Introduction

In February 2016, three individuals went to the Minnesota House of Representatives to ask the state to create an occupational license to regulate the practice of music therapy. These were not people who had experienced or observed harms from the unlicensed practice of music therapy. They did not come bearing empirical evidence of a genuine threat to public health and safety from unlicensed music therapists. Instead, they were representatives from the music therapy industry, all privately certified music therapists themselves, arguing for licensure of their own occupation.

The industry representatives made vague, unsupported appeals to the need for licensing to protect the public, but their primary argument was that licensing was necessary so that health care organizations could more easily differentiate between music therapists and “other non-music therapy musicians in health care.” ¹ Calling licensure “a viable solution with minimal government involvement,” one industry representative said, “[w]e feel this is a low-cost approach for the government and taxpayer as we hope it will be budget-neutral.” ²

Leaving aside the arguable question of whether the music therapy license amounts to “minimal government involvement,” the belief that it would be budget neutral ignores a variety of other costs from licensure, including the costs to aspiring music therapists, to consumers of music therapy services and to the wider economy. ³

For example, under the proposal, anyone wishing to work as a music therapist would need to earn a bachelor’s degree in music therapy, complete at least 1,200 hours of clinical training, pass an exam and fulfill an ongoing continuing education requirement. ⁴

These are steep hurdles, ⁵ and clearing them requires a great deal of time, money and income forgone. Not coincidentally, they are also the requirements for private certification through the Certification Board for Music Therapists (CBMT) ⁶ —the same private body through which the three industry representatives voluntarily became certified. The lack of substantiated harms from unlicensed music therapists suggests that alternatives like private certification through the CBMT are working well to keep the public safe. At the same time, the lack of substantiated harms from uncertified music therapists suggests that fulfilling the CBMT’s requirements is not the only path to safe practice.

Yet taking the CBMT’s requirements for certification and making them mandatory forces everyone wishing to work as a music therapist to follow this same path—and shuts them out if they are unable (or unwilling) to do so. This is a loss for disappointed aspirants, for consumers who find a smaller pool of music therapists from which to choose, and for society and the economy at large as people are blocked from the occupation for which they might be best suited, forcing them to work in an occupation less aligned with their skills, interests and aspirations.

These issues are not unique to music therapy. Indeed, a body of research has shown that, by raising the costs of entering licensed occupations, licensing reduces access to jobs, restrains worker mobility between states, hinders entrepreneurship, reduces consumer choice and raises service prices—without improving consumer outcomes in terms of safety or quality.

Yet these and other costs of licensing are frequently invisible to policymakers and the public. Unaware of the costs of licensing—and of alternatives to it—and faced with insistence from members of an occupation and their professional associations that licensing is necessary, policymakers too often give in to an occupation’s demands for licenses. ⁷ The result has been rapid growth in licensing over the past several decades: Where in the 1950s, only about one in 20 American workers had a license to work, current estimates put it at between one in five and one in three. ⁸ And as licensing has expanded, so, in all likelihood, have its costs.

Previous research has explored the extent and costs of licensing. ⁹ However, because of data limitations, most of the analyses have been at the national level only, although licensing is most often a matter of state or local policy. This study takes advantage of a uniquely large dataset to estimate, at both the state and national levels, (1) how many American workers have government-mandated licenses to work and (2) four costs to the economy from licensing:

• Economic returns from licensing, or how much more licensed workers can make because licensing gives them a monopoly. These returns are costs borne by consumers and the wider economy, factoring into estimates of each of the following three costs.
• Losses in jobs due to licensing, or how many fewer jobs there are due to licensing.
• Losses in output due to licensing (also known as deadweight loss), or a conservative measure of value lost from the economy due to licensing.
• Misallocated resources due to licensing, or a broader measure of value lost from the economy due to licensing. While losses in output accounts only for lost production, misallocated resources also accounts for resources not being put toward their most highly valued use.

This study finds that roughly 19 percent of American workers now have a license to work, with individual state percentages ranging from about 14 to 27 percent. It also finds that licensing produces substantial economic returns for licensees in 36 states and nationally. For those 36 states and nationally, these returns imply large costs for consumers and the wider economy, in terms of losses in jobs, losses in output and misallocated resources. Annually, licensing may cost the national economy upwards of 1.8 million jobs, $6.2 billion in lost output and $183.9 billion in misallocated resources.

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