The U.S. is a continent-wide single market with free movement across state lines. This has driven economic development since the 19th century. It encouraged mass production, national distribution and labor mobility.
That calculus is changing as services, from home repair to hospitality to health care, make up a bigger chunk of personal spending and a higher proportion of jobs. You can still build a successful enterprise that spreads costs over a huge customer base — see Amazon.com Inc. or Alphabet Inc. (Google) — but many of today’s service jobs are done directly for consumers. They’re in-person and inherently local. Physical therapists and personal trainers can’t telecommute. That makes where people live all the more important to their incomes.
Economists worry that Americans are not moving to where their skills are most in demand. Migration rates have been dropping since the 1980s. The states with the highest incomes also used to have the fastest-growing populations, as Americans moved to places with better jobs. That’s no longer the case. Workers seem stuck.
“The interstate migration rate is half of what it was in 1980,” says Janna E. Johnson, an economist at the University of Minnesota’s Humphrey School of Public Affairs. One factor appears to be the high cost of housing in the most productive parts of the country. Another is the spread of occupational licensing.
About one in four Americans work in jobs that require licenses, up from a mere 5 percent in 1950, and the requirements continue to expand to new occupations. Each state determines its own licensing requirements, so a licensed professional in one state may find it hard to move to another.
Under its Commerce and 14th Amendment powers, Congress should place sharp limits on state licensing, and require reciprocity on those fields that are licensed.