Undocumented immigrants contribute significantly to the United States economy but have yet to be fully integrated into our society.
In many states, they are not eligible for driver’s licenses; not eligible for unemployment and pension benefits; less likely to be covered by health insurance; and more likely to take up low-wage jobs—in part because occupational licensing laws requiring legal work status lock them out of higher paying jobs.
Ostensibly, occupational licensing requirements ensure that professionals have met certain standards of education and training and are qualified to perform their jobs. However, many professional licenses also require legal work status, a condition that has no bearing on actual skill levels.
For example, an undocumented immigrant who is certified as a midwife in her home country would be unable to acquire a license and practice in the United States because of her nonresident status. From this perspective, occupational licenses are preventing our economy from drawing upon existing skills, training, and experience. Qualified professionals are barred from entering the workforce.
In this paper, Bobby Chung, assistant professor of economics at St. Bonaventure University, documents the benefits of lifting occupational license restrictions on undocumented immigrants. For his research, he leverages a 2014 policy change in California. Before the change, licensing boards only considered applicants that had social security numbers, which undocumented immigrants do not have. The 2014 legislation instructs boards to accept federal taxpayer identification numbers as an alternative. It also prohibits the 40 state licensing boards from denying a license application based on citizenship or immigration status.
Chung compares the undocumented population’s employment status in California with that in other states before and after the policy change. He finds that the CA policy change increased employment among undocumented immigrants. He also finds that the undocumented workers filled labor shortages—that is, they did not crowd out US-born workers or documented immigrants.
As Chung explains, the previous legal work status requirement restricted labor supply and created shortages. Lifting it fulfilled unmet demands instead of displacing existing job opportunities.
If policymakers and regulators would remove this one unnecessary licensing requirement, they would improve employment outcomes and living standards for thousands of undocumented immigrants and make a sizable dent in the ongoing labor shortage.