The occupational licensing burden pressing down on American workers remains stubbornly wide, with roughly one in five employed people still required to hold a government-issued licence, according to new data from the Federal Reserve Bank of Minneapolis and the Archbridge Institute’s fourth annual state-level ranking.
One in Five US Workers Still Needs a Government Licence
A December 2025 report from the Minneapolis Fed, co-authored by Juliet Cramer and Ryan Nunn, found that 22 per cent of the employed report holding a government-issued licence, spanning professions from physical therapy to cosmetology to public school teaching. The share has stabilised after decades of expansion, the researchers found, but delicensure remains rare.
The barriers are not trivial. Workers seeking entry to one of 102 lower-income occupations must surrender, on average, nearly a year to education and on-the-job training, pass at least one examination, and pay nearly $300 in fees.
The Minneapolis Fed also maintains an occupational licensing dashboard, initially released in 2023 and since extended to track where and when specific occupations were first licensed, placing the requirements in comparative context across states.
Oregon Tops the Burdensome List as 28 States Adopt Universal Recognition
The Archbridge Institute’s 2026 State Occupational Licensing Index, the fourth edition of the annual ranking, identifies Oregon, Texas, Tennessee, Arkansas, and New Jersey as the five most burdensome states. Oregon alone records 182 licensing barriers against a national average of 159.1, and has no universal recognition policy; its most distinctively licensed occupation is lactation consultant.
At the other end of the scale, Missouri, Kansas, New York, Indiana, and Colorado impose the fewest bureaucratic hurdles. The rankings shifted meaningfully from the 2025 edition, in which Tennessee ranked second and Kentucky fourth; Texas has climbed to second in 2026 and New Jersey enters the top five.
The inconsistency across state lines undermines the safety rationale for licensing. Nail technicians require a licence in every state. Mold remediation workers need one only in Texas. Security guards are licensed in half of states; medical assistants in ten. Master gas fitters face barriers of some kind in 44 states, including full licensing requirements in 11. The 2026 index, prepared by Noah Trudeau of Troy University, Edward Timmons, and Benjamin Seevers of West Virginia University, catalogues these gaps in detail.
Alabama offers a particularly pointed example: acupuncturists are not formally licensed as such, yet the occupation is effectively barred because practitioners must hold a physician’s licence. In several states, shampooers must obtain cosmetology licences to work.
The Evidence Against Licensing as a Safety Tool
The research consensus on whether licensing actually protects the public is bleak. A broad ideological spectrum of analysts and economists, as Spence Purnell wrote in 2018, ‘mostly agrees: occupational licensing does not improve public health in any scientifically rigorous or statistically significant manner.’ One study of dental hygienists found that stricter licensing correlated with poorer oral health outcomes, the mechanism being that higher prices caused lower-income patients to forgo routine care.
Chris Edwards of the Cato Institute has calculated that ‘shifting an occupation from unlicensed to licensed reduces employment in the licensed occupation by 29 per cent.’ The Minneapolis Fed’s own analysis links licensing requirements less to public safety than to the policies of neighbouring states, lobbying by professional associations seeking barriers to entry, and competition for jobs from immigrants: ‘licensing disproportionately reduces employment of foreign-born workers,’ the researchers found.
A July 2026 Minneapolis Fed Staff Report (No. 685), ‘Analysing Occupational Licensing Across Nations,’ broadens the picture. Drawing on harmonised survey data from 44 countries, it found licensing prevalence ranges from roughly 14 per cent of workers in Denmark to more than 40 per cent in India and South Africa. Licensed workers earn 6 to 19 per cent higher wages than comparable unlicensed workers across specifications. The report also found that licensing prevalence is negatively associated with GDP per capita and governance quality, and positively associated with informal employment, suggesting that heavy licensing is intertwined with weaker labour markets rather than safer ones.
The pattern is not confined to the United States. A July 2026 Fraser Institute study found Alberta carries the highest occupational licensing burden among Canadian provinces, again with little evidence that licensing improves safety.
Universal Recognition: Reform at the Margins
The most practical reform on the table is universal licence recognition, under which a licence issued in one state is accepted in another. As of 2026, 28 states have adopted some form of this policy, with 11 earning Archbridge’s gold standard for recognising licences without restrictions on their origin.
A Minneapolis Fed case study of Montana, published in May 2024, showed the policy in action: total licences issued in the state grew from 7,429 in 2012 to 15,575 in 2022, with licences granted by endorsement (rather than fresh examination) rising from 2,428 to 7,527 over the same period following Montana’s 2019 universal recognition reform.
Recognition reduces friction without eliminating the underlying requirement to hold a licence at all. Whether lawmakers who justified these requirements on public safety grounds will go further and repeal them remains the harder political question. The trajectory of the index rankings, and whether any state graduates from the burdensome list to the least-burdensome tier, will signal how seriously that question is being taken.
