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Research Update: How Restrictive Should N.C. Make Its Licensing of General Contractors?

Justified or arbitrary? JLF’s Jon Sanders assesses potential new rules for general contractors:

A bill before the General Assembly (Senate Bill 55) would create new continuing education requirements for general contractors. Currently, the state doesn’t require any continuing education for general contractors. So right from the start, this bill would raise costs on being a general contractor in North Carolina.

There are other problems with this idea. First of all, requiring a license for general contractors to start with. Twenty-three states (nearly half of U.S. states) don’t require that general contractors be licensed.

Can the state protect occupational freedom in general contracting instead? If other states can, why can’t North Carolina? The concerns being overaddressed by licensing in North Carolina could probably be addressed through registration with the Secretary of State.

Even within a field that’s licensed, however, research shows that imposing higher costs harms employment and job creation in that field. The stricter and more costly the occupational regulation, the more it dampens job growth in that field.

Does this need to be said? The state should not be imposing arbitrary costs that would harm employment and job creation. North Carolina’s decision to license general contractors seems arbitrary already, given that about half the states find they can do without it. But then to raise costs on it?

Research also shows that these arbitrary limits on employment and job creation impose harm on consumers, especially lower-income consumers. Why? Because when there are fewer suppliers of a service, the ones who are around to do the work can charge higher rates, and these higher costs make consumers seek out riskier alternatives to licensed work.

Does this need to be said? The state should not be imposing arbitrary costs that would lead to higher service rates on and riskier choices by consumers, either.

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