Policy Position

Occupational Licensing

in Government Regulation
Featured Image

Introduction

Everyone in North Carolina has a self-evident, inalienable right to “the enjoyment of the fruits of their own labor.” That is according to North Carolina’s Constitution, Article I, Section 1.
A person shouldn’t have to petition and pay the state before he or she is allowed to enjoy a self-evident, inalienable right. At its core, however, that is what an occupational license requires. Perhaps there are legitimate safety concerns behind an urge to license. But there are many other ways to ensure safety and quality before taking that extreme step.

Key Facts

  • Occupations come under state licensing supposedly to ensure safety and quality of service work.
  • The most consistent finding in academic research literature on occupational licensing is not that it ensures safety and quality, however.
  • Instead, it is that licensing boosts the earnings of those already in the profession by limiting the supply of competitors and driving up the price of service.
  • Getting a license involves costs in money and time: satisfying educational credits, logging job experience, passing required exams, and paying license and renewal fees.
  • These costs are very large hurdles for the poor, the less educated, minorities, mothers returning to the workforce, relocated military families, and older workers seeking a new career.
  • Employment within an occupation grows 20 percent faster in states where it is not subject to licensure than in a state where it is.
  • But states can hardly agree what occupations need licensing. Of over 1,100 state regulated professions, only 60 (a little over 5 percent) are regulated by all states.
  • That means there is widespread disagreement over whether any particular licensed profession actually poses a significant risk of harm to the public.
  • North Carolina is one of the more aggressive states in terms of licensing occupations. Crossing the border into South Carolina reduces the number of licensed occupations by about two-thirds.
  • According to the landmark White House report on occupational licensing released in 2015, 22 percent of North Carolina’s work force is licensed by the state.
  • In August 2014 the State Auditor identified 57 occupational licensing boards with over 565,000 licensees.
  • From 1901 to 1969, North Carolina added a new occupational licensing agency about once every three years. From 1970 to 2008, the rate of creating new licensing agencies in North Carolina accelerated to about one every 10 months.
  • Occupational licensing has grown so entrenched in North Carolina that it is difficult to get a complete accounting of licensing boards, let alone of licensed job categories.
  • In December 2014 the Program Evaluation Division (PED) of the General Assembly identified 55 occupational licensing agencies in North Carolina. Among other things, PED found insufficient oversight of the agencies and recommended review and consolidation of several of them.
  • The State Auditor also found that oversight of the (57) boards was ineffective, that their performance was unmeasured, and even that the official listing of boards was incomplete.
  • If there are legitimate safety concerns in a profession, policymakers don’t have to choose between the policy extreme of licensing or nothing. There are several options that preserve occupational freedom (see chart).
  • Notably, voluntary certification addresses consumers’ health and safety risks while not prohibiting entry into one’s chosen field. We see voluntary certification in action all the time, such as by Underwriters Laboratories, Good Housekeeping, and the Better Business Bureau.
  • Industry-specific examples of certification include the National Institute for Automotive Service Excellence for mechanics, the Associated Locksmiths of America, and the Behavioral Analyst Certification Board.
  • In fact, there is even certification for private certification programs themselves, such as by the National Organization for Competency Assurance and the American National Standards Institute.

Recommendations

  1. Subject licensing boards and their licenses to sunset with periodic review, eliminating questionable ones.
  2. Seek policy options other than licensing first, with a strong preference for respecting the freedoms to work and to choose.
  3. Expand recognition of other states’ licenses.
  4. Work with boards to reduce fees, education/experience requirements, and examination requirements when possible.

Data

How To Protect Consumers and Freedom, Too

Donate Today

About John Locke Foundation

We are North Carolina’s Most Trusted and Influential Source of Common Sense. The John Locke Foundation was created in 1990 as an independent, nonprofit think tank that would work “for truth, for freedom, and for the future of North Carolina.” The Foundation is named for John Locke (1632-1704), an English philosopher whose writings inspired Thomas Jefferson and the other Founders.

The John Locke Foundation is a 501(c)(3) research institute and is funded solely from voluntary contributions from individuals, corporations, and charitable foundations.