Licensing to Restrict Competition

The WSJ has yet more examples of crazy job licensing, example:  (ht Alex Tabarrok)

But economists—and workers shut out of fields by educational requirements or difficult exams—say licensing mostly serves as a form of protectionism, allowing veterans of the trade to box out competitors who might undercut them on price or offer new services.

"Occupations prefer to be licensed because they can restrict competition and obtain higher wages," said Morris Kleiner, a labor professor at the University of Minnesota. "If you go to any statehouse, you'll see a line of occupations out the door wanting to be licensed."...

Texas, for instance, requires hair-salon "shampoo specialists" to take 150 hours of classes, 100 of them on the "theory and practice" of shampooing, before they can sit for a licensing exam. That consists of a written test and a 45-minute demonstration of skills such as draping the client with a clean cape and evenly distributing conditioner. Glass installers, or glaziers, in Connecticut—the only state that requires such workers to be licensed—take two exams, at $52 apiece, pay $300 in initial fees and $150 annually thereafter.

California requires barbers to study full-time for nearly a year, a curriculum that costs $12,000 at Arthur Borner's Barber College in Los Angeles. Mr. Borner says his graduates earn more than enough to recoup their tuition, though he questions the need for such a lengthy program. "Barbering is not rocket science," he said. "I don't think it takes 1,500 hours to learn. But that's what the state says."

Many, many other examples -- it takes 750 hours of training to be a manicurist in Alabama.  Somehow my daughter learned to paint her own nails during the course of a single sleepover.

  • me

    Yeah, that way madness lies. Requiring "degrees" for almost any job leads to unemployment (it restricts labor force mobility, given that it takes years to obtain the "qualifications" for a different job). At the same time, it's a handy tool for rent-seeking, as competition can be prevented from entering a specific labor market and those hopeful enough can be milked for fees for the necessary "education".

    It would be entirely reasonable to allow educational institutions to hand out degrees with certification labels and allow customers to make up their own mind. I'd even go further and advocate the same system for, say, medical doctors.

  • Brian

    I'm pretty sure you read Radley Blako's blog, so you've probably already seen this, but I thought it was another great example of licensing to eliminate competition. In this case, the city engineer has started an investigation into a person that dared to question his official pronouncement that an intersection didn't need a traffic signal.

    http://www.newsobserver.com/2011/02/03/964781/citizen-activist-grates-on-state.html

  • mahtso

    “Many, many other examples — it takes 750 hours of training to be a manicurist in Alabama. Somehow my daughter learned to paint her own nails during the course of a single sleepover.”

    I agree with the overall sentiment in this post, but the manicurist example shows why this is not without a gray area. Painting nails is one thing, but there are health and safety issues related to the nails because the nails are a potential conduit into the blood stream and people often have bacteria or disease on their feet.

    Most of us probably are not getting pedicures, but of those who are: would you prefer that the pedicurist understand the potential risks or not? (The risk is not limited to the grunge you bring with you, but includes the risk of improper sanitation of the last guy’s grunge.)

    As other posts on this blog have made clear, assurance that the pedicurist has that knowledge need not be through a state license, but my point is that there is a rational basis for some of the regulations. My opinion is that there should be two options for many professions (e.g., child care operator; pedicurist, barber) – one where you show that you are licensed by the state and the other where you prominently display that you are not licensed.

  • http://www.cogfactory.net colson

    When tattoos started to pick up in popularity, it was funny to watch how fast the established shops pushed for licensing when most of the artists running the shops started their careers doing unlicensed work at home parties for practice.

    There have even been more than a few articles in states with legal, medicinal weed. These new medical pot facilities want licensing because they have to compete with Johnny the weed delivery guy working out of his own house.

  • GoneWithTheWind

    One of the best examples of this is teachers. Some years back when many aerospace engineers were being laid off there was an effort to recruit them as math teachers. The reason is simple most people who aspire to be teachers either cannot learn math or those who can learn math are cherry picked for higher paying jobs. So with a national shortage of math teachers and an abundance of engineers with considerable math advantage why not allow them to teach math in high school??? Why because they didn't get a degree in education or jump through all the hoops put in place by the unions. So we still don't have decent math teachers.

  • perlhaqr

    mahtso: I'll buy a 'rational basis for regulation' in a case like that, because there are, as you say, health risks, but that's literally three times as long as I spent in classes becoming an EMT-Basic. (245 classroom hours.) I did manage to test out of the basic math and English classes required, but even so... I'm going to have to call the level of regulation demonstrated irrational.

    In fact, thinking about it, after only ~500 classroom hours, plus 60 clinical hours, (and passing the licensure test, of course) I'll be an EMT-Intermediate.

    750 training hours would have me halfway through Paramedic school, I think. Painting nails and the biohazard control procedures therein required cannot possibly be that difficult. :D

  • Dr. T

    States are willing to go along with these anti-competitive licensing schemes because they are an easy and steady source of revenue. Licensed workers send in fees that greatly exceed the administrative costs of issuing and maintaining licenses. The excess helps the state governments to expand in budget and power.

