A legislative proposal that would consolidate or eliminate licensing boards for more than a dozen occupations may be stalled until next year, but as legislators weigh public input on licensing rules, other states may serve as models for reforming occupational licensing provisions.
The issue got the attention of the General Assembly after a landmark U.S. Supreme Court decision issued last year struck down North Carolina’s licensing regulations for teeth-whitening services — potentially affecting other state-based occupational licensing programs. The decision, stating it wasn’t necessary to be a licensed dentist to provide teeth-whitening, led to a proposal before the Joint Legislative Administrative Procedure Oversight Committee that would have ended or merged licensing boards regulating acupuncturists, alarm systems professionals, athletic trainers, clinical perfusionists, foresters, laser hair practitioners, employee assistance professionals, irrigation contractors, interpreters, locksmiths, pastoral counselors, public librarians, and recreational therapists, among others.
In April, the committee decided not to recommend any major changes during the current short legislative session. “We’re still gathering information,” Sen. Andy Wells, R-Catawba, told the committee. “I’m still hearing from boards and we’re still hearing from citizens.” The committee may propose alternatives to licensing during the 2017 session.
In most cases, occupational licensing requirements require workers seeking to enter an occupation to pass industry-authorized tests, certify the completion of coursework from authorized providers, perform a number of hours of work as an apprentice, or some combination of the three.
Wells says there are more than 50 occupational licensing boards in North Carolina, and more than 700,000 occupational licenses of one form are active in the state. (A person can hold licenses for several occupations.) And yet some of these rules may interfere with the North Carolina Constitution’s acknowledgment of a “self-evident” right of residents “to the enjoyment of the fruits of their own labor.”
The Mercatus Center at George Mason University ranks North Carolina 39th of the 50 states on occupational licensing freedom, ahead of South Carolina (41st) and Tennessee (44th) but trailing Georgia (30th) and Virginia (34th).
Many states retain extensive licensing regimes. In Arizona, attorneys with the libertarian public-interest legal firm Institute for Justice filed a lawsuit on behalf of a woman accused of practicing veterinary medicine without a license because she was giving horses rubdowns. Two years later, the case is still in litigation.
Further west, California requires a state license for 177 different job categories — the most of any U.S. state and nearly twice the national average of 92 occupations. In 2012, there was an attempt to license pet groomers.
Nationally, 36 states require a person to have a license in order to be a “makeup artist.” At least five states require a license to be a “shampooer.”
But some states have undertaken aggressive reforms. In Texas and Colorado, state “sunset” commissions review occupational licensing rules and — unless the regulations are approved by the legislature — requirements for licensing are eliminated if the licensing boards cannot demonstrate that the rules “protect the public interest.” For example, a Colorado Sunset Commission eased requirements for manicurists after finding that just 90 of the required 350 hours of training for the profession centered on health and safety concerns.
In others, the process has been more targeted. In 2014 Virginia officials deregulated hair braiding, allowing people to braid hair commercially without a license from the state. The deregulation process took years. Hair braiders previously had to complete a 1,500-hour cosmetology course to qualify for a license. The state reduced the requirement to a 170-hour course before finally doing away with the rule altogether.
Support for easing licensing rules has transcended the typical left/right ideological divide.
According to the left-leaning Brookings Institution, there are “plenty of activities where licensing is unnecessary, or unnecessarily strict, which limits market dynamism and possibly social mobility, too.” For example, since laws vary from state to state, a license earned in one place often is not honored in other states. “In South Carolina, only 12 percent of the work force is licensed, versus 33 percent in Iowa,” Brookings found. While it would take 16 months of education to become a cosmetologist in Iowa, it takes half that time in New York. Census figures show that those working in licensed professions are less likely to be mobile across state lines.
A report from the Obama administration echoed similar concerns. Unnecessary licensing requirements create “substantial costs, and often the requirements for obtaining a license are not in sync with the skills needed for the job,” according to a report from Treasury Department, the White House Council of Economic Advisers, and the Department of Labor.
Historically, such requirements were used to keep certain groups from attaining upward mobility. “Whether it was the Chinese in San Francisco or blacks in the South, it was primarily a discriminatory tool to keep out competition,” said Adam Summers, an editorial writer and columnist at the Orange County Register who has studied the issue. “It’s not so much ethnically- or racially-based right now. But stringent occupational licensing still disproportionally affects the poorer or ethnic minorities.”
States with less restrictive licensing requirements have higher rates of entrepreneurship among low-income workers, concluded a study from the Arizona-based Goldwater Institute. Overall restructuring of occupational licensing laws and sunshine provisions to keep boards accountable are some steps taken at the state level.
Regular review, which includes cost-benefit assessments, was also touted as a major policy prescription in the White House report.
“Without that extra bureaucratic protection, they say, people will be exposed to unnecessary risk from bad actors,” Wells told The Insider. “That may have been true 50 years ago. But in the age of smartphones and Yelp, there may be a better way to protect consumers than more bureaucracy.”
Popular sites like Yelp, Angie’s List, Consumer Reports and others are empowering consumers, helping them locate quality practitioners. Furthermore, industry groups themselves often offer their own voluntary certification programs, allowing markets to self-regulate.
Studies from the Mercatus Center and Goldwater Institute concluded that licensing laws neither have improved the quality of service nor kept costs down for consumers. In fact, they have reduced job growth.
“The existing practitioners are the ones who benefit from occupational licensing,” said Summers, pointing to an analysis from the Reason Foundation that also ranked states’ requirements. “These are laws born of the special interest rather than the public interest.”
Moreover, Summers noted, existing businesses often are “grandfathered in” when new restrictions are placed on occupations; they don’t have to abide by the stricter regulations placed on their future competitors. The costs of those new regulations are shifted to consumers and would-be entrepreneurs.