Saturday, February 12, 2011


The February 7th Wall Street Journal suggests another reason for the economy's slow recovery--anti-competitive over-regulation:
[C]at groomers, tattoo artists, tree trimmers and about a dozen other specialists across the country . . . are clamoring for more rules governing small businesses.

They're asking to become state-licensed professionals, which would mean anyone wanting to be, say, a music therapist or a locksmith, would have to pay fees, apply for a license and in some cases, take classes and pass exams. The hope is that regulation will boost the prestige of their professions, provide oversight and protect consumers from shoddy work.

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."

While some states have long required licensing for workers who handle food or touch others--caterers and hair stylists, for example--economists say such regulation is spreading to more states for more industries. The most recent study, from 2008, found 23% of U.S. workers were required to obtain state licenses, up from just 5% in 1950, according to data from Mr. Kleiner. In the mid-1980s, about 800 professions were licensed in at least one state. Today, at least 1,100 are, according to the Council on Licensure, Enforcement and Regulation, a trade group for regulatory bodies. Among the professions licensed by one or more states: florists, interior designers, private detectives, hearing-aid fitters, conveyor-belt operators and retailers of frozen desserts.

At a time of widespread anxiety about the growth of government, the licensing push is meeting pockets of resistance, including a move by some legislators to require a more rigorous cost-benefit analysis before any new licensing laws are approved. Critics say such regulation spawns huge bureaucracies including rosters of inspectors. They also say licensing requirements--which often include pricey educations--can prohibit low-income workers from breaking in to entry-level trades.

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.
Such regulatory burdens are killing job growth.

(via EconLog)


suek said...

They were involved in the Kelo case, but most of their work is more mundane. I get their publication quarterly - they win many of their cases. A worthy cause.

Anonymous said...

Too much regulations for productive people and too little regulation for financial institutions.