Unemployment postrecession remains stubbornly high, yet states throughout the U.S. have been requiring that an ever increasing fraction of workers be licensed before they can offer their services or open a business—about 30% today, up from just 10% in 1970, according to thorough studies by the University of Minnesota professor Morris Kleiner. And the problem is concentrated in the services sector, where roughly 80% of Americans (an even higher fraction if government employees are excluded) actually work.
A version of this article appeared in the April 2012 issue of Harvard Business Review.