When Seattle resident Tom Stewart was working on his graduate degree at the university of Minnesota in the early 1990s, he supported himself as a certified real estate appraiser. At the time, garnering the necessary state license entailed only taking a single 75-hour class and passing one statewide test.

It was a far cry from what he would experience if he was just getting started today back in his home state of Washington.

“Now, [in Washington] you have to spend two years as a trainee or apprentice, during which you have to take 120 hours of continuing education and acquire a minimum of 2,500 hours of appraisal experience,” he says.

Applicants who meet all those requirements and pass the state exam – and pay a litany of fees along the way – can then become a licensed residential real estate appraiser. But there’s more. If a licensed inspector wants to step up to becoming a certified appraiser, that person often will also need a four-year college degree.

It’s not mandatory that an inspector become certified like Stewart – who stayed in the industry when he moved back to the Evergreen State in 1994 – but he says there are very valid reasons to do so.

“Most lending institutions here want only certified appraisers because they have more hours, more education, and more experience. So not becoming certified definitely limits a person’s job possibilities,” he says.

Exponential Licensing Growth

Stewart’s experience is hardly unique. According to a recent four-year joint study conducted by the National Conference of State Legislatures, the National Governors Association and the State Government Affairs Council, “Occupational licensing has grown exponentially over the last 60 years, comprising nearly 25 percent of the U.S. workforce, up from 5 percent nearly 60 years ago.”

That kind of growth has drawn intense opposition from libertarian and business groups, and it is the rare issue that has also come under fire from more progressive entities as well.  But while licensing reform has generally been a bipartisan issue, it is not without concern from some quarters that a blind rush to toss aside licensing requirements could ultimately harm consumers.

A guidance framework released by the Obama administration in 2015 noted that “When designed and implemented carefully, licensing helps to ensure high-quality services, safeguard against serious harms, and offer workers clear guidelines around professional development and training...and may also help practitioners to professionalize, encouraging individuals to invest in occupational skills and creating career paths for licensed workers.” 

But that same framework also noted that “by making it harder to enter a profession, licensing can also reduce employment opportunities and lower wages for excluded workers, and increase costs for consumers.”

This can be particularly hard on military families. According to the study, about 35 percent of military spouses are employed in professions that demand a license, and those same families are 10 times more likely to move across state lines within the previous year than their civilian counterparts.

It can also be very challenging for new immigrants to work in fields where they may already have years of training and experience, depriving them of lending their greatest contribution to the U.S. workforce.  And in dozens of states, having a criminal conviction – even a minor one from many years before – is enough to prevent an applicant from obtaining a license.

Reform Efforts Across the States

Now, just as licensing mandates grew exponentially in a short time, so too have efforts to ease those kinds of limitations. According to NCSL, states have introduced over 3,500 occupational licensing bills since 2017.

Those measures cover a wide range of occupations and categories. Although the study tracked introduced legislation across all 50 states, the policy results were most closely focused on the original 11 that formed the Multi-State Occupational Licensing Learning Policy Consortium in 2017 and five additional states that joined the following year. (See Bird’s Eye View in this issue.)

The most frequently introduced measures were those dealing with fee requirements, licensing reciprocity with other states, or easing licensing requirements for military families or those with criminal histories.

Licensing reform has also been a popular topic for governors, with at least eight governors naming it as a priority in their State of the State addresses in 2019. According to the NCSL study, six of those states enacted a licensure reform bill in that session.

One of the most significant reform efforts came in Idaho, where Gov. Brad Little (R) issued an executive order (EO 2019-01) that called for, among several things, imposing sunset provisions on all existing state licenses. But the governor got an unexpected gift that summer when the legislature failed to reauthorize the state’s entire regulatory code, which by law then expired that July. With a clean slate to work with, Little and lawmakers cut 40 percent of the state’s overall regulatory code from the books.

Last May, Little followed upon his regulatory reform success of 2019 by issuing another order (EO 2020-10) that consolidated 11 separate licensing agencies into one, the Division of Occupational and Professional Licenses.

Another wide-ranging 2019 reform came in Arizona, where in January Gov. Doug Ducey (R) called on lawmakers to make the Grand Canyon State the first to enact broad licensing reciprocity with other states. They did, with Ducey signing that measure (HB 2569 2019) in April.

“Plumbers, barbers, nurses, you don’t lose your skills simply because you pack up a U-Haul truck and move to Arizona,” Ducey said at the time.

Several other states have since followed suit, including Montana, New Jersey, Pennsylvania, Idaho, Iowa, Missouri and Colorado. Four others - Ohio, Louisiana, Mississippi, and Indiana – did so for military families.

Arizona continued its reform fervor in 2020 as Gov. Ducey issued Executive Order 2020-17, which allowed the issuance of provisional medical licenses to physicians licensed in good standing in other states. That order, for now, applies only during the pandemic, which saw an explosion in the use of telehealth services across the nation.

Florida Gov. Ron DeSantis (R) followed that in June by signing a measure (HB 1193 2020) that eases or removes licensing rules on more than 30 professions, including interior designers and boxing referees. It also allows universal licensing reciprocity for cosmetologists and barbers licensed in other states.

And on the heels of a 2019 measure that requires all new licensing requirements to be reviewed by the state Legislature, Ohio Gov. Mike DeWine (R) in December signed HB 442 (2020), which eases licensing requirements in education, environmental protection, natural resource conservation and various types of medical practice.

Suzanne Hultin, Program Director for the NCSL Employment, Labor & Retirement Program, expects several more states to consider various forms of licensing reform legislation in 2021.

“Even though our study is over, we’re always watching to see which states might be re-evaluating their current regulations,” she says. “We know lawmakers always have interest in helping military families, and we definitely expect more states to look at enacting very broad portability and reciprocity legislation in 2021.

Utah is another state taking a hard look at its current regulations. Gov. Spencer Cox’s (R) first executive order (EO 2021-01) on January 7^th directed Beehive State government agencies to “review all occupational licenses to ensure they are truly necessary and are not outdated or incomplete.”

Reform measures have also been introduced in Arkansas and West Virginia, and Hultin believes significant reform measures may be forthcoming in North Dakota, Nevada and Vermont as well. And back in Arizona, Gov. Ducey has asked lawmakers to make the provisions of his 2020 telehealth order permanent.

Reformers have even got encouragement from the new president. On the campaign trail, then candidate Joe Biden made clear he also supports significant occupational license reform.

The Way Forward

NCSL’s Hultin says the study her group undertook showed that the success or failure of those efforts will likely be determined by how well reform advocates communicate with stakeholders, and how willing they are during such highly partisan times to allow a neutral third party to help facilitate things.

“The contention is always between those who want to help workers by quickly easing these requirements and those who want to make sure consumers are still being protected,” she says. “What our partnering organizations were able to do in our consortium states was to get all the stakeholders to the table and hash out those conversations.”

Back in Seattle, Stewart hopes that can happen, particularly with licensing reciprocity. He points to statistics that show the average age of he and his fellow appraisers is now 55, a figure industry analysts believe might even be low.

“We’re shooting ourselves in the foot,” he says. “If we keep making it this hard to get into the business, we’re going to look up soon and see 80 percent of the current people gone and nobody to replace them.”

-- By RICH EHISEN

Multi-State Group Leading Way on Occupational Licensing Policy

In 2017 the Council of State Governments (CSG), the National Conference of State Legislatures (NCSL) and the National Governors Association (NGA) Center for Best Practices created the Occupational Licensing Policy Learning Consortium to help states identify problems with occupational licensing and develop solutions for them. The consortium initially consisted of 11 states but was expanded to 16 states in 2018.