    The claim that licensing minimizes risks to the public is mostly bullcrap, since almost all licenses are issued without actually assessing the knowledge and skills of the licensees. Besides, there are private methods of verifying competency when that is important. Example: Some states license medical technologists (the people who perform lab tests on human samples). Despite such licensing, hospitals and private labs that hire medical technologists still check their credentials via one of three national certification agencies.

  • Noumenon

    You could also look at it as a status treadmill, as going to college becomes more important for the rest of society other people wish their job required college too.

  • IgotBupkis, President, United Anarchist Society

    > As other posts on this blog have made clear, assurance that the pedicurist has that knowledge need not be through a state license

    I see, so it's more important that the bozo pass a test showing they "know" this info rather than a system of spot-checks to actually verify that the mani-pedi specialist in the field is actually following proper guidelines?

    I can state for you that, beyond any shadow of a doubt, the net effect of licensing auctioneers in the State of Florida has been to chase out any legitimate, honest auctioneers in favor of the auctioneering equivalent of quacks, thieves, and charlatans. Pure and simple.

    I state that as someone whose grandfather was a founding member of the state's Auctioneering Association. My GF never believed in licensing, and was GFed in without one for his entire life, and held auctions in Florida and his home state of Iowa for more than sixty years.

  • DrTorch

    "Many, many other examples — it takes 750 hours of training to be a manicurist in Alabama. Somehow my daughter learned to paint her own nails during the course of a single sleepover."

    The obvious answer is that your daughter is a prodigy.

    Many have pointed out, there are important health issues w/ many of these professions. We like to think we're beyond them, but like bedbugs, headlice made a comeback some years back. Barbers do need to know how to keep things sanitary.

    Most of the ranting is a false dichotomy. Like Arthur Borner said, it doesn't take 2 years to make a barber. But maybe it takes 2 weeks to teach the public health issues.

    me wrote:
    "It would be entirely reasonable to allow educational institutions to hand out degrees with certification labels and allow customers to make up their own mind. I’d even go further and advocate the same system for, say, medical doctors."

    There's nothing reasonable about that. It is w/in the purview of the gov't to protect the well being of the citizens, against harm and fraud. Even libertarians believe that.

    This approach may be fine for a barber. But, experimenting around w/ a poorly trained physician is NOT a reasonable approach. The obvious consequences demonstrate why that's untenable.

  • Judge Fredd

    Here, I got one from my home state that out shines them all:

    http://www.lsfaonline.com/membership.html

    Who knew wreath arranging was akin to handling nuclear waste.

  • marco73

    You remember back in January 2000, when all businesses shut down, electricity went out, airplanes were grounded, and starving hoards roamed the streets? You know, just what the experts proclaimed would happen because of the Y2K "bug."
    Those are the same experts that have been clamoring to license computer professionals in many states. Thankfully, so far they have been just as successful as their earlier Y2K predictions.
    The current system is about right: there are certificates available from software and hardware companies for completing specialized education. There are college degrees available for computer sciences and systems. There are trade and vocational schools available to learn specific computer systems and languages. There are professional organizations that will allow membership of computer-skilled people who can pass certain requirements.
    And there are rows of computer related "... for dummies" books in every bookstore in the country.
    Companies are free to hire and fire computer-skilled people who can do the job, and not have to bother with pesky state-issued licenses.
    I've seen the computer industry go from room sized machines and punch cards to wireless devices that fit in your pocket. Computer technology moves so fast that any state licensing test would be obsolete before the ink was dry. Not that that isn;t stopping some groups from trying.

  • me

    @DrTorch

    Having had some encounters with physicians, I disagree. Most general practioners order basic bloodtests, dispense antibiotics and pain meds and refer to specialists. You don't need medical school for that. Especially given that it teaches plenty little critical thinking (read up on lipitor and statin prescriptions for an excellent example).

    Allow me to chose between someone who learned something practical (like basic nursing) for that and pay less, and choose to pay way more for yourself. But don't demand that everyone should pay for what you consider the only correct standard of care.

  • Noumenon

    The "poorly trained physician" appeal is similar to the "protect our kids" appeal or the "rich can afford to pay more" appeal. It's true, but it can be used over and over again to defend more and more government intervention that's less and less necessary. Our physicians were probably "trained enough" a long time ago. Actually they seem both overtrained and undertrained; they get a bunch of generic medical knowledge and not much that applies day to day.

  • me

    @Noumenon. Spot on. :)

    Another word on licensing - Germany requires a license (around $300 to acquire) to play golf. Start down the road of licensing, and it'll reach absurd dimensions at somepoint. Certification is so much preferable.

  • DrTorch

    Noumenon:
    The “poorly trained physician” appeal is similar to the “protect our kids” appeal or the “rich can afford to pay more” appeal. It’s true, but it can be used over and over again to defend more and more government intervention that’s less and less necessary.

    So? Just b/c something can be misused, doesn't mean you get rid of it completely.