Yesterday I blogged about a Vermont-licensed funeral director blocked from getting a license in North Carolina on the grounds that Vermont’s licensing requirements aren’t considered “substantially similar” to North Carolina’s. I pointed out that an effect of this decision is to deprive bereaved consumers of a wider range of cost and service options.

What if bereaved families, rather than a Raleigh bureaucracy, could decide whether their choice in funeral director has had enough training to suit their needs? What if state law allowed North Carolina families to choose even a funeral director from Vermont, if they provided evidence that they knew going in that the funeral director wasn’t licensed in North Carolina?

Occupational Licensing Consumer Choice Act

An idea presented to Texas legislators would provide that change. It is model legislation called the “Occupational Licensing Consumer Choice Act.”

Under its provisions, a service professional in a field licensed within the state would retain the right to earn a living even without an occupational license by providing consumers with a non-license disclosure prior to agreeing to do work. Consumers could then knowingly choose someone whose professional credentials in a state-licensed profession would include other things, including another state’s license, but not a state license.

So, for example, a grieving family in North Carolina could choose a Vermont-licensed funeral director if the funeral director had fully informed them of his out-of-state credential and lack of North Carolina license.

The director would be able to give the family a non-license disclosure form to sign prior to providing his services, informing them that he lacks a North Carolina license while stating his other professional credentials and training.

Knowledge imbalance vs. choice imbalance

After all, one of the service quality issues that occupational licensing is supposed to solve is a knowledge imbalance. It does so, however, by imposing a choice imbalance — removing consumers’ range of preferences for service professionals’ training, education, experience, and skill levels in favor of the licensing board’s one-size-fits-all dictate. (Not to be overlooked: the amount of expertise a consumer may seek in a service professional could also depend on the size and importance of the job.)

The non-license disclosure would attest to the fact that the consumer was informed about what professional qualifications he was choosing. The professional must be able to produce a disclosure signed by both parties if asked by authorities, and it would provide a positive defense to any licensing regulation.

It would not overturn state licensing regulations. In fact, it would provide a market test of them. If consumers found them preferable, they would demonstrate it by their choices; that is, through revealed preference. On the other hand, it could provide evidence that consumers don’t find a particular license that necessary at all.