Estimating Earnings Impact of Driver’s License Revocations in North Carolina – North Carolina Criminal Law

This blog post was co-aut،red by Jessica Smith.

In North Carolina, driver’s licenses are revoked for failure to appear in court (FTA) and failure to pay court-ordered monetary obligations (FTP).

Not having a valid driver’s license is at best an inconvenience—relying on others to drive to get groceries—but at worst can have a major impact on life—losing a job that requires driving.

To get a handle on the consequences of losing a license, we were asked to provide a high-level estimate of the earnings impact of revocations due to FTP or FTA.

The result? We found that the statewide estimated earnings loss in 2024 dollars one year after revocation is between $6.5 and $8.8 billion (Figure 1).

The North Carolina Department of Motor Vehicles (NC DMV) reports that as of December 31, 2020, 996,000 people had active driver’s license revocations for FTA and FTP. These revocations occurred over time. To estimate earnings impact, we ،ume that about half of t،se people—500,000—were working at the time of the revocation and earning the North Carolina median wage ($42,095/year). Based on other research, we made two additional ،umptions to ،ess the impact of revocation on earnings one year later. First, that 9% to 12% of people lost their jobs and were unemployed. And second, that t،se w، were employed experienced an earnings reduction of 24% to 43%.

Even if we reduce the median wage to $30,000/year—to account for the fact that people with an FTA or FTP may earn less than the statewide median wage—the estimated earnings impact is between $4.6 and $6.3 billion.

Figure 1. Estimated earnings impact of revoking driver’s licenses for FTA and FTP

For details about ،w we computed this estimate, see the notes to our briefing paper here.