Licensed to Work: How Licensing Reform Can Contribute to Economic Recovery

Industries that require professional licenses like construction have experienced significant barriers in the credentialing process for years. Reforming licensing practices could help to reduce those barriers and stimulate job growth. 

Industries that require professional licenses like construction have experienced significant barriers in the credentialing process for years. Reforming licensing practices could help to reduce those barriers and stimulate job growth.  Bob LoCicero/SHUTTERSTOCK


Connecting state and local government leaders

COMMENTARY | Licensure reform will be critical to stimulating future job growth.

As overwhelmed hospitals struggled to handle an influx of cases due to Covid-19, states relaxed medical licensing laws to quickly mobilize qualified personnel to areas of greater need. This change saved lives. And a similar approach can save people’s livelihoods. 

Many licensed professionals have experienced disruptions in their work environment as a result of the coronavirus. Licensed workers make up 23% of employed Americans. In many licensed industries, like trucking, construction and real estate, the ability to work depends on a state agency or other governing body establishing, approving and tracking the required training and qualifications. However, these professionals have faced significant barriers in the licensure process in recent years. Reducing these barriers could offer opportunities for the millions of unemployed Americans who are qualified, licensed professionals facing a fragile jobs market. 

Licensing rules are critical to protecting consumers and holding professionals to the highest standards. However, most states use outdated laws and infrastructure to manage the process. Professionals, particularly those who are renewing or moving from another state, spend a significant amount of time complying with the process by physically collecting and submitting paperwork that state officials then need to manually update into the state’s records. This contributes to the overall estimate that employers need an average of 42 days to hire a new employee and can prevent credentialed professionals from working.  

Even where state laws mandate licensing reciprocity, meaning one state accepts licenses from another, it doesn’t automatically allow an individual to work. Instead, what typically occurs is that the person has to wait until their former state of residence receives the paperwork for the license transfer, locates the individual’s records, sends the request to the new state for processing and that state issues a new license. This records-transfer process can take weeks, if not months. 

The economic consequences are particularly devastating for unemployed and underemployed people. The nearly 650,000 U.S. military spouses in the U.S. are a prime example of this hardship. A joint report by the U.S. Departments of Defense and Treasury found that 35% of military spouses work in professions that require a state license or certification. They are also 10 times more likely than other workers to move across state lines and have a 24% unemployment rate. Despite documented qualifications, many military spouses struggle to find new jobs. Another finding of the study is that it took 65% of military spouses four months to find a new employer after relocating, with 25% of those individuals taking a year or more. More than half of the families reported financial hardship due to the family’s nonmilitary partner’s unemployment or underemployment. Veterans also experience difficulty in getting hired for licensed civilian jobs, despite obtaining comparable skills and performing similar functions in their military roles.

Now is the time to pave the way for reforming the professional licensing system. One way to do that is to make professional credentials digitally portable and accessible. Similar to an airline boarding pass, a digital professional license would make it easier and faster to share accreditations, training and qualifications to work. It also would reduce the time a qualified candidate goes without a paycheck while helping employers hire with more confidence and eliminating redundancy in the due diligence process—especially when the ideal candidate currently lives in a different state. 

State governments are well-positioned to implement digital licenses and at least one already has. Virginia, for example, has already taken steps toward ensuring workers have a permanent, transportable digital record of their qualifications. The Virginia Department of Professional and Occupational Regulation has deployed a digital license statewide. Since its unveiling in 2019, more than 225,000 digital credentials have been provided to professionals across the state. This has enabled the state to instantaneously and remotely update tens of thousands of worker licenses that were set to expire during the Covid-19 pandemic, saving countless hours of staff time and eliminating a major hurdle for workers.

Employers are eager to get back to business. To do that, they will need to quickly refill their ranks with qualified, licensed talent. Adopting verified identity through digital credentials will help states kickstart our recovery, unlock billions of dollars in lost time and opportunity and dismantle the barriers that keep Americans from quickly putting their skills to work.

Tomer Kagan is the CEO of Merit and was previously CEO of Quixey. Kagan has served on the board of the Machine Intelligence Research Institute, worked with the National Science Foundation’s futurist project, has spoken at the World Economic Forum and Mobile World Congress and was named one of Forbes Magazine’s “30 Under 30.”

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