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It’s Not “Complicated”; Job License Requirements Hurt Job Growth

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Want to start a new business, or start a new job in North Carolina? Not so fast! – succeeding in a state that claims to provide numerous job opportunities and a business-friendly environment might not be as easy as you hope, thanks to the state’s restrictive and convoluted occupational licensing requirements.

The Old North State is the 21st most broadly and onerously licensed state in the country, with 48 of 102 measured moderate-income occupations requiring licenses to work. As much as 22 percent of those in the North Carolina workforce are required to have a license to do their job. More recently, North Carolina lawmakers discussed the possibility of making changes to the state’s outdated occupational licensing system which could remedy this situation. Instead of taking action to reduce the barriers to opportunity, the state legislators put off reform until next session. Their reason? The issue was “more complicated” than they realized.

The issue is actually very simple, if legislators didn’t cave to the protectionist demands of industry interest groups. The proposal would have eliminated or consolidated over 12 occupational licensing boards, which cover professions that vary from locksmiths, to interpreters and translators. These regulations are currently in place under the justification that they protect the health and safety of the public, but this justification often does not hold up under scrutiny. After all, if the government is looking to protect the health and safety of its citizens, it doesn’t make much sense that an occupation focused on health care, like an emergency medical technician, has to jump through fewer hoops than a non-health related profession, like a hairdresser, has to. However, this is in fact the case in North Carolina – a license to be an emergency medical technician requires at least 169 hours of training, while a license to be a hairdresser requires over 1,500 hours of cosmetology school.

Industry representatives claim that their license – and government oversight – will protect people from unnecessary risk, but most North Carolinians would likely rather forgo the well-documented added cost of licensing, and take their chances with the risk of an unregulated public librarian.

In reality, the people protected by excessive occupational licensing regulations are the people within the industry that want protection from new competition, creating barriers to entry. In practice, occupational licensing harms social mobility, and this problem has been particularly pernicious in the state and in its Hispanic communities.

After all, young would-be entrepreneurs often do not have the money or schedule flexibility to accommodate the burdensome requirements needed to get a license. North Carolina is rapidly becoming younger and more diverse, and a new report from Durham-based research center MDC shows that North Carolina young people have a tougher-than-average time achieving upward mobility. Lack of education, along with government-imposed barriers to opportunity such as occupational licensing, leaves many poor North Carolinians unable to achieve the American Dream.

Unfortunately, many in North Carolina’s Hispanic population are among those groups most hurt by occupational licensing laws. In North Carolina, 33.6 percent of the Hispanic population falls below the poverty line, and many of these Hispanics are young - 69 percent of Latino residents are younger than 50. North Carolina legislators need to be working to help this population, instead of limiting their potential for success.

But limiting potential for success is exactly what occupational licensing requirements do. Many North Carolinians, especially the poorest and youngest, are struggling to make ends meet as it is, and these burdens are difficult or even impossible to handle for those just entering the workforce. To put things in perspective, 50 percent of the jobs listed by Institute for Justice as most favored by those seeing entry-level or mid-level positions are licensed under North Carolina law.

 As of July 2014, 9 percent of the population of North Carolina is Hispanic, up from 4.7 percent in the year 2000. Many of these Hispanics have entrepreneurial aspirations – nationally, Hispanics start businesses at 2 times the average national rate – but the excessive regulations put forth under the state government can put a damper on this entrepreneurial spirit. It’s not complicated – North Carolina legislators should encourage, not crush, the hopes of Hispanics and all North Carolinians, and work to remove these barriers to opportunity and pass licensing reform.

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The LIBRE Initiative is a resource for the US Hispanic community with information and events to help you achieve prosperity!

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Economic freedom is the key to prosperity; at LIBRE we want to empower Latinos to take charge of their future and finances!

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