by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor, John Locke Foundation
This week the Institute for Justice issued a comprehensive report on occupational licensing across the United States. The study, written by Dick M. Carpenter II, Lisa Knepper, Angela C. Erickson, and John K. Ross, focused especially on the burdens occupational licenses place on low-income workers.
The authors discussed the 50 states and the District of Columbia’s approaches to 102 different lower-income occupations. Their analysis involved taking account of not just whether an activity is licensed in a state, but also how difficult that license is to obtain; i.e., how many and how high are the hurdles that prospective workers must overcome to obtain state certification.
In their analysis, North Carolina was the 21st most burdensome state regarding occupational licensing. N.C. licensed nearly half (48) of the 102 low-income occupations and required, on average, $180 in fees, 250 days spent on occupational education, and one exam.
The IJ report was dismissive that the stated rationale for all this licensing — protecting the health and safety of the public — was really the basis for most of the licenses. The authors noted that only 15 of the 102 occupations they looked at required licensing in 40 or more states, with the implication being that the bulk of the licensed activity isn’t considered a threat to health and public safety in several states and probably shouldn’t be in the others. Emergency Medical Technicians (EMTs) are licensed in all 50 states and D.C., but that occupation is relatively easy to get into compared with, e.g., interior designers:
Quite literally, EMTs hold lives in their hands, yet 66 other occupations have greater average licensure burdens than EMTs. This includes interior designers, barbers and cosmetologists, manicurists and a host of contractor designations. By way of perspective, the average cosmetologist spends 372 days in training; the average EMT a mere 33.
Instead, the report saw that the protection offered by the licenses was that of shielding people and firms already in the licensed occupation from competition. The burdens they impose "are often severe, arbitrary, and irrational." Their cumulative effect works especially to keep out lower-income workers and would-be entrepreneurs who are less able to afford the expense of money and time chasing the licenses. The answer, therefore, is to remove the hurdles and watch what happens next:
Reducing the breadth and burden of occupational licensure could help states realize significant economic benefits by freeing job-seekers to enter new occupations and enabling entrepreneurs to create new enterprises.
It’s a conclusion quite similar to that offered by the John Locke Foundation recently in our Agenda 2012 report. The section on "Occupational Licensing" discussed the state’s heavy involvement in the practice and noted, for example, that "Most occupational licensing is favored by individuals already in the regulated industry. They are helped by restrictions and hurdles to entry faced by potential competitors on the outside."
It concluded with a call to "Reform North Carolina’s licensing structure; abolish some licensing boards and reform and merge others to bring about more jobs and lower costs." JLF President John Hood’s well-received new book, Our Best Foot Forward: An Investment Plan for North Carolina’s Economic Recovery, discusses reform of occupational licensure in N.C. in his chapter on "The Regulatory Tax on Business" (see pages 98-99). Expect to hear more about occupational licensing in North Carolina shortly as part of the Carolina Cronyism series.
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