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By John Hood

RALEIGH — Over the past dozen years, North Carolina lawmakers have made our state freer, more innovative, and more prosperous. But in one critical area of policy — the freedom to change careers and enter new occupations — state leaders have made far too little progress.

The Archbridge Institute, which explores ways to help more people achieve the American Dream, has just released its latest index of state restrictions on occupational choice. By this measure, North Carolina has the 11th-worst system of regulations in the country.

The Archbridge team counted 186 instances in which it is illegal to perform a given professional task without a state license. That’s higher than the average for South Atlantic states (176.1) and the nation as a whole (174.1). The number of educational credentials, tests, waiting periods and other non-licensing requirements North Carolina imposes on our workers is 144, again higher than the regional and national averages.

By contrast, Georgia — comparable in population and many other ways — follows a much more sensible approach to occupational freedom. It has fewer licensed tasks and non-licensing requirements than we do.

Last year, its legislature also enacted a reasonably good “universal recognition” law. That means that when folks with professional licenses move to Georgia, most no longer have to invest time and money in obtaining a new permission slip from their new state to do their jobs. Georgia recognizes their prior occupational license as valid.

Our state ought to do the same. “Workers don’t lose skills when they cross state lines to live in North Carolina,” my former John Locke Foundation colleague Jordan Roberts wrote last year. “Let’s not punish them for wanting to call North Carolina home.”

You might be wondering whether occupational licensing is really that big a deal. Well, for starters, more than a fifth of workers face some sort of government-imposed licensing requirement for doing their jobs. I’m not just talking about heart surgeons or transportation engineers designing high-traffic bridges over raging rivers. Massage therapists, cosmetologists and many other workers providing personal services or assisting other professionals must also be licensed.

There’s little evidence that such regulations confer enough quantifiable health and safety benefits on consumers to justify their costs — which can be measured in tens of thousands of lost jobs, tens of millions of dollars a year in higher prices, and hundreds of millions of dollars in misallocated capital and other economic effects.

Here are some studies of occupational licensing released within the past few months:

• A paper in the July 2024 issue of the American Economic Journalfound that higher licensing requirements in the home-improvement industry are associated with “less competition, higher prices, and no increase in demand or consumer satisfaction.”
• A paper in the August 2024 issue of Contemporary Economic Policyexamined the relationship between occupational regulation and the “shadow economy” — that is, instances of consumers purchasing services outside of normal conditions and legally enforceable contracts. They found solid evidence that government licensing “leads to higher prices in the formal sector and barriers to entry into formal sector employment, therefore incentivizing individuals to migrate their demand and supply to the underground sector.”
• A new working paper from scholars as George Mason University and West Virginia University compared the effects of technological change and occupational licensing on workers. “We find that a significant share of the prediction of falling income mobility tied to automation are actually tied to changes in occupational licensing,” they concluded. “Areas that experienced labor market deregulation and high exposure to automation suffered far less than areas that did not engage in deregulation.”
• A new book from scholars at Utah State University’s Center for Growth and Opportunity summarized research detailing higher costs for consumers with little corresponding gains in the quality of goods and services delivered.

If licensing reform were something speculative, promising on paper but never tried before, I might understand North Carolina lawmakers being cautious. But if Georgia can do it, so can we. So should we.

John Hood is a John Locke Foundation board member.

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