One in Five Americans Still Need Government Approval to Work

In Governing last week, it was observed that even after years of reform, roughly one in five jobs in the United States still requires formal government authorization in the form of occupational licensing. In a labor market that is more mobile and adaptable than ever, such licensing rules can pin people down or erect substantial barriers to entering new trades and professions. The Archbridge Institute’s 2026 State Occupational Licensing Index identifies which states impose the heaviest burdens and which ones make it comparatively easier to earn a living.

Twenty-Two Percent of Americans Must Hold Licenses to Work

“Too often, the occupational licensure laws on the books do not reflect the world we actually live in,” Alanna Wilson cautioned in Governing. “American workers wishing to launch a career, start their own business, or re-enter the workforce in one of 102 lower‑income occupations must on average devote nearly a year to education and on‑the‑job training, pass at least one exam, and pay almost $300 in fees.”

Wilson drew from a December 2025 Federal Reserve Bank of Minneapolis report which found that “in recent years, 22 percent of the employed have reported holding a government-issued license, in professions ranging from physical therapy to cosmetology to public school teaching.” After decades of creeping credential requirements, the report found, the “share of workers who have a license and the number of licensed occupations appear to have stabilized.” While licensing requirements are holding steady, they’re not disappearing: “Delicensure is rare.”

The Minneapolis Fed maintains an occupational licensing dashboard that places requirements in context by showing which jobs call for licenses. While licensing proponents argue that government permission is essential to protect health and safety, that claim becomes less persuasive when many occupations are licensed in some states but not in others. Are Arizona and Nevada paying a price for not requiring electricians to navigate California‑style credentialing? Is Rhode Island shielding residents from risks posed by license‑free nutritionists in New Hampshire?

Not all licensing requirements impose the same burdens. As outlined in this year’s Archbridge report, some states demand only nominal training and fees while others subject applicants to rigorous scrutiny. Certification and registration requirements can be intrusive without matching the severity of licensing. Regulatory schemes sometimes tie jobs together in ways as restrictive as explicit licensing mandates.

“In the state of Alabama, all acupuncturists are required to be licensed physicians; thus while the occupational title of ‘acupuncturist’ is not licensed, that occupation is barred by a license in some way,” Archbridge notes. “In several states, shampooers must obtain cosmetology licenses to work.”

On the plus side, there is a growing trend toward recognizing licenses issued elsewhere. That shift does not erase barriers to employment, but it reduces their impact on mobility. Archbridge’s 2026 analysis—authored by Noah Trudeau, assistant professor of economics at Troy University and Labor Policy Fellow at Archbridge; Edward Timmons, Vice President of Policy at Archbridge; and Benjamin Seevers of West Virginia University—gives a detailed look at how state boundaries hamper work opportunities.

No Rhyme or Reason to Licensing Requirements

According to Archbridge’s findings, the five most burdensome states are Oregon, Texas, Tennessee, Arkansas, and New Jersey. The five states that impose the fewest bureaucratic obstacles to work are Missouri, Kansas, New York, Indiana, and Colorado.

As the report notes, medical doctors require licenses in every state. Nail technicians, for reasons not entirely clear, also need licensure across all jurisdictions. Most regulated occupations—such as electricians and nutritionists—are licensed in some states but not in others. Master gas fitters encounter barriers in 44 states, including licensing requirements in 11. Dental radiographers face similar burdens in 33 states. Security guards are licensed in half the states, as are fuel‑piping contractors. Medical assistants and animal breeders are licensed in 10 states. Mold remediation workers require licenses only in Texas.

In other words, while some tightly regulated occupations arguably invoke safety concerns, others with comparable risks are licensed only in some places. That variability provides an opening to assess whether licensing yields real benefits.

‘Occupational Licensing Fails to Improve Public Health’

“A broad ideological spectrum of analysts and economists mostly agrees—occupational licensing does not improve public health in any scientifically rigorous or statistically significant manner,” wrote Spence Purnell, then with the Reason Foundation, which publishes Reason, in 2018. He added that a study of dental hygienists found “the stricter the licensing requirements, the poorer the health outcomes. The study found this is because the more stringent regulations lead to higher prices, which lead to low income-earners forgoing routine dental work, which eventually leads to more oral diseases, more pain and more costs to the patients.”

Rather than safety concerns, the 2025 Minneapolis Fed report observed that state licensing requirements appear driven by the policies of neighboring states, lobbying by professional associations to erect barriers to entry, and competition for jobs from immigrants. “Licensing disproportionately reduces employment of foreign-born workers,” researchers found.

Rather than delivering benefits, licensing requirements raise costs for consumers by limiting competition: “Shifting an occupation from unlicensed to licensed reduces employment in the licensed occupation by 29 percent,” according to Chris Edwards of the Cato Institute. “Such barriers also discourage hiring across state lines, and thus limit workers’ interstate mobility.”

While, as the Minneapolis Fed warned, eliminating licensing requirements is unlikely, states have moved toward recognizing licenses issued in other jurisdictions. “As of 2026, 28 states have adopted some form of universal licensing recognition—the same as last year,” according to Archbridge. “Universal” recognition isn’t truly universal—some states require that recognized licenses be subject to rules that are substantially similar to those issued locally, while others recognize only licenses held by residents of the same state. Yet 11 states earn Archbridge’s gold medal for universally recognizing occupational licenses without restrictions.

Universal recognition, though helpful, is not a perfect substitute for removing the need to obtain government permission to work.

Still, asking lawmakers to eliminate licensing altogether would be a tall order given the public messaging around “pointless and expensive burdens” supposedly safeguarding safety. In that sense, universal recognition represents a constructive reform that reduces needless hurdles to productive work and prosperity.