Occupational Licensing and Recidivism in the United States

Vittorio Nastasi and Samuel R. Staley

DeVoe L. Moore Center, Florida State University

Executive Summary

This policy study examines the effects of occupational licensing reform on reducing recidivism—the likelihood former prisoners will re-offend and return to prison. Eighty-six percent of released prisoners are likely to re-offend within nine years of their release, with the majority re-offending within the first two years. With more than 1.5 million people in prisons nationwide, and approximately 100,000 in Florida prisons, transitioning formerly incarcerated people into the mainstream workforce and community is of vital importance.

Academic research has consistently demonstrated that access to a financially sustainable job combined with a supportive family environment can dramatically reduce the chances a former prisoner will re-offend. Access to a good job, however, is problematic since many employers are skeptical of hiring workers with arrest records. Moreover, many states statutorily preclude hiring ex-felons from holding jobs in specific fields through occupational licensing laws. These limits exist even when the crime conviction is not substantively related to the job being performed.

Beyond these blanket prohibitions, occupational licensing laws often establish barriers to entry by imposing requirements greater than necessary to protect the public safety and welfare. In fact, licensing requirements can vary significantly from state to state. In many cases, regulation appears politically arbitrary. For example, interior designers are licensed in just three states (including Florida), while the rest of the U.S. states allow the private sector and consumers to regulate quality through markets. Just 11 states license medical and clinical laboratory technologists.

These fees and training requirements can create barriers that are almost impossible to overcome when starting out with no income and very little formal training. For example, in Florida, a drywall installation contractor must undergo training equivalent to 1,460 days (more than five years, excluding weekends) and pay fees equivalent to one week’s pay (at $10 per hour) before they can sit for the exam. Twenty-one states do not license drywall installation contractors. Pest control applicators must finish 533 days of training (more than two years), pay fees of $760, pass an exam, and have a high school diploma, before the state will issue a license. Despite the fact 21 states do not regulate carpenter or cabinet maker contractors, Florida requires those interested in practicing this trade to rack up 1,460 days of training, pay $364 in fees, and pass an exam before they can get a license. Florida licenses 56 occupations such as these that would be suitable re-entry jobs for those starting out on the lower- and middle-income levels.

These examples, however, do not determine a pattern. An analysis of data from 30 states tested whether occupational licensing laws had significant impact on recidivism. After controlling for the state economy, labor force participation rates, the degree of urbanization, and education levels, states that regulate entry into occupations most suited to lower- and middle-income occupations have higher re-arrest rates for former prisoners. The effect is statistically significant and robust.

Overall, lowering barriers to entry by de-regulating occupational licensing laws could have a one-for-one impact on reducing recidivism. In other words, a one percent reduction in licensing occupations will reduce re-arrests rates by one percent. The effects are even stronger for reductions in the average training days required before someone can sit for a licensing exam.

An application to Florida revealed that the positive impacts on re-arrest rates were even more important. A 10 percent reduction in the number of average training days would lead (statistically) to a 16 percent reduction in Florida’s re-arrest rate. Reducing the average number of training days to the average for the 30 states examined in this study could cut the re-arrest rate by more than half.

While robust, these statistical results should be considered in context. The sample size is small, and the analysis did not examine recidivism over time. Nevertheless, the conclusions are consistent with broader academic research by economists and criminologists. Occupational licensing reform may well be the “low hanging fruit” for improving the chances formerly incarcerated people can find gainful employment that is also financially sustainable.

Reintegrating former criminal offenders into society poses an important challenge to American society. One academic study estimates that eight percent of American adults and one third of African American adult men have felony convictions.[i] Ex-offenders face a wide array of restrictions in terms of legal rights, civic participation, and employment. In addition, ongoing criminal activity weakens civil institutions, including families, neighborhoods, and the economy. Finding ways to reduce criminal activity are important to strengthening the economy and communities. To the extend public policy prevents the re-integration of ex-offenders into mainstream society, including the labor market, the economy is less productive, civic culture is undermined, and citizens endure hire tax burdens to underwrite a larger than necessary criminal justice system (e.g., prisons, jails, police, courts, parole officers, etc.).

This report examines an often neglected, but potentially important, barrier to transitioning formally incarcerated people into mainstream society and economy: occupational licensing.. In the U.S., nearly one third of all occupations now require licenses before workers can practice their profession requiring an average of nine months of training.[ii] Florida alone licenses over 300 professions and businesses.[iii] Moreover, little evidence supports the effectiveness of licensing as effective way to protect consumers or improve the quality of services.[iv] Thus, occupational licensing reform may be “low hanging fruit” for criminal justice reform focused on easing the re-entry of formerly incarcerated people into the mainstream economy.

The next section of this report provides an overview of recent trends in incarceration, illustrating the rapid growth in the prison population and its social implications. The subsequent two sections discuss recidivism – the likelihood a released prisoner will re-offend – and its relationships to occupational licensing. The fourth section presents original research that examines the empirical evidence that suggests a link between recidivism and occupational licensing reform, while the concluding section discusses policy implications.