by Jon Sanders
Research Editor and Senior Fellow, Regulatory Studies, John Locke Foundation
The Fraser Institute’s newly released report ranking states according to economic freedom has me thinking of what could be. Mitch Kokai discusses the findings, which gives us the relatively high ranking of 14th.
Thing is, a state that boasts of being “First in Freedom” can’t be satisfied with second place, let alone 14th.
In 2015 the John Locke Foundation published its First In Freedom Index, seeing how North Carolina stands among other states in broad policy areas and finding fertile ground for reform. There remains plenty to do in regulatory policy, where North Carolina ranked 36th.
Much of that unfavorable result owed to the state’s restrictive occupational licensing regime. Unfortunately, that’s an area that has seen little* subsequent change, even as other states have been making significant, sometimes even systemwide reforms. (See a list here with additions since, given here, here, here, here, here, and here.)
I recently posted a research brief on “Some Ways for a Light, Lean, Sensible Regulatory Climate” highlighting, well, just that. Here was my entry for Occupational Licensing Reforms:
North Carolina’s state constitution recognizes everyone’s inalienable right to the enjoyment of the fruits of their own labor. Occupational licensing is the most restrictive regulation a state can place on someone trying to work in a legal occupation. It is an entry barrier making it illegal to provide any labor at all in a particular field without first obtaining a license from a state government licensing board.
Getting a license involves significant costs in money and time (paying fees, paying tuition, time spend taking mandatory classes, time spent studying, paying sitting fees for mandatory exams, paying licensing fees, etc.). These costs fall hardest on the poor, even as occupational licensing affects many low-income jobs. Because it artificially limits the supply of workers in a licensed field, occupational licensing leads to fewer options and higher prices for people who need licensed work done, and that also falls hardest on the poor.
Two structural reforms of occupation licensing include the Occupational Licensing Consumer Choice Act and the Right to Earn a Living Act. Occupational Licensing Consumer Choice retains the consumer protection aspect of licensing while fixing its entry barrier problem. Right to Earn a Living upholds a standard of least restrictive regulation necessary to accomplish legitimate state interests in consumer protection.
* I don’t mean to downplay the good done by the Freedom to Work bill, but it didn’t free up occupations from unnecessary — or unnecessarily strict — state regulation.