Why occupational licensing reform can boost Illinois business

In Illinois, nearly 1 in 4 workers requires an occupational license to perform more than 100 different professions.

That includes barbers, hair braiders, interior designers, makeup artists, locksmiths, bill collectors and fire alarm installers.

With one of the most restrictive licensing systems in the country, Illinois has lost 135,000 jobs and $15 billion in economic activity, while also worsening racial and income inequality in the state. Illinois businesses are left facing hiring shortages while workers struggle to complete expensive or time-intensive requirements.

The solution: state occupational licensing reform. Illinois should sunset unnecessary licensing requirements, bring down work requirements to match other states and offer alternative pathways to make it easier to get licensed. This kind of reform would help businesses by making it easier to hire and find needed staff, lower business costs, attract residents and encourage new entrepreneurship. It would help workers in a state with one of the nation’s highest unemployment rates.

The main advantage of reforming occupational licensing is access to a larger workforce. Current licensing requirements — including extensive training hours and expensive tests — hinder jobseekers, especially those looking to change careers or move to Illinois from states with more flexible licensing.

States with flexible licensing laws, such as Arizona, have seen a rise in skilled labor and economic growth, partly because they accept out-of-state licenses and reduce unnecessary restrictions.

Licensing also puts a financial strain on workers, particularly those from lower-income backgrounds. In certain fields, aspiring professionals can pay thousands of dollars in training fees and spend months completing required training hours before they can legally work in Illinois.

Cosmetologists and barbers in Illinois need 1,500 hours of training to be licensed, with training costs ranging from $5,000 to $20,000. In some states, those requirements are far lower. In others, no license is required whatsoever.

To make up for pricey licenses, businesses and entrepreneurs often pass on the cost in the form of higher service prices. Reducing these requirements would allow Illinois businesses to operate more affordably, invest in growth and offer competitive prices to consumers.

Illinois already has passed four laws aimed at easing occupational licensing restrictions in fields such as cosmetology, health care and construction. This progress shows reform is both feasible and effective. But there’s more work to be done.

Illinois could improve its occupational licensing for workers by making some changes:

• Ensure licensing is essential: Regularly review state licensing regulations to guarantee they are not overly burdensome. The state of Illinois began this effort in 2019 but has not made any recommendations for reducing or removing licenses.

• Remove unnecessary licenses: Eliminate licenses for occupations that are safely practiced in at least 10 other states that do not require a license. Examples of such occupations in Illinois include hypnotist and sanitarian in training.

• Offer alternate pathways to licensing: Create apprenticeship programs, high school programming and other routes to licensure, enabling individuals to receive a license without attending expensive educational institutions.

• Allow online education: Enable online training and education programs for jobs that do not have hands-on requirements to make licensing more accessible to people who cannot attend in-person classes.

• Adopt universal license recognition: Allow individuals from other states with licenses in good standing and without criminal complaints to work in Illinois without having to requalify. There are 26 states with some form of universal license recognition.

Illinois has the chance to create a thriving business environment, benefiting workers, employers and the state economy — retaining workers and helping others to move here. Embracing licensing reform would set Illinois on a path to sustainable growth and prosperity, with a workforce and business community better able to reach its potential.

• Matt Paprocki is president and CEO of the Illinois Policy Institute.