John Locke Update / Research Brief

N.C. Should Replicate Ohio’s Occupational Licensing Reforms

posted on in Economic Growth & Development, Law & Regulation, Rights & Regulation
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The De-Licensing Revolution continues to progress through the states. Ohio is the latest to implement a significant reform — yet another one that will sound familiar to those who know the John Locke Foundation’s long advocacy for streamlining and modernizing North Carolina’s outdated occupational licensing regime.

Nick Sibilla writes about it for Forbes:

Signed by Ohio Gov. John Kasich on Friday, SB 255 dramatically reforms the state’s occupational licensing laws, which together have become one of the biggest barriers to job creation and upward mobility in the Buckeye State. …

Under the bill authored by Sen. Rob McColley and Rep. Ron Hood, all state licensing boards will expire every six years unless they are explicitly renewed by lawmakers. Prior to a board’s end date, the board must prove to legislative standing committees that there is actually a “public need for its continued existence.” In a rigorous “sunset” review, the Legislature will determine whether a board is “necessary to protect the health, safety, or welfare of the public” and whether its regulations are “the least restrictive form” that “adequately protects the public interest.” …

Sunset reviews will also analyze a board’s staff, its budget and its enforcement actions and conclude whether the board has “inhibited economic growth, reduced efficiency, or increased the cost of government.” One-third of the state’s licensing boards will be reviewed every two years.

Any proposed occupational regulations will have to undergo a similar “sunrise” review process by Ohio’s Legislative Service Commission. The Commission will evaluate the proposed regulation’s potential effects on economic opportunities and costs to consumers and compare the proposal with other states’ regulatory schemes.

Backers of the proposed regulation would be expected to provide evidence of “present, significant, and substantiated harms to consumers in the state” and explain why current laws are “inadequate.” …

My 2013 Carolina Cronyism report on North Carolina’s occupational licensing system concluded with several reform proposals. Among them were:

5. Enact sunset provisions with periodic review for current licensing boards

The idea of once licensed, always licensed would be poor public policy; periodically reviewing the add-ons of state government is good public policy to ensure that things thought necessary years ago are still a going concern. The legislature should have all licensing boards slated to sunset (a set number per year) in order to ensure that their ongoing existence can be justified. …

6. Enact sunrise provisions for any future licensing board

Placing more job categories under state licensure is an aggressive act that should be done circumspectly and with proper deliberation to demonstrate it is absolutely necessary. A principle of If it ain’t broke, don’t fix it should apply. Creating a new licensing board should happen only after it has been demonstrated that there is a decided health, safety, or quality issue in the market that warrants licensure to solve. So those who favor the creation of a new board should be statutorily required to prove, rather than merely allege, that the board would indeed “safeguard the public health, safety and welfare and to protect the public from being harmed by unqualified persons” before the formation of the board could be complete. This proof should describe what the alternatives to licensing were and why they were discarded and should include an objective economic analysis by a disinterested third party.

Not only is North Carolina’s occupational licensing system outdated, so is my count of states joining the De-Licensing Revolution. I didn’t update it with New Mexico’s reform, either, where I noted other states waiting in the wings. Ohio was one of those.

When North Carolina’s day comes (soon, I hope!), reform-minded lawmakers will find plenty of discussion here of the problems of burdensome licensing requirements in many ways — and how to fix them:

Looking for more information?  Our Policy Position on occupational licensing is a good place to start.

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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