Remote Work Disrupts State Occupational Licensing: The $1.6 Trillion Regulatory Federalism Challenge

Abstract

States regulate professional services using occupational licensing regimes instituted pre-1900 when services were completely internal commerce of states. Now, services flow digitally across state lines along national internet infrastructure, raising new Constitutional questions of state vs. federal regulatory jurisdiction. Using state administrative data and occupational digitizability indicators, we estimate that a mean across the 50 states of 35% of state-occupationally-licensed workers can remotely deliver their services with value totaling $1.6 trillion in 2024. This threatens state policy-maker jurisdiction over occupational regulation and spotlights the digital era federalism conflict between state sovereignty and national regulatory coherence in an increasingly de-spatialized economy.