Licensing boards

Published September 27, 2014

by Adam Smith and Dompe, Johnson and Wales University, published in Charlotte Observer, September 25, 2014.

In October, the U.S. Supreme Court will weigh in on a dispute between the Federal Trade Commission and the N.C. State Board of Dental Examiners over just who is capable of whitening teeth. The FTC claims that the State Dental Board is hurting consumers by fining small teeth-whitening businesses for operating without a license.

The case represents a larger problem facing North Carolina: occupational licensing requirements. Licensing boards do little for safety and much to restrict competition, resulting in higher prices for consumers and fewer job opportunities – two results no state wants if it aims to support a healthy economy.

A ruling against the Dental Examiners could set an exciting precedent for North Carolina, opening up competition, driving down prices for consumers, sparking job creation and making it easier for small businesses and entrepreneurs to open shop.

Under the guise of safety and protection, occupational licensing keeps prices higher for consumers by blocking competition. The teeth whitening business provides a case-in-point: Licensed dentists charge between $300 and $700 for the service while their unlicensed competitors charge between $100 and $200.

The Board has thus provided a great service – to its dentists.

The explosion of licensed occupations that pose little risk to the public calls into question the true intent of these licensing boards. North Carolina has more than 50 state licensing boards and paradoxical as it sounds, many professions actively seek licensing because they know how profitable it can be. For example, in the 2011-12 session of the North Carolina General Assembly, musical therapists, homeopaths, herbalists and personal trainers all lobbied the state to pass licensing laws protecting their industries from competition.

Do any of these services sound like a public hazard?

Not only does occupational licensing limit job opportunities by building barriers to business formation and growth, it also places unnecessary restrictions on changing careers. This structure not only inhibits personal freedom, but is extremely harmful during economic downturns when many lose their jobs and must quickly adapt by seeking employment elsewhere.

North Carolina’s occupational licensing requirements, on average, demand 250 days of education or prior experience to obtain a license to work. How many people can afford to pay for eight months of classroom training before drawing a single paycheck?

Licensing has become an overgrown thicket of weeds that is strangling the ability of people to find work in the professions of their choice. A verdict in favor of the FTC will do more good for workers and consumers than all the state licensing boards combined.

Adam C. Smith is an assistant professor of economics and Stewart Dompe is an adjunct professor of economics at Johnson & Wales University in Charlotte.

http://www.charlotteobserver.com/2014/09/25/v-print/5200011/licensing-regulations-and-the.html

Read More NC SPIN >>

September 27, 2014 at 9:28 am
Richard Bunce says:

Yes, let the customer decide who they will hire for a service, not State bureaucrats.

September 27, 2014 at 9:43 am
Norm Kelly says:

I'm sure there are SOME licensing that makes sense. But on average, the licensing requirements are as useful as unions. Both had a place and time, and some still do. But by and large, both are useless. Both do nothing to promote job creation or innovation. Both do nothing to spur the economy. Both are simply designed to protect those already 'in' the system. In the case of unions, the purpose is also to have people who do absolutely nothing enjoy cushy positions and harass employees - they provide virtually no useful service, but get to party on a regular basis on the union's dime. I mean, on the backs of those who are unfortunate enough to belong to the union. And before any of you saps unfortunate enough to belong to a union, and forced to pay union dues that support what you would otherwise NOT choose to support, I have belonged to a union. I fought them every day while I was working at that job. At one point they threatened to kick me out of the union. Union membership was a requirement of that job. They expected I believed that being thrown out of the union was going to force me to be terminated, and they would be free of my grief. Except I already knew that union membership was indeed forced upon all the workers at this location, with one single exception (outside of management). If the union chose to kick me out of the union, the company had the option of keeping me on, as it was the unions decision to kick me out, not my choice to try to leave and also keep my job. So, I stupidly pointed out to my union rep that I actually desired for them to kick me out - I'd get an automatic pay increase, I'd be free of their control, and I'd be able to keep my job. The threat of being kicked out disappeared immediately! Imagine that.

I've also experienced licensing board absurd requirements. It's not possible to install a camera system without a 3 year apprenticeship. It's all low voltage, so there's no fear of causing an electrical short that could destroy a building/residence. Plus it's necessary to pass an electrical test, don't recall if it involves only low-voltage or if it combines high- and low-voltage issues. But taking a test to be able to install a camera 'security' system is foolish. And a 3 year apprenticeship for mounting a video camera is foolish. But they've successfully locked down the state. Which simply reduces competition. And keeps prices relatively high for the consumer, whether that consumer is a business or a residence. How much damage can be done by a 5 to 12 volt line? None! Yet, for some unknown reason, it's necessary to be licensed and do 3 years locked into someone else's crappy prison-like apprenticeship garbage! I know, some cameras run on 24 volt DC. But 24 volt is still too low to do any damage. And DC is much more safe than AC, so it's even less harmful. But there's still the licensing requirement. In order to protect those already in, but for no other reason. This is mostly because a camera system is considered a 'security' system, and security is a licensed, regulated business in our state. But if the camera system isn't used as part of a security system, then it's not a security system and shouldn't fall under the licensing requirements. Actually, since a camera system is so easy to install & configure, it should NOT matter if it's part of a security system, it should NOT fall under the auspices of ANY licensing board or apprenticeship program. But that's just one issue, and I'm sure that supporters of licensing will have plenty to say about my attitude, and the attitude of the original post. But every one of those who don't agree with me are almost guaranteed to be 'in' the system, so their opinion is extremely biased.