by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
My first entry in this series looked at the Right to Earn a Living Act’s finding that the right to work is a fundamental civil right. I explained why that’s not a revolutionary statement in North Carolina at all.
This entry explores the next finding.
The second finding recognizes the positive personal and social results from respecting that foundational civil right to the enjoyment of the fruits of one’s own labor:
The freedom to earn an honest living traditionally has provided the surest means for economic mobility.
Freedom to earn an honest living has several other names: Entrepreneurship. Free enterprise. Labor freedom. Right to earn a living.
All of these names strike the same idea that Adam Smith, the “father of economics,” hit upon when he wrote in 1776:
The property which every man has in his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable.
The patrimony of a poor man lies in the strength and dexterity of his hands; and to hinder him from employing this strength and dexterity in what manner he thinks proper without injury to his neighbor, is a plain violation of this most sacred property.
Smith wrote that in The Wealth of Nations (Book I, Chapter X, Part II). He was arguing against occupational licensing’s dream-killing predecessor, the guild system. Freedom to earn an honest living is, in Smith’s view, a paramount property of the poor because they have no other way to earn and acquire. Hindering it is “a plain violation of this most sacred property.”
Indeed, the most striking aspect of this “ladder out of poverty” effect of free enterprise is that it’s greater for poor areas:
[There are] many hurdles that end up disproportionately blocking poorer would-be professionals from pursuing work in licensed professions. But especially if they’re from poor communities, they’re not the only ones effectively denied by being priced out this way. Their neighbors are also denied a chance to enjoy needed community growth from local business activity.
Research shows that local entrepreneurs provide a “double dividend” in low- and moderate-income communities. As Federal Reserve Bank of Kansas City economist Kelly Edmiston explained, “Entrepreneurial activity not only provides income to the entrepreneurs and perhaps others in the community, but also provides needed goods and services.”
It can be difficult to imagine what isn’t there but could be. How are we in an aggressive licensing state to conceptualize the lost entrepreneurship opportunities, the lost “double dividends” in low-income communities?
Research by University of Minnesota labor economist Morris Kleiner, the nation’s foremost expert in occupational licensing, estimated that these lost jobs and higher consumer costs nationally could be as steep as “2.85 million fewer jobs with an annual cost to consumers of $203 billion.”
If you view his estimates from the reform side, they suggest possible large gains in jobs and consumer savings. Kleiner writes that current evidence suggests that
substantially reducing occupational licensing … could translate into significantly higher employment, better job matches, and improved customer satisfaction. Low-income consumers, in particular, would benefit because reduced barriers to entry would reduce the prices of services provided.
Producing public policies that benefit all of society, but especially the poorest areas, would be another highly compelling reason to reform occupational licensing in North Carolina.
Posts examining the Right to Earn a Living Act:
Part 1: A fundamental civil right
Part 2: A well-known path up from poverty
Part 3: Legitimate vs. arbitrary regulation
Part 4: Fewer jobs, higher prices
Part 5: Greater burden for poor workers and consumers
Part 6: Three main objectives
Part 7: Defining the terms
Part 8: A very high bar
Part 9: Defending the decision to license
Part 10: Challenging the decision to license
Epilogue: Securing rights on the local level, too