Last November, North Carolina’s Division of Motor Vehicles (DMV) issued a five-year strategic plan. In part, it was a response to the scathing audit of August 2025 by State Auditor Dave Boliek. Boliek found, among other things, that wait times were shocking:
“The average DMV visit already exceeds 1 hour and 15 minutes statewide, with rural areas seeing a 17.9% increase since 2019,” he wrote. “Over 13.8% of customers now endure visits longer than 2.5 hours, up nearly 79% since 2019.”
As a result, many people drive long distances to find a DMV office that appears less full.
“DMV is already operating in an unsustainable staffing model,” Boliek said. ”Daily examiner availability ranges between 62–75%, and 160 examiner positions remain vacant (63 permanent positions and 97 temporary positions). Employee morale has been deteriorating. Only 47% of DMV workers believed DMV fostered open communication, and 43% expressed negative views of prior leadership support.”
The head of the DMV and the head of the North Carolina Department of Transportation (DOT), in which the DMV is housed, accepted all the recommendations made by Boliek except for the one he considers the most important: separating the DMV from its parent department. Boliek argued that the DMV was following DOT’s priorities, not the agency’s own. Furthermore, the office brings in 30% of DOT’s revenues but receives only 3% in funding. Insufficient funding is a factor, but far from the only one.
Unless the legislature steps in, it looks as though Boliek’s proposal may not have much traction.
WHAT HISTORY TELLS US
Can the DMV improve its operations? To answer this question, let’s look at some history. In 2013, when Pat McCrory became governor, he made improving DMV customer service a major goal. Indeed, he and the General Assembly made some positive changes that continue today. McCrory removed the requirement to get a North Carolina driver’s license if you come from another state; he allowed customers to use credit cards, not just cash or checks; he instituted online renewals; and he set up trained greeters at some offices. (Obviously, such improvements were long overdue.)
However, McCrory didn’t tamper much with the actual operations of the DMV; rather, he basically lightened the load on its customers and staff. Meanwhile, North Carolina’s population continued to grow, and the agency was overwhelmed.
In 2018, Beth Wood, then state auditor, conducted an audit of the DMV’s performance evaluation program, just one part of DMV management. She hired an expert from the UNC-Chapel Hill Department of Government to help. In this one program, they found severe distortions.
The DMV was mostly following the goals of the DOT, not its own. The goals and objectives of the DMV’s major operations had “not been defined,” the audit said. This was the case even though the department was using “300 distinct performance measures.” These measures were primarily “output” measures such as how many licenses had been issued each year or how many vehicles had been registered. They were not “outcome-based measures,” such as “how much it costs on average per registration processed, what percentage of licenses are issued in a timely manner,” etc. Not surprisingly, service worsened.
So, for well over a decade, the DMV has been trying, but failing, to make sufficient internal improvements to raise its level of customer service. Is there an inherent problem with this government agency that cannot be rectified? To decide, I will apply what is known to scholars as public choice economics.
WHAT PUBLIC CHOICE ECONOMICS TELLS US
Economists have always studied the marketplace and know how it operates — through competition, profit, loss, and bankruptcy. Competition enables most customers to find what they want. Companies that don’t satisfy enough customers lose money and go out of business as more effective companies appear.
Some economists (along with political scientists) study government, too. A fundamental fact about government activity is that governments have the power of coercion. This is in contrast to markets, which rely on voluntary decisions. The incentives are quite different.
As a leading textbook on public choice expresses it: “In the government sector, politicians compete for elective office. Bureau chiefs and agency heads compete for larger budgets. Government employees compete for promotions and higher pay rates . . . . [B]usiness, labor, and other special interest groups compete for program funding, favorable bureaucratic rulings, and other political favors.”
In other words, government actors seek benefits that may not have anything to do with serving the public. Providing incentives for good service is very difficult. Agency heads struggle to identify and reward good performers, but the material they rely on is sketchy. Even customer surveys (which the DMV uses) are often too broad and vague to rely on. And agency heads, too, must consider their own political futures, which might explain the resistance to separating the DMV from DOT. In sum, other goals tend to replace customer service.
The incentive problems in government agencies should guide our thinking when we consider what will work and what will not at the DMV. Government managers and workers want to do what is right, but they lack the knowledge and incentive to insist on it as private companies must. The DMV audits reveal that it is hard to improve performance the way profit and loss (and, ultimately, bankruptcy) do in the marketplace.
I urge the agency to understand what it is up against. Perhaps Boliek’s recommendation for giving autonomy to the agency would help. But there is a fundamental problem of inherently conflicted incentives that must be understood before the problems can be properly addressed.
