By Tim Shea
In the contemporary American political environment, one’s feelings towards economic regulations have become litmus test of sorts as to where one’s ideological loyalties lie. Are regulations, as the left insists, necessary oversites that protect against the damaging greed and excess of Corporate America? Or is the right correct in arguing that such rules are growth-stifling bureaucratic overreach that often facilitate the very harms they’re supposed to protect again? From an economics perspective, the short answer is…both?
Yes, it’s true. Contrary to what the political class might like to believe, the merit (or lack thereof) of the amorphous blob that is our regulatory framework cannot be distilled down to tidy and aesthetically pleasing arithmetic. Rather, the battle for or against economic rule-making must be fought on a case-by-case basis if it is to maintain an intellectual integrity. Some regulations, the Clean Air Act being one, have proven themselves to be of enormous economic and social benefit. The gains from other regulatory laws such as the post-Recession era’s Dodd-Frank are much more ambiguous and harder to pin down. And then there’s rules like the Jones act, which, as of late, has become much-maligned by individuals across the political spectrum as being nakedly protectionist and downright harmful.
Of particular interest to this debate is a once seemingly innocuous class of economic regulations that has increasingly come to be recognized as falling squarely in the latter category: occupational licensing. A wide-sweeping set of rules covering professions as simple as cosmetology and as complex as medicine, occupational licensing laws are essentially state-mandated minimum education and experience requirements for legally practicing within a certain field. The ostensible justification for such regulations is public safety; pretty much nobody once a self-stylized “doctor” running around performing open-heart surgery on a whim. But are licensing laws, to the extent they are currently employed, really necessary to keep the public safe from the would-be Sweeney Todd’s of the world?
To answer that question, we must look at the specific licensing requirements governing the various professions affected as enacted across the various states of our beloved Union. One career path that seems to exemplify the more bewildering aspect of occupational regulations is the aforementioned cosmetology. A quick review existing laws show that all 50 states require extensive cosmetology training, with the typical regimen consisting of at least 1,000 hours of classroom instruction. Some states push that requirement as high as 2,000 hours. To put that in perspective, they typical bachelor’s degree requires something in the realm of 1,800 – 1,900 hours of classroom instruction. That’s right: in Idaho, Iowa, and others, it takes more education to do make up than it does to become an aeronautical engineer.
It is hard to imagine how such onerous licensing requirement are essential for the public to remain safe. Sure, cosmetology necessitates communal facilities that increase the risk of infections and procedures sometimes involve dangerous chemicals. But surely it doesn’t take the equivalent of eight semesters to learn how to mitigate these hazards? That is not to say a less strenuous set of licensing laws that focus only on the safety aspects of the profession will produce competent cosmetologists. Having never done makeup a day in my life, I have no idea how much training and experience it takes to be good at professional beautification, but that’s not the point. The point is that the state need not concern itself with the non-safety aspects of the profession. Between bad Yelp reviews and a lack of repeat business, the market will weed out the grossly inept by its own volition.
So if occupational licensing laws aren’t in place strictly to protect the public, why are they there? That’s a great question, you smart person you. Check back next week for the answer.
P.S. For those unconvinced that licensing laws aren’t focused exclusively on public safety, here ya go.