A License to Kill Shampoo

by on February 7, 2011 at 9:07 am in Economics | Permalink

The WSJ has a good piece on licensing, with the usual amusing stories.

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…

A shampoo specialist in Texas, for instance, learns about neck anatomy and must practice skills such as regulating water temperature. "There's a lot of different things that go into it," says Elizabeth Perez, the state's cosmetology program manager.

Morris Kleiner offers the economist's interpretation:

Licensing "Occupations prefer to be licensed because they can restrict competition and obtain higher wages,"….

Mr. Kleiner estimates that across the U.S. economy, occupational licensing adds at least $116 billion a year to the cost of services, which amounts to about 0.1% of total consumer spending. In a look at dentistry, Mr. Kleiner found that the average price of dental services rose 11% when a state made it more difficult to get a dental license.

Does licensing improve quality?

But whether licensing guarantees better-quality work is an open question. Several academic studies in the 1970s and '80s found that licensure boosted quality in professions such as dentistry, optometry, plumbing and real-estate sales. More recent studies have found no evidence that licensing improves the quality of teachers or mortgage brokers.

I love that last sentence. The WSJ does offer some interesting tests:

…a look at consumer complaints about manicurists suggests licensing doesn't necessarily correlate with quality.

Alabama has perhaps the strictest licensing requirements in the nation: 750 hours of schooling and a written and practical exam. The state gets, on average, four public complaints a year about poor service, according to the Alabama Board of Cosmetology.

Connecticut, which doesn't require manicurists to get licenses, has averaged just six complaints a year to the state over the past five years. Two-thirds of those complaints are about gift certificates that aren't honored, according to data from the consumer protection division of the state attorney general's office.

Certification can serve many of the legitimate roles of licensing without the anti-competitive effects of licensing. I hope that is OK with you.

Addendum: Doug in the comments points us to this instant classic in the Palm Beach Post comparing unlicensed hair dressers, "garage cutters," to back-alley abortionists and quoting one salon owner:

"Even with the standards we have, you see a lot of dry hair and wrong color. Imagine what we'd have without these regulations."

1 Barbara February 7, 2011 at 5:46 am

Licenses just ensure that you've taken certain courses. Jobs that require skill and craft just as beauty salon jobs, have nothing to do with exams and intellectual work. You may know by heart how to dye hair but be unable to do it right when it's time to get your hands dirty.

2 Daniel Klein February 7, 2011 at 6:06 am

Licensing expansion => Economic slow down?

3 k February 7, 2011 at 6:56 am

yet again, the presumption that authority functions with superior knowledge than it ever really can…the role of authority is not to provide the best solutions, but to avoid the worst ones

4 t. alord February 7, 2011 at 7:36 am

"Regulating water temperature"….is that a fancy term for knowing how to use a faucet?

5 Peter February 7, 2011 at 8:00 am

Police here on Long Island have been raiding a lot of Asian massage parlors in the past year or so. When they bust the parlors they typically don't charge the women with prostