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One canard about immigrants is that many come for the comforts of the welfare state. That’s not true of most newcomers, but it is true that excessive occupational licensing rules are too often a barrier for immigrants to work.
A new paper from the Federal Reserve Bank of Minneapolis finds that licensing regimes can especially “limit employment options for immigrants.” Authors
Tyler Boesch,
Michou Kokodoko
and
Ryan Nunn
crunched data from the Bureau of Labor Statistics’ Current Population Survey, which includes responses from immigrants regardless of their legal status. They find that “foreign-born workers are 7.7 percentage points less likely to be licensed than native-born workers.”
A recent case in Kansas is illustrative. It involves threading, in which a thin string is used to groom facial hair.
Jyotsna Biscuitwala,
originally from India, had some three decades of experience in the practice, as well as family who wanted to employ her at their Kansas salons. Yet the state made it a misdemeanor crime to thread without 1,000 hours of training, a passing grade on state exams, and an esthetician’s license.
The paper notes that “the largest disparity” in licensing is “between foreign-born workers with the highest educational attainment and their native-born counterparts.” Fewer than 30% of immigrants with a bachelor’s degree hold a license to work, compared to more than 49% of the native-born with an equivalent education. Meanwhile, American employers continue to clamor for skilled workers.
The Association of American Medical Colleges has projected that the U.S. will face a shortage of between 37,800 and 124,000 physicians by 2034. Foreign-trained doctors could help fill that need. But even if a foreign physician spends hours a week studying and thousands of dollars in fees for exams and residency applications, a medical license in the U.S. is hard to obtain.
Fewer than 55% of foreign international medical graduates matched with a residency program in 2021. Healthcare workers account for about one in four foreign-born licensees, but hospitals and clinics are still struggling to hire enough nurses, occupational therapists, respiratory therapists and other staff.
The good news is that states are beginning to realize they’re missing out on immigrant talent. The Minneapolis Fed authors applaud Utah for passing legislation years ago that allows easy licensing for foreign-born occupational therapists who can demonstrate that they’ve completed appropriate training abroad and pass the state exam. “Expanding that approach would greatly facilitate the relicensure of foreign-born workers,” they write.
There are signs of progress outside of healthcare. In 2020 Virginia lawmakers streamlined the licensing process for foreign-licensed massage therapists. Meanwhile, Ms. Biscuitwala, the threader, sued with help from the Kansas Justice Institute, and her case inspired state lawmakers to exempt threaders from the licensing requirements this spring.
Excessive licensing deprives the U.S. of workers who can contribute to an economy that needs them.
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