John Locke Update / Research Brief

New report on occupational licensing makes a strong case for reform

posted on in Law & Regulation, Rights & Regulation
Featured Image

The burdens of occupational licensing in North Carolina are harmful to military veterans and military spouses, and the General Assembly needs to act. That’s according to a new report from the legislature’s Program Evaluation Division (PED).

The PED report makes a strong case for changing the law to help veterans and military spouses struggling because of occupational licensing burdens. But as I see it, it does even more.

Yes, we should ease licensing burdens on veterans, military spouses, and also other struggling workers

The report states:

Occupational licensing regulations can be difficult to navigate for military service members transitioning to the civilian workforce. Service members on active duty often receive extensive training that is approximately equivalent to the credentials required to secure civilian employment, yet lengthy licensure processes can place undue burdens on military applicants. For military spouses, frequent moves between states often mean reapplying for licensure every few years.

It doesn’t take much to put that in a broader perspective:

Occupational licensing regulations can be difficult to navigate. [Workers moving to North Carolina often have] extensive training that is approximately equivalent to the credentials required to [find] employment [in their desired field of work], yet lengthy licensure processes can place undue burdens on [them]. For military spouses [and others], frequent moves between states often mean reapplying for licensure every few years.

Do you see the underlying problem? North Carolina’s occupational licensing regulations don’t just block and frustrate veterans and military spouses. They affect workers and would-be workers from a multitude of backgrounds.

The report identifies several fundamental problems with North Carolina’s occupational licensing regulations:

  • They’re difficult to navigate
  • They don’t count “approximately equivalent” training or take into account working expertise
  • Licenses take too long to get
  • This delay causes “lost income for the family” as well as “lost tax revenue for the government” since applicants can’t start work without the license

Those are some of the reasons why North Carolina needs to promote occupational freedom first. There are bigger reasons, too. Occupational licensing puts many barriers to entering a profession, limits the supply of competitors, drives up consumer costs, discourages innovation, tamps down job growth, and slows economic growth.

Yes, you can regulate occupations without going to the extreme of licensing

The report’s “Background” section links the severity of occupational regulation with “the perceived level of threat to the public of unregulated practice.” This report lists three levels of regulation — licensure, certification, and registration. As shown in the report’s Exhibit 1, licensure is the “Most Restrictive,” used when the risk to public welfare is “High.”

The John Locke Foundation has long pointed to several less restrictive policy alternatives to licensing (see the list and chart below). Like PED, we recognize a graduated policy response. Ours begins with occupational freedom, but should state regulation should prove necessary, licensing must be the policy of last resort. The policy alternatives are highlighted in bold below:

The state’s default policy option should be occupational freedom, trusting competitive forces, consumers, information providers, and the courts. If legitimate, serious safety concerns are identified, policymakers have several policy options other than licensing that still preserve occupational freedom. The keys are to match the regulation to the concern and then go no further.

Options include greater powers to the attorney general and the deceptive trade practices act, inspections, bonding, registration, and recognition of certification. Unlike licensing, none of those policy options would preclude North Carolinians from enjoying their self-evident right to the enjoyment of their own labor.

Adopting this approach would benefit job-seekers from all backgrounds, including veterans and military spouses. It would also benefit consumers and the economy overall.

Yes, occupational licensing really is extreme, so let’s check if it’s really necessary

The PED report makes it crystal clear that the reason for occupational regulation is protecting public safety. It lists three objectives behind occupational regulations: protecting the public from “unscrupulous, incompetent, and/or unethical practitioners,” assuring the public that practitioners are “competent,” and disciplining errant practitioners.

Importantly, the report points out this: “Determination of the most appropriate form of regulation for each profession is generally made based on the perception of potential threat to public health, safety, and welfare.”

As you can see from the report’s Exhibit 1 above, licensing is reserved for the occupations posing the highest perceived risk to public health, safety, and welfare.

That means that the grounds for debate over whether a practice should be licensed is whether the risk is correctly perceived and can only be managed by licensing. The tests are:

No, insurance reimbursement isn’t a good reason for licensing

It also means that, when emerging medical practices ask for licensure from the General Assembly on the grounds that they can’t get medical insurance reimbursement, the answer must be “No.” Going to the extreme of licensing just to help a discipline get medical insurance reimbursement doesn’t meet the state’s interest in licensing.

Is there a way that isn’t occupational licensing for the legislature to help a discipline get medical insurance reimbursement? Yes. Create what’s called a specialty occupational license for medical reimbursement.

Similar to recognizing certification, this specialty license would be a credential from the state determined by meeting certain qualifications, which would allow for medical reimbursement without disputes over scope of practice. It wouldn’t prevent practitioners without that credential from practicing, just from qualifying for insurance reimbursement.

Here’s hoping the General Assembly will take these other aspects of the PED report to heart as they reconsider how — and how extremely — North Carolina engages in occupational regulation.

 

For more information and for good ideas adopted in other states, see:

 

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… ...

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.