The recent news that non-farm American payrolls increased by just 38,000 in May – the smallest increase since September 2010 – reminds us that policymakers at all levels of government must look constantly for ways to remove obstacles to economic growth.
North Carolina’s story has been better than the nation as a whole in recent years, with job growth outpacing regional and national averages. Yet there’s room for additional improvement.
The pressure for growth is especially high in an election year. But political pressure can lead to hasty decisions. Those decisions might look good in the short run as they leave larger issues unresolved.
One area in which N.C. legislators should avoid such a quick fix involves occupational licensing reform. In 1950, about 5 percent of workers nationwide required a license or certificate. Today that number approaches 30 percent, and North Carolina has one of the nation’s most aggressive licensing regimes.
Some lawmakers might feel compelled to “do something” before hitting the campaign trail. They might target particular requirements for selected licenses. They might reduce the number of hours of required training or the size of a licensing fee.
Even if those changes make sense, they would not address key problems associated with the licensing structure itself. With 55 boards targeting some 150 professions, occupational licensing plays an outsized role in the North Carolina economy. Licensing helps explain North Carolina’s No. 36 ranking in regulatory freedom among the states, according to the John Locke Foundation’s “First In Freedom” report.
State occupational licensing agencies employ nearly 500 people. At $96 per licensee, North Carolina’s licensing expenses dwarf those in Virginia ($68). Our northern neighbor would have to raise fees by 40 percent to match North Carolina’s administrative expenses.
Getting a better grip on licensing requires more than cutting a few dollars from a fee here or cutting a few training hours there. The overall structure of occupational licensing deserves a thorough review.
It’s a review that’s unlikely to take place as lawmakers haggle over state budget details and otherwise wind down this year’s work. To get it right, occupational licensing reform ought to wait until 2017.
Mitch Kokai is senior political analyst for the John Locke Foundation.