Professional licensing boards are prevalent in states across the country and pretend to be consumer protection agencies. But in reality, such boards were established as — and continue to be — political tools to protect the current class of professionals and businesses from competition.
Typically, such boards oversee a given profession or industry — usually in the service industry — and create rules establishing educational and training requirements for individuals to obtain a state license to practice their chosen craft. The stated purpose is to protect consumers from unqualified professionals.
Rules requiring professional licensing, however, make it more expensive and difficult for new entrants to enter an industry, limiting competition for those who have already attained their licenses. With limited competition, the established professionals and businesses can charge consumers higher prices than otherwise. Most licensing boards and commissions are headed by professionals or business owners in the given industry, and as such they have incentive to restrict competition.
In North Carolina, there are more than 50 such licensing boards and commissions. Recent reports indicate there is little oversight or accountability of these organizations.
Indeed, an audit released earlier this month by the Office of the State Auditor examining North Carolina’s occupational licensing boards and commissions shed light on what poor oversight there is of these groups. For starters, there is not even an official list of such boards that state agencies can agree upon.
The Attorney General’s office lists 55 boards, while a legislative oversight committee lists 57. According to the audit, “When asked how state-level entities compile their board listings, one entity responded that it initially received its listing from another state agency but it now receives updates by word of mouth from board administrators and chairmen.”
When the state doesn’t even know for sure how many licensing boards there are, there is little doubt oversight is lacking.
On that note, the audit concludes that “state-level monitoring of board activities is ineffective.” The audit points out that oversight is so lax that the Attorney General’s office does not even note the date compliance reports are filed by boards, nor is there any followup performed for missing reports.
One example of the wildly excessive and unnecessary number of state licensing boards and committees is the Board of Cosmetic Art Examiners.
The N.C. State Board of Cosmetic Art Examiners was created in 1933 under the stated purpose to “establish and maintain sanitary and professional standards for the cosmetic art industry.”
The Cosmetic Art Examiners Board has an annual budget of roughly $2.6 million, which is paid for almost completely from business license and certification fees.
Key components of the board’s budget include:
•$1.8 million in compensation for its 33 workers;
•$127,800 in transportation, lodging and meal reimbursements; and
•$70,000 in phone services.
Such micromanagement of workers in the cosmetology, hair care and manicuring industries does not seem to fit into the core functions of state government. Moreover, the more than $2.5 million the board extracts from workers and businesses in the cosmetic art industry could better be put to use providing more jobs and improved service for customers.
State occupational licensing boards and commissions are a waste. They have little oversight, erect barriers to entry for potential businesses and professionals, waste resources and money and fail to offer effective consumer protection.
A better way to protect consumers would be to allow for free competition in the industry. That way, consumers have more choices, ensuring the service providers will provide safe and quality treatment of consumers, lest they lose business.
— Brian Balfour is Policy Director for the Civitas Institute.