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New Jersey could create a new category of professional licensing, and no one is bothering to pretend it’s about anything other than raising prices and reducing competition.
That is, of course, what licensing systems normally do, but they are usually adopted under the guise of protecting the health or safety of consumers. Without mandatory government permits, it is usually said that unscrupulous companies would cheat you of your money or poison your children.
Give Lawrence Caniglia the honor of refusing to play these semantic games. Caniglia is the executive director of the Northeast Spa and Pool Association, which is drafting bill in New Jersey to require a state license for anyone installing, building, or maintaining a pool or spa.
“Honestly, we are looking for a more professional industry – and you can increase the fees because you are … a (properly) licensed pool builder or service professional,” Caniglia told Pool and Spa News, a trade magazine.
New Jersey lawmakers seem to agree with this argument. The law was passed by the State Assembly on Thursday with 53-13 votes and is now awaiting a vote by the Senate.
The invoice does not specify the requirements for obtaining a license. Instead, it gives the State Department of Commerce the power to set these rules by creating a new regulatory body: the Pool and Spa Service Contractors and the Advisory Board for Pool and Spa Builders and Installers. The bill requires four of the seven board members to be members of the Northeast Spa and Pool Association. This gives the trade association the majority and essentially allows them to prevent anyone they dislike from licensing or installing service pools in New Jersey.
This is how the rules are recorded, people.
NESPA has been pretty successful in getting what it wants. Pool and Spa News reports that the trade association has been working for several years “to achieve license saturation in its territories which include Connecticut, New Jersey, New York and eastern Pennsylvania.” New Jersey is the last state with no pool business license requirements.
“We know trade associations love licensing because it holds back their competitors, puts barriers before people can enter the field, and raises their prices,” says Lee McGrath, legal advisor for the Institute for Justice, a libertarian law firm that often does bad Licensing laws pose challenges. I interviewed McGrath about New Jersey’s proposed licensing rules for this week’s edition of the American Radio Journal (hear our entire conversation here).
New Jersey is already one of the most heavily licensed states in the country. According to IJ research, at least 48 professions require a government permit. As Caniglia helpfully pointed out, licensing increases the cost of goods and services. In New Jersey, according to research by the Heritage Foundation, the average family pays an additional $ 1,200 each year due to the added cost of professional licensing systems.
“It’s a blind price,” says McGrath. “This is money that families in New Jersey send to licensees. It usually involves money that goes from blue-collar workers, middle-income people to the rich or highly organized Trenton people.”
Other states shouldn’t do what New Jersey does – something that is “always good advice,” McGrath quips – and instead try to scrap unnecessary licensing laws in favor of other, better ways of ensuring good business practices. If there are real fraud concerns in a given industry, states should empower attorneys general to conduct unscrupulous business instead of adding licensing burdens that harm companies from doing things right. If there is a knowledge gap – for example, when consumers are unsure whether to hire a good contractor – states could offer voluntary certification programs to sort the field.
If New Jersey lawmakers want to see how licensing systems for pool entrepreneurs actually work, they can turn to Connecticut, where similar law was passed several years ago. In September, Bristol, Connecticut police arrested someone for the crime of repairing a pool without a state license.
Joseph Verardi was arrested in September for doing repairs on pool tiles without a license, according to Pool and Spa News. Veradi has a state home improvement license, but that doesn’t allow him to work on a pool.
“This is important to the industry as it supports properly licensed individuals working on pools and sends the message that the state is taking these laws seriously,” Caniglia told Pool and Spa News at the time.
It certainly sends a message.