The Latest on Occupational Licensing Reform

The John Locke Foundation has written extensively, and advocated aggressively for reform of North Carolina’s oppressive and burdensome regulations on occupations.

North Carolina has the 4th most restrictive occupational licensing in the country. Licensing fees cost North Carolina professionals over $67 Million a year, about 40% more than what professionals in Virginia pay. Occupational licensing has become an oppressive and costly burden, a barrier to entry to a profession, a tax on jobs, and discourages entrepreneurs and investments in the community. The economically disadvantaged are hit the hardest. It’s time to fix it.

The right direction is moving towards setting up a foundation and structure to protect public safety and health while removing barriers to enter professions and explore full work opportunities, which parts of a proposed committee substitute for HB 1007 do.

The wrong direction are those provisions in HB 1007 which increase requirements and fees for entry into professions –  for NC Medical Board, the State Board of Chiropractic Examiners, the State Board of Opticians, and Real Estate Brokers. In addition, SB 303, the House regulatory reform bill increases fees for a general contractors’ license and Board of Commercial Refrigeration Examiners.

Mandatory increases in fees behave like a tax increase from an economic perspective. It is a bad idea, which raises the barrier to entry into these professions.

House Bill 1007 restructures some of the licensing boards, moves some licenses to certification, increases transparency, makes boards more accountable and legally responsible when things go awry. This is a good idea.

Replacing licensing with certification is a very good idea. Occupational boards with fewer that 1,500 licensees by July 1, 2016 would be consolidated or move to certification on October 1, 2019. Each affected board would submit a dissolution and transfer plan to the legislature by November 1, 2017.

Setting an objective standard for review eliminates the concerns of picking winners and losers and moves the structure of occupational licensing to a more efficient, fair and transparent structure. Although some consolidation of boards is worth careful consideration, ultimately the goal should be to end the license itself, not just re-shuffling the burden and calling it something else.

Under the 1,500 licensee threshold set out in HB 1007, 23 of North Carolina’s 57 boards would be eliminated, freeing 17,717 individuals from the regulatory burden of licensing, the tax imposed on their job and move instead to certification. This is a start, a very good start.However if the threshold were raised to boards with 3,000 licensees, 32 of the 57 boards would be freeing 30,463 licensed individuals from the burden they bear for the privilege of doing their job. Only the NC Medical Board, the NC Board of Nursing, North Carolina Board of Cosmetic Art Examiners, and the North Carolina Real Estate Commission license more than 3,000 workers.

While consolidation of some of the boards, replacing licensing with certification and increasing transparency and accountability is good idea. Increasing fees and creating greater barriers to entry is not. From an economic growth perspective, mandatory fees are a tax and increasing those fees is a tax increase.

As the General Assembly winds up their work for the 2015-16 session, sunsetting occupational licensing boards, insisting on accountability, ensuring a fair and efficient system that protects the health and safety of North Carolinians while removing any barriers for opportunity for all is a very good idea.

You can find more information and JLF research on occupational licensing here.

Update – An earlier version of this entry referenced increased licensing requirements for professional engineers.  The provisions in HB 1007 do not increase the requirements or fees for professionals engineers. Their changes in HB 1007 make the requirements for licensure clearer and more easily understood. Following a new national professional engineer model law, they also offer more flexibility for testing and experience requirement after a candidate has competed an engineering degree.

 

Becki Gray / Senior Vice President

Becki Gray is Senior Vice President of the John Locke Foundation. She provides information, consultation, and publications to elected officials, government staff and other dec...

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