Introducing the License Portability Scorecard (LPS)
Helping policymakers navigate the tangled thicket of efforts to improve license portability
Image created with ChatGPT.
As we continue through the dog days of summer and most of the US has been stuck with a lot of heat and humidity, we are also in peak road trip season. I just returned from my family’s annual trip through the Maritime provinces to beat some of the summer heat.
When navigating unfamiliar roads, I am lost without my GPS. It is a critical tool to have to help me get to where I need to go.
License portability reform can also be very difficult to navigate. There are several reforms and interest groups competing for the attention of policymakers.
Occupational licenses do not work like driver licenses— there are often frictions when licensed workers move from state to state. There are a lot of competing voices and ideas on how best to deal with this lingering problem. Several of these voices have skin in the game unlike myself.
To help out in the upcoming legislative session and hopefully future legislative sessions, I have put together the License Portability Scorecard or LPS. Much like GPS, LPS can help well intentioned policymakers to steer away from the bad policies, and keep on the path towards improving labor market mobility with more sound policy.
I used many of the ideas here over the last year advising my home state as it successfully implemented universal recognition.
Photo from WV Joint Committee on Government Organization interim meeting in Parkersburg on September 8, 2024.
On to the LPS!
License Portability Scorecard (LPS)
Here is a more detailed breakdown of each policy:
Compact
You can read more on licensing compacts in my two previous posts here and here. For a compact to operate, states must rely on peer states to also pass and enact model legislation. Even after the minimum number of states pass and enact the compact, it can take as long as 2 years for a compact to get up an running. The sad truth is that most licensing compacts are currently not active. Even worse, compacts often get started using tax dollars made available through federal government grants.
Compacts are managed via a compact commission. The compact commission has the authority to change the rules and requirements for compact participation. We already have one example of this pernicious behavior: the massage therapist licensing compact or IMpact. This compact mandates that massage therapists must complete 625 hours of education, even though most states require 500 hours.
There is nothing stopping similar behavior in the future from other compacts. Compacts are bad policy, plain and simple. In the LPS, compacts received a grade of D— there may be some small benefits, but far too many risks and are not worth the cost. Policy makers are wasting valuable time considering any compact legislation.
Endorsement
The good thing about endorsement is that states are empowered to decide whether or not they will honor an occupational license from another state— there is zero reliance on other states. The bad thing about endorsement is that it almost always gives licensing boards the authority to decide whether or not to accept the license. Licensing boards will insist that licensees complete “substantially similar” or “substantially equivalent” amounts of education and training and completely ignore what actually matters— the on-the-job experience that licensees have completed. Does it really matter how many hours of education and training a licensee has completed if they have demonstrated through actual work experience that they can perform the job effectively? No, education and training that might have been completed decades ago is mostly irrelevant.
Don’t be fooled when licensing boards or professional associations insist that they already have a process in place. The existing process in place is broken and outdated. Endorsement gets a C in the LPS.
Reciprocity:
This is the policy that is the least understood. Many times, reciprocity gets used to describe any policy that improves the mobility of licenses. Reciprocity, in fact, is a specific policy that is bilateral in nature. State A will accept licenses for a specific profession from State B if State B accepts licenses for the same profession from State A. This is the reciprocal nature of the arrangement. This reliance on other states is a problematic aspect of this policy.
Reciprocity prevents licensing boards from scrutinizing applicants education and training. Once the agreement is in place, licenses will easily transfer. The problem is getting the agreement started in the first place.
One recent example that seemed to be well intentioned was the enactment of HB11 in Texas this past legislative session. The bill mandates that the Texas Department of Licensing and Regulation seek out new reciprocity agreements for licensed professions. But of course, the caveat is that the education and training requirements in the target states are “substantially similar.” This is the same outdated thinking associated with endorsement. In the LPS, reciprocity also gets a C. There is a much better way to improve license portability.
Recognition
First, I should make clear, the best way to improve license portability is eliminate the license requirement. This will not only improve portability, it will also remove needless barriers to individuals working in the state. Passing recognition coupled with the Right to Earn a Living Act helps to make sure that this line of thinking is followed. Arizona and Louisiana have both successfully moved forward with this model.
Universal recognition empowers states with no reliance on other states. When done right, it strips licensing boards of their ability to scrutinize the education and training of applicants. Eighteen states have enacted the strong version of universal recognition— with no mandated requirements that education and training are “substantially similar.”
Another great aspect of recognition is that it covers many occupations at a time, not a one-by-one approach that is necessary for each other policy. Recognition gets a grade of A-: definitely the superior approach of improving licensing portability if licensing is absolutely necessary to protect the public from harm.
For more details on how to structure universal recognition right, check out this playbook that I coauthored with Kihwan Bae.
When policy makers are looking to improve the labor market in their home state and potentially help alleviate persistent shortages of skilled workers, they should use the LPS as simple guidance. Compacts are a failed policy. It never makes sense for policy makers to waste time on new or existing compacts. Once recognition is enacted, improving the effectiveness of recognition should become the priority. Making sure that recognition covers as many occupations as possible, and strips licensing boards from gatekeeping and using education and training requirements as entrance requirements.
Policy makers should not be satisfied with the status quo. Endorsement and reciprocity arrangements have existed for decades. And we continue to have limited mobility of licensed professionals across state lines in states lacking strong universal recognition policies. The status quo isn’t good enough.
After strong recognition is in place, compacts are duplicative and inferior and never needed. Instead, policy makers should pivot to further reform, like The Right to Earn a Living Act, to make sure that licensing is only used as a policy tool when it is absolutely necessary to protect the public from harm.