by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
The Supreme Court decision in North Carolina Board of Dental Examiners v. Federal Trade Commission in 2015 shattered states’ presumption that occupational licensing boards are automatically immune from federal antitrust actions. Since then, as I’ve shown in research papers and updates, several states have begun reforming their occupational licensing systems.
North Carolina hasn’t joined them — yet.
The most comprehensive reforms were passed in Arizona, Tennessee, and Mississippi. Arizona and Tennessee each passed a Right to Earn a Living Act. Mississippi’s reform was structurally very similar.
The appendices of my report on “Modernizing North Carolina’s Outdated Occupational Licensing Practices” contain the text of Tennessee’s law and the model Right to Earn a Living Act from the Goldwater Institute. Over at the John Locke Foundation’s “Locker Room” blog, I am going to take an in-depth view of the Right to Earn a Living Act, examining it piece by piece.
Basically, the act limits entry regulations into an occupation (i.e., licenses) to only those that are legitimately necessary to protect public health, safety, or welfare, and when those objectives could not be met with less burdensome means, including certification, bonding, insurance, inspections, etc. It favors policy options that preserve occupational freedom.
Here is a discussion of the act’s first two statements of findings.
An inalienable civil right
Let’s start with the statements of findings and purposes. The primary finding is this:
The right of individuals to pursue a chosen business or profession, free from arbitrary or excessive government interference, is a fundamental civil right.
This is no revolutionary statement in this state. It would require no heavy lifting ideologically from North Carolina policymakers. We already have the same basic principle inscribed in Article 1, Section 1 of the North Carolina State Constitution:
Section 1. The equality and rights of persons:
We hold it to be self-evident that all persons are created equal; that they are endowed by their Creator with certain inalienable rights; that among these are life, liberty, the enjoyment of the fruits of their own labor, and the pursuit of happiness.
A time-tested, well-known path up from poverty
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.”
As I see it, protecting a fundamental civil right and producing public policies that benefit society in general, but especially the poorest areas, are two highly compelling reasons to reform occupational licensing in North Carolina.
But there are many, many other reasons than those.