According to Heidi Hall, of Vanderbilt University, states are facing increased risk of lawsuits following a Supreme Court case, North Carolina State Board of Dental Examiners v. Federal Trade Commission:
Allensworth compiled a list of 1,790 state boards. Eighty-five percent of the boards have rules that result in most of the board members selected to serve being active in the same profession the board regulates.
“The dark side of occupational licensing – its tendency to raise prices to consumers with dubious effects on service quality, its enormous payout to licensees and its ability to shut many willing workers out of the workforce – has begun to receive significant attention,” Allensworth said.
Basically, if licensing boards consist overwhelmingly of members from within the profession, they’ll be subject to lawsuit based on their self-interest in controlling the flow of competition. In the case of the North Carolina dentists, six of the eight members were required to be dentists, themselves. Rhode Island’s Board of Barbering and Hairdressing, for another example, requires six of the seven members to be barbers or hairdressers. That leaves only one vote on the board with no immediate financial interest and, therefore, no incentive to make the rules challenging for potential competition.