Licensing Is Associated with 6.5 Percent Higher Wages on Average in All Professions

The Alliance for Responsible Professional Licensing (ARPL)—a national coalition of responsible licensing advocates—has released “Valuing Professional Licensing in the United States”, a new, first-of-its-kind report that was developed in partnership with the internationally recognized research firm Oxford Economics. Oxford Economics’ economists analyzed all professions and occupations in the U.S. and found that licensing is associated with 6.5 percent higher wages on average.

The ARPL-Oxford Economics report comes as licensing reform is emerging as a hot topic of debate in statehouses across America, which are now kicking off their 2021 legislative sessions. The Valuing Professional Licensing report delivers a red flag to lawmakers and policy setters who are considering applying one-size-fits-all legislation in an attempt to roll back their state licensing programs. In 2020, several states attempted to pass bills that would eliminate licensure for various occupations and professions as a way to ease occupational mobility challenges caused by the pandemic or generate economic growth.

“Licensing impacts professions, occupations and populations differently and is a clear driver of higher wages and stronger economies. It also creates strong consumer protections and many professions, especially those that ARPL represents, have several decades of mobility and reciprocity programs that work. These are critical insights that must be acknowledged as part of any thoughtful consideration of licensing policy,” says Marta Zaniewski, vice president for State Regulatory and Legislative Affairs for the American Institute of CPAs. “One size does not fit all. Time and again we have seen that broad-brush policy doesn’t work, but responsible licensing does.”

The ARPL-Oxford Economics report also shows that women and minorities in job fields requiring advanced education and training (engineers, surveyors, architects, landscape architects and CPAs, among others) benefit significantly from licensing. For these workers, the results show that a license narrows the gender-driven wage gap by about one-third and the race-driven wage gap by about one-half.

Key report findings:

  • The results show that across all professions and occupations, licensing is associated with a 6.5 percent average increase in hourly earnings, even after accounting for the job holder’s educational attainment, gender and racial demographics.
  • The results show that among professionals in technical fields requiring significant education and training, a license narrows the gender-driven wage gap by about one third and the race-driven wage gap by about half.
  • Minority engineers, surveyors, architects, landscape architects and CPAs can expect an 8.1 percent hourly wage increase on average after becoming licensed in their field.
  • Female engineers, surveyors, architects, landscape architects, and CPAs can expect a 6.1 percent hourly wage increase on average after becoming licensed in their field.
  • Both white professionals and male professionals were shown to benefit from licensing too, but to a lesser degree. White engineers, surveyors, architects, landscape architects, and CPAs can expect a 2.9 percent hourly wage increase after becoming licensed, and males in these professions can expect a 0.7 percent hourly wage increase after becoming licensed.
  • Those in trade and vocational occupations (barber, plumber, etc.) can expect a 7.1 percent hourly wage increase after becoming licensed, while those in a profession requiring advanced education and training (eengineer, architect, etc.) can expect a 3.6 percent wage increase after becoming licensed.

“The report findings suggest licensing is an important economic tool for professionals,” says Oxford Economics Senior Economist Alice Gambarin, who served as project lead. “These new findings also reflect the distinctions between each profession and occupation, and the licensing systems that support them should take those differences into consideration.”

The Valuing Professional Licensing report was commissioned by the Alliance for Responsible Professional Licensing (ARPL), which is a coalition composed of national associations that represent highly complex, technical professions and their state licensing boards. Members of ARPL are licensed in all 50-plus U.S. states and territories. Associations within ARPL have established uniform education, examination, and experience standards and a proven national mobility path for professionals.

In December 2020, ARPL also released, Licensed to Move: A Guide to Interstate Practice, which explores several examples of how states can responsibly accomplish flexibility and mobility. (Access the Licensed to Move report and fact sheet here.)

The alliance was formed to ensure their voices are heard by policymakers and the public amid the growing debate around licensing.

Members of ARPL include the American Institute of Certified Public Accountants (AICPA), American Society of Civil Engineers (ASCE), the American Society of Landscape Architects (ASLA), the Council of Landscape Architectural Registration Boards (CLARB), National Association of State Boards of Accountancy (NASBA), National Council of Architectural Registration Boards (NCARB), National Society of Professional Engineers (NSPE) and National Council of Examiners for Engineering and Surveying (NCEES).

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