It’s a debate that’s raged for years—do you need a license to succeed in the accounting profession?
After completing our Contemporary Controller Study, we were surprised to find out that not a whole lot of professionals held a license. As we found, 34 percent of CFOs are active CPAs and 23 percent of controllers hold this licensure. Understandably, this isn’t the only license, with many options including Certified Management Accountants, Certified Internal Auditors, Certification in Risk Management Assurance, and more, but it was nonetheless something that caught our eyes.
But this brings up another question. Could a license help you unlock new doors—be them figurative (i.e., a promotion), or literal (using that big raise to upgrade your home)? The Alliance for Responsible Professional Licensing commissioned Oxford Economics to answer this exact question.
In their study, titled Valuing Professional Licensing in the U.S, Oxford Economics independently looked at trends across industries to see if there is a reason for licensing. In turn, the Alliance for Responsible Professional Licensing (ARPL) used this to deepen understanding of the full impact of professional licensing. Here are just some of the findings.
Licensing Delivers Results for Women and Minorities
One of the biggest results of the studies? A license narrows the gender wage gap by about one-third and the race-driven wage gap by about half. Additionally, for some, licensing delivers some significant wage growth:
- Across all professions and occupations, licensing is associated with a 6.5% average increase in hourly earnings, even after accounting for the job holder’s educational attainment, gender, and racial demographics
- Minority engineers, surveyors, architects, landscape architects, and CPAs can expect an 8.1% hourly wage increase on average after becoming licensed in their field.
- Female engineers, surveyors, architects, landscape architects, and CPAs can expect a 6.1% hourly wage increase on average after becoming licensed in their field.
Licensing and Mobility
If you’re looking to move, a license could connect you with opportunities. Using reciprocal licensing, something many fields outside the accounting profession are slow to embrace, professionals can find opportunities.
Currently, one of the biggest challenges for many is the state-based requirement.
As noted in the study, the professions of interest have made significant efforts to harmonize the system and make it easier for professionals to migrate across states. Literature on the subject finds that regulatory harmonization increases cross-border labor migration, suggesting that it is not the licensing system per se that potentially discourages mobility, but rather the different state-level requirements.
But Is It Worth It for Accounting Professionals?
With 29% of accountants cited in the study holding a license or certification, it’s worth asking whether or not it’s worth it.
“There were nearly 674,000 certified public accountants (CPAs) in the US in 2019 according to statistics by the American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA).29 According to these sources, some 15% of CPAs are estimated to be self-employed, while the remainder are employed by private or governmental bodies, in industries ranging from accounting and tax preparation to real estate.”
The accounting profession already faces a talent challenge. Skills are hard enough to find—and many firms are willing to look past the license requirements to hire someone that can deliver true skills.
An Unclear Result—What Are Your Thoughts?
On the corporate side of the equation, the licensing debate is one worth having. Do you hold a license? Do you think that it’s a benefit or a necessity? Share your thoughts by requesting access to our Slack Channel and joining the Controllers Council.
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I knew my mom would be disappointed if I didn’t get my CPA license before taking time off to raise a family. Good thing I pleased her. After a 20 year break, reactivating my license was not a problem and I had something to my name along with a degree from a recognized university. Using connections to get a job and then demonstrating my worthiness through good work habits, I have progressed from admin to staff accountant to senior accountant to a position as controller I never dreamed possible. The degree and the license were a definite boost.