Anne Davis, a psychotherapist with two decades of experience working with homeless individuals and patients with mental illness in Colorado, encountered significant delays in resuming her practice after relocating to Michigan. Despite the state’s urgent need for mental health professionals, it took Davis more than a year to obtain a license permitting her to work in Michigan, a situation reflective of broader challenges posed by the nation’s fragmented occupational licensing system.

Michigan faces a critical shortage of mental health counselors, social workers, and therapists. According to the National Alliance on Mental Illness, over three million residents live in communities lacking adequate access to these professionals. However, the state’s licensing requirements have complicated efforts to address these gaps by making it difficult for out-of-state licensed practitioners to start work promptly.

This issue extends beyond mental health to numerous occupations including dentistry, massage therapy, and cosmetology, where individuals often must undergo additional training or testing after moving to a new state—even when they hold established credentials and have practiced safely for years. Licenses granted by one state are not always recognized by another, creating barriers that reduce consumer options and increase costs by limiting competition.

While every state provides some form of reciprocity for licenses from other states, this coverage is often limited or inconsistent. Professional licensure compacts exist for certain fields, such as the Interstate Medical Licensure Compact for physicians and the Nurse Licensure Compact, which facilitate mobility across member states. Michigan participates in the physicians’ compact but not the nursing compact, placing its nurses at a disadvantage compared to those in neighboring states. In early 2026, a legislative sunset clause in Michigan’s compact membership threatened approximately 8,000 physicians with license revocation before lawmakers removed the clause shortly before it took effect.

These licensing arrangements sometimes create protectionist effects, benefiting current in-state license holders by restricting competition from out-of-state professionals. This phenomenon has been noted in dentistry and other fields where licensing restrictions effectively shield incumbents.

More than half of U.S. states have adopted some form of universal recognition laws to facilitate the transfer of occupational licenses. Independent evaluations have awarded “gold medal” ratings to 10 states, including Michigan’s neighbors Indiana and Ohio, for their extensive reciprocity measures. These states have demonstrated stronger economic performance, a factor attributed in part to the ease with which licensed professionals can relocate and practice without redundant requirements.

In response to these challenges, Michigan lawmakers are currently reviewing proposals to expand reciprocity or implement broader universal recognition for occupational licenses. Such reforms aim to allow professionals already licensed and actively practicing elsewhere to begin working in Michigan more quickly, barring any justifiable reasons for denial.

Experts argue that simplifying interstate recognition of occupational licenses can help states compete for workers, improve access to healthcare, and facilitate family mobility, urging legislators to reduce regulatory barriers based on state borders. The issue reflects a nationwide need to modernize licensing systems to better align with the realities of a mobile workforce and evolving labor markets.