John Locke Update / Research Brief

As Other States Innovate, N.C. Clings to an Outdated Licensing Regime

posted on in Law & Regulation, Rights & Regulation
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New Mexico Governor Susana Martinez has added her state to the list of states working to restore the right to earn a living to their citizens. Earlier this month Martinez signed an executive order requiring an internal review by state agencies of their licenses and licensing requirements.

The goal of this review is “determining opportunities for potential consolidation of functions, increased efficiency, cost-savings, and the elimination of unnecessary regulatory burdens and processes.”

Martinez’s rationale and reforms will sound familiar to readers of the John Locke Foundation’s work advocating occupational licensing reform in North Carolina. They include:

  • “onerous licensing requirements, excessive fees, and redundant testing requirements are counterproductive”
  • “research shows licensing requirements and fees limit economic mobility, entrepreneurship and innovation, disproportionately affecting low- and middle- income Americans”
  • “occupational criminal licensure reform has yielded positive benefits both for industry and the previously convicted individual in decreasing unemployment and reducing recidivism”
  • “expedited licensure and licensure reciprocity across state lines is particularly vital for New Mexico’s military service members, their spouses, and their dependents’ ability to obtain jobs and sustain careers”

We have discussed each of those issues for North Carolina — frequently. Read the links for recent discussions on burdensome licensing requirements, how those costs tend to be more harmful for lower-income workers and harm entrepreneurship in poor neighborhoods where it is doubly important, how it thwarts people with conviction records trying to put their lives back in order, and how it harms military spouses and makes it harder for people to move to North Carolina and set up shop.

Under Martinez’ executive order, each license review would include lists of licensing fees, education requirements, testing requirements, the national averages of those things across other states with a similar license, number of states with a similar license, whether the license includes a disqualification for a conviction record and how that is handled, how long it takes to get a license approved, what kind of alternatives to the license there could be, and how expedited licensing for military spouses may be done.

Here are some intriguing features of the license review:

  • The licensing board would have to provide written justification any time it finds a licensing requirement that exceeds the national average.
  • The licensing board would also have to justify why its license is necessary specifically for New Mexico if the same profession is licensed in only 24 or fewer states.
  • The licensing board would have to attest that a future license is “essential to protecting the health, safety, or welfare of New Mexico’s residents,” that an “enumerated cost-benefit analysis has been conducted,” that less restrictive alternatives were found to be less desirable than licensing, that the regulation is objective and evidence-based, and that it would not unduly burden the people or competition.
  • A board or commission must eliminate at least one preexisting regulation for any new one it adopts.

Intriguing and, again, familiar to JLF readers. Concerning licensing requirements more burdensome than the national average, our Policy Position on occupational licensing recommends “Work[ing] with licensing boards to make acquiring licenses less costly and burdensome.”

Going further, with respect to licenses that most states don’t bother to have, our Carolina Cronyism report “Guild By Association” urges adopting a principle of “least-cost state”:

For job categories that continue to be licensed in North Carolina, the boards should examine what other states require of licensees in those jobs and, where another state’s standards are less burdensome on prospective workers (in hours of training, for example, or in licensing fees or in ongoing license renewal), adopt the less burdensome standard. By extension, this approach would entail getting North Carolina out of licensing anything that leaders in other states have left up to the free market.

We have promoted reserving licensing only for the most extreme cases when it is demonstrably necessary to “fulfill legitimate public health, safety, or welfare objectives,” when less intrusive regulations don’t work, and when they are narrowly tailored only to meet those objectives.

We have also promoted regulatory budgeting (or regulatory reciprocity) in which agencies must eliminate a number of old rules in exchange for a new one.

The Revolution Will Not Be Tar Heel–ized?

The de-licensing revolution is spreading. New Mexico is the latest to join. Oklahoma is also beginning a comprehensive review of its licensing structure. New Hampshire, Louisiana, Michigan, and Ohio are all considering bills to curtail occupational licensing and restore people’s right to earn a living.

When will North Carolina join in?

Jon Sanders is an economist studying state regulations, that spreading kudzu of invasive government and unintended consequences. As director of regulatory studies and research editor at the John Locke Foundation, Jon gets in the weeds of all kinds of policy… ...

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