My colleague Adam Thierer sent me this tweet from Rep. Jillian Gilchrest (D-CT). Apparently, the legislator is thrilled that Connecticut will keep more low-skilled workers out of the labor force by passing an occupational-licensing requirement for, wait for it, eyelash technicians, estheticians, and nail technicians.
Here is the tweet:
Her ignorance and economic illiteracy would be funny if it were not for the fact that many people will suffer as a result of this restriction. Many will not be able to start their own businesses, while many others will have to pay higher prices for simple cosmetic services. In fact, it will affect the people she likely thinks she is helping the most: women, the low-skilled, minorities, and poor consumers.
Occupational licensing is the practice of requiring government approval before legally allowing individuals to earn a living in a particular profession. It is born of the idea that service-industry entrepreneurs who are not pre-approved by politicians cannot be trusted to offer their services to consumers.
Nonsense. Just as innovators shouldn’t have to ask the government for permission to bring new products to consumers, people who want to work and earn their livings by starting and running businesses shouldn’t have to ask the government for permission to do so. But you don’t have to be a committed libertarian to understand the need to return to more of what we might call “permissionless employment.”
Seriously, a look at the data from the Institute of Justice shows that occupational licensing since the 1950s has increased dramatically, from 1 out of every 20 workers being required to obtain a government license to 1 in 3 today. Back in the ’50s, licensing requirements were typically justified on the grounds of consumer protection and public safety; and so licenses were required for the likes of surgeons and doctors. While there is evidence that even these licensing requirements do little to enhance consumers’ safety, they were concentrated on higher-income, higher-risk professions.
Today, by contrast, government is trying to “protect” us from pillows that don’t match, poorly constructed caskets, and bad massages. The state now obstructs entry into occupations like truck driving ( beyond showing that you can drive a truck), florists, funeral attendants, and hairdressers, and so many more professions. This is crazy as the only license that anyone should need to be free to sell her services to another adult is the willingness of a buyer to purchase the service. The buyer’s willingness to spend his own money on the service certifies that it meets the buyer’s standards. And if the consumer isn’t happy, he won’t come. There is no need for the state to intervene.
In addition, without licenses, workers that are the most vulnerable and need these jobs the most could enter the job market easily and start working with limited training. Again, their only requirement would be to offer services that satisfy consumers. Indeed, thanks to these licensing schemes, it takes an average of 372 days (!) of training to be certified by the government to be allowed to style hair.
This is an expensive requirement. The Institute for Justice’s occupational-licensing report looked at 102 low- to moderate-income occupations in all 50 states and the District of Columbia — and it found that, on average, licenses cost $209 in fees and require nine months of training and then the passing of a state-approved examination. That’s pretty stiff when you have no or little money and need a job to survive — and you cannot afford to go back to school to get a license. This is why in the end many abstain from entering the market altogether.
This obstacle also reduces income mobility by artificially making it more difficult for low-skilled and low-income workers to reach the first rung of the career ladder. The climb out of poverty becomes that much more difficult.
Yet, in the occupational-licensing game, not everyone is a loser. These statutes protect incumbent workers from the competition of new entrants, with the government-sustained monopoly resulting in higher wages for the licensed workers. That’s what is going on when dentists lobby to prevent hygienists from cleaning teeth without a license. It’s what happens when funeral home operators lobby the state to stop monks from making caskets.
The reduction in competition of course also brings higher prices to consumers. And who do you think these higher prices hurt the most? You guessed it: low-income consumers. That’s right, many of these licenses are regressive twice: low-income workers must shoulder the cost of training, and low-income consumers now face high prices.
Matthew Mitchell at the Mercatus Center gives a few examples:
State nurse-practitioner licensing is estimated to raise the price of a child checkup by 3 to 16 percent. Dental-hygienist and dental-assistant licensing is estimated to increase the price of a dental visit by 7 to 11 percent. Optician licensing is estimated to increase the price of eye care by 5 to 13 percent.
One particularly onerous example is child daycare. Daycare providers are subject to a number of regulations, including many occupational-licensure laws. The various state regulations include prescribing maximum child-to-staff ratios and requiring staff members to have high school diplomas.
The high costs of licensing often price low-income families out of the childcare market. Moreover, regulation may deter qualified teachers from working at childcare centers.
And, of course, minorities are put disproportionately at a disadvantage as they are much less likely to hold college degrees or to have mastered English, which some licenses require. They might also be disqualifying for immigrants who haven’t lived long enough in the state. These requirements certainly are a terrible burden on those workers who move often, since a hairdresser’s license in New York may not be honored in California.
So, Rep. Gilchrest, I really don’t think you should be pleased by the new licensing requirements in Connecticut.
That said, I may make an exception to my dislike of licenses. If I had my way, the only licensing requirement that I regret we don’t have is one that would prevent arrogant politicians from foisting on us their nanny statism.