September 21, 2017
RALEIGH — North Carolina risks losing ground economically to other states unless it reforms its current approach to occupational licensing. The state also faces the threat of federal legal action. A new John Locke Foundation Spotlight report delivers those warnings.
The report recommends reforms aligned with those in model legislation dubbed the Right to Earn a Living Act.
“While several states have made sweeping reforms to their occupational licensing rules in recent years, North Carolina risks being left shackled to an unwieldy, highly restrictive, and patently anticompetitive approach,” said report author Jon Sanders, JLF Director of Regulatory Studies. “The risk is not just being passed by states with more competitive labor practices. The risk is also from federal antitrust and other enforcement actions.”
Sanders supports what he calls a “Right to Work Act approach” to licenses for jobs in North Carolina. Tennessee and Arizona have both enacted a Right to Work Act.
“North Carolina’s approach should include principles that, first and foremost, protect competition and the constitutional right to work,” Sanders explained. “The approach also should emphasize narrowly tailored regulations that address legitimate concerns, the least-restrictive regulations necessary to address those concerns, and an array of policy alternatives to licensing.”
Regulation of jobs in North Carolina “tends to be an all-or-nothing thing,” Sanders said. “Either the state applies the most extreme form of regulation — licensing — or it mostly leaves the occupation alone.”
This means that North Carolina licenses more occupations than most states, Sanders said. It also means that industry interest groups often ask for licensure when they want the legislature to address problems in their businesses. “It seems like the only way to fix the problem.”
North Carolina’s approach also leaves the state at risk of federal antitrust violations, Sanders said. He cites the example of a 2015 U.S. Supreme Court ruling against the N.C. Board of Dental Examiners.
Now the Federal Trade Commission has started a new Economic Liberty Task Force, Sanders said. “It focuses on state occupational licensing activities, and some observers expect an increase in FTC actions involving licensing boards.”
U.S. Labor Secretary Alexander Acosta also has signaled the Trump administration’s interest in building on licensing reform efforts started under Barack Obama. “In a July speech, Acosta urged state legislators to limit licensing only to where it is clearly necessary to address compelling health and safety concerns,” Sanders said. “The federal government’s interest in state occupational licensing reform doesn’t appear to be a passing fancy.”
State lawmakers see new bills filed every year to expand licensing requirements. At the same time, the effort to scale back licensing rules has been difficult across the country, Sanders said. “A 2015 federal report identified just eight cases of occupations being delicensed in the previous 40 years across the 50 states.”
The political landscape is changing, Sanders said. Seven delicensing attempts have succeeded in the past year. Arizona, Connecticut, Nebraska, and Rhode Island all have removed some licenses. In addition to the Right to Work Act in Arizona and Tennessee, Mississippi has changed its entire approach to occupational regulations.
“These states show that modernizing a state’s approach to regulating occupations, including getting rid of unnecessary licensing, is a winning idea,” Sanders said.
Sanders reminds readers that occupational licensing blocks a person from entering a profession unless he’s cleared government-mandated hurdles. These include time and money devoted to fees, classes, exams, and criminal background checks.
“This entry regulation is a problem because North Carolina recognizes a constitutional right of people to enjoy the fruits of their own labor,” Sanders said. “That right is spelled out next to the rights of life, liberty, and the pursuit of happiness.”
The report spells out alternatives to occupational licensing. “If there’s a significant concern about protecting consumers from fraud, then enhance the powers of the attorney general and laws against deceptive trade practices,” Sanders said. “If the concern focuses on cleanliness, then require inspections. If it’s potential damage to third parties, require bonding. If it’s shady, fly-by-night providers, require registration.”
Sanders recommends certification, rather than licensing, to address other concerns. “Unlike licensing, none of these policies would preclude North Carolinians from enjoying their self-evident right to the enjoyment of their own labor.”
“Placing state entry regulations on some people’s chosen fields of labor should be a regulation of last resort, reserved only for the most extreme regulatory concerns,” Sanders said. “A state that recognizes its people have a constitutional right to ‘the enjoyment of the fruits of their own labor’ should be extra careful its laws don’t tread on that right.”
Jon Sanders’ Spotlight report, “Modernizing North Carolina’s Outdated Occupational Licensing Practices,” is available at the JLF website. For more information, please contact Sanders at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].