In America today, nearly 25 percent of jobs require licensure. In the name of consumer protection, states have delegated occupational licensure to professional associations, which then decide how high a fence to erect around the profession. Given that licensure is overseen by practitioners and results in double-digit percentage increases in income, the usual answer is pretty high. As one commentator recognized, the way states run occupational licensure is “roughly akin to requiring the Commodity Futures Trading Commission to be run by active options traders.”

When I last lambasted licensure, I focused on ridiculous requirements for hair braiders and interior designers, leaving health care alone. But since nearly 70 percent of health care jobs now require licensure, it’s time for another look. By adding friction to obtaining jobs in the largest sector of our economy, occupational licensure has become a major driver of American inequality — and a telling symptom of a larger problem.

The U.S. departs dramatically from other developed countries in the licensure of entry-level health care workers, as well as jobs delivering care that is objectively low risk. In Europe, health care support roles called “assistant” or “aide” aren’t licensed and are an accessible point of entry to health professions. 

But to be licensed as a physical therapy assistant (PTA) in the U.S., all states require an associate’s degree accredited by the Commission on Accreditation in Physical Therapy Education (CAPTE, a fitting acronym for a profession subject to regulatory capture). These degrees require five semesters of study and include courses in anatomy, physiology, exercise physiology, biomechanics, kinesiology, neuroscience, clinical pathology and behavioral science. Meanwhile, here’s what PTAs are actually permitted to do:

• Help patients exercise and stretch, but notably not for “interventions … such as spinal and peripheral joint mobilization … and wound management”;

• Observe exercises and record progress; and
  
• Perform clerical tasks.

While there’s no question this coursework should be required for physical therapists themselves — who, thanks to credential inflation mandated by state PT boards, now must obtain doctoral degrees — I can find no supporting evidence from CAPTE or state PT boards on why five semesters of coursework in anatomy, physiology and neuroscience should be required to help patients do exercises designed by licensed PTs, particularly when assistants can work only under their direct supervision. There also seem to be no studies demonstrating that PTAs with associate degrees perform better or provide better consumer/patient protection than those without, or why relevant experience — say, as an athlete or personal trainer — might not be equivalent to sitting in a classroom for five semesters. 

Occupational licensure is another example of failure of American state capacity. As Ezra Klein noted recently in the New York Times — citing a 2021 paper by Brink Lindsey, the director of the Open Society Project at the Niskanen Center — the effectiveness of our government has been sideswiped by two forces coming from very different directions: knee-jerk anti-statism from the right; and from the left, a fetish for process at the expense of outcomes. 

The former has been obvious since the rise of Ronald Reagan. The latter, Klein explains — now citing University of Michigan’s Nicholas Bagley — has arisen because the Democratic Party is “dominated by lawyers. [Joe] Biden and Kamala Harris hold law degrees, as did Barack Obama and John Kerry and Bill and Hillary Clinton before them. And this filters down through the party. ‘Lawyers, not managers, have assumed primary responsibility for shaping administrative law in the United States,’ Bagley writes. ‘And if all you’ve got is a lawyer, everything looks like a procedural problem.’” And if you’ve got a solution with enough procedure, no need to worry about outcomes — such as, say, supply of housing or refining capacity or employability of college grads.

Let me tell you, there’s a healthy amount of procedure involved in PTA licensure. In addition to earning an associate’s degree, PTAs must complete applications requiring notarized documents, criminal background checks, character references, in-person interviews, and passing a licensure exam. As for the degree itself, CAPTE’s accreditation requirements span 34 pages, eight standards, and over 100 elements, including maintaining accurate information regarding accreditation status on the program website. With so much procedure, it’s got to be good, right?

In fact, the negative externalities are legion. Requiring licensure and a degree for entry-level positions in low-risk health professions raises the cost of health care without any demonstrable improvement in quality — and may actually result in worse outcomes due to less availability of care. And, it can exacerbate inequality by benefiting those who have established themselves in the profession while deterring aspiring PTAs, who then may be steered into lower-paying positions that don’t require a license. 

State licensure also severely restricts interstate mobility, which makes little sense in an era of telemedicine. Last but not least, it further erodes government legitimacy — already under constant barrage from the right. As Klein says (quoting Bagley), “Legitimacy is not solely, not even primarily, a product of the procedures that agencies follow. … Legitimacy arises more generally from the perception that government is capable, informed, prompt, responsive and fair.” Multiply the PTA licensure and degree requirements across dozens of entry-level, low-risk health care jobs that should be easy stepping stones to economic advancement and it’s clear why tens of millions of potential voters have checked out.

States more interested in the welfare of their citizens than in continuing to make an ideological point about government ineffectiveness have two options. They can withdraw their delegation of licensure to captive professional associations. Given the certain pushback to that option, an easier step for entry-level, low-risk professions may be legislation requiring that licensing boards provide alternative pathways to licensure — pathways that require candidates to demonstrate relevant experience or mastery of relevant competencies (i.e., helping patients stretch, not passing an anatomy class). 

Tuition-dependent colleges will yell and scream, especially in the context of secular enrollment decline. But let’s hope most are sufficiently mission- and civic-minded to recognize the many problems spawned by state licensure, coupled with unnecessary degree requirements.

Ryan Craig is managing director at Achieve Partners, a New York-based private equity firm that makes investments in companies operating in technology, health care and business services. He is the author of “College Disrupted” and “A New U: Faster + Cheaper Alternatives to College.” Follow him on Twitter @ryancraigap.