*This article was a special to the Charlotte Observer by our friends Adam Smith and Stewart Dompe, professors of economics at Johnson & Wales University. We hope to add them as regular contributors here at PunditHouse.
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.
Originally appeared in the Charlotte Observer at this LINK. Used with permission of authors.