Opinion: Daily Journal

North Carolina needs an alternative to occupational licensing

For half a century, making any reform to a state’s occupational licensing system has been nigh on impossible. How hard? In 2015, the federal Bureau of Labor Statistics could find “only eight instances of the de-licensing of occupations over the past 40 years.”

In recent months, however, the ice jam over occupational licensing has begun to break. Just since last year, several states have succeeded in implementing reforms of occupational licensing. Arizona (two reforms, one last year and another in March), Mississippi, Nebraska, Rhode Island, and Tennessee.

From eight in 40 years to six in just the past year. It suggests we’re at a watershed moment for re-examining occupational licensing, and we are.

Five reasons to chart a new way forward

For North Carolina, this is not something to watch on the sidelines. There aren’t any sidelines. North Carolina needs to devise an alternative structure to occupational licensing. Here are several reasons:

Moral. North Carolina’s constitution recognizes the inalienable right of individuals to enjoy the fruits of their own labor. Occupational licensing blocks many individuals from even entering their chosen field of labor.

Legal. The Supreme Court in North Carolina Board of Dental Examiners v. Federal Trade Commission (2015) dismantled the presumption that state occupational licensing boards are automatically immune from federal antitrust laws.

In the court’s opinion, a state licensing board may violate federal antitrust law if a controlling number of board members comprise “active market participants” regulated by the board but the board is not actively supervised by the state.

How to demonstrate active supervision by the state over licensing boards is an open question. Freeing up more occupations from barriers to entry via licensure would eliminate anticompetitive concerns at their root.

Meanwhile, the FTC has a new Economic Liberty Task Force to focus on state occupational licensing activities. Acting FTC chairman Maureen Ohlhausen announced it in a March 31 speech at George Mason Law Review’s antitrust symposium.

Primarily, the FTC’s interest in Economic Liberty will be advocacy and partnership. But as Ohlhausen made clear at George Mason, she is not averse to fighting for economic liberty in court.

It’s worth noting that a January 2017 Reason magazine profile of her said that “North Carolina Dental is Ohlhausen’s greatest achievement so far as an FTC commissioner.”

Indisputable. Fighting the many harms of occupational licensing to employment and consumers is an issue that unites thinkers across the political spectrum. For example, two of the most important recent studies on the issue came from the Institute for Justice and the Obama administration. Last year, the John Locke Foundation and the N.C. Justice Center both made similar cases for reforming occupational licensing before the Joint Legislative Administrative Procedure Oversight Committee.

Only the power of special-interest lobbies and the unique stickiness of a public-choice problem such as licensing keep it from reform.

Tangible. Six states passing licensure reforms in a year not an aberration. As they free their labor markets, North Carolina risks staying shackled to an unwieldly, highly restrictive, and patently anticompetitive approach. Those other states offer proof that eliminating unnecessary licensing is achievable.

Technological change is ongoing, and there’s a clear market interest in obtaining and communicating information about safe, quality work in many fields (licensed or not). Private providers are meeting this need across untold numbers of professions, not only through certification and credentialing organizations, but also through consumer apps and reviews.

It’s never been easier to find information about service providers. Plodding, officious state boards have never been more redundant.

Practical. The General Assembly regularly receives requests from occupations seeking special validation. This session, for example, has bills to:

Does each occupation making such a request need its own special state apparatus and barriers to entry? Obviously not.

But the frequency of such requests suggests something is lacking. North Carolina obviously needs a better way to balance protecting people’s constitutional right to work and enjoy the fruits of their labors and protecting public health and safety.

Reforms in Arizona, Tennessee, and Mississippi point the way. They offer thorough approaches to conform — and limit — the state’s involvement in an occupation to the issue at hand. If cleanliness, require inspections; if damage to third parties, bonding; if shadiness, registration; if insurance reimbursement, certification.

Importantly, they would go no further than the least regulatory activity necessary.

For North Carolina, whatever the reform, it’s past time to start working on alternatives. The all-or-nothing world of licensure is coming to an end.

Jon Sanders (@jonpsanders) is director of regulatory studies at the John Locke Foundation.