JLF Research | Spotlights

Guild By Association: N.C.'s Aggressive Occupational Licensing Hurts Job Creation and Raises Consumer Costs

Jon Sanders
Jan. 28th, 2013
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  • North Carolina features over 50 occupational licensing boards. The state licenses more occupations than most other states and is one of the more aggressive in licensing jobs for the poor or less educated.
  • At its core, an occupational license is a grant of permission from the government to an individual to enter the field of work he desires.
  • The supposed purpose for occupational licensing is to ensure safety and quality. In practice, its motivation is to protect current members of a profession from competition and thereby make them wealthier. Its costs are dispersed among consumers and would-be professionals blocked from the field.
  • Economists studying occupational licensing generally find it restricts the supply of labor and drives up the price of labor and services. They find similarity between licensure and medieval guilds.
  • Licensing has grown tremendously. In the 1950s, nearly one in 20 workers needed a government license; now that number is approaching one in three.
  • Research is mixed over whether licensing actually has a positive effect on safety or quality. States differ greatly over which occupations even need state licensure.
  • Without state licensure, who would ensure safety and quality? Private providers of reviews and certification, internet sites and consumer applications, social media, and competitors and market forces. The government would still enforce safety and quality through the court system.
  • This report recommends six ways to de-guild North Carolina's economy:
  1. Reduce the number of licensing boards and licensed job categories.
  2. Reform and merge licensing boards.
  3. Encourage reciprocity.
  4. Apply a principle of 'least-cost state.'
  5. Enact sunset provisions with periodic review for current licensing boards.
  6. Enact sunrise provisions for any future licensing board.

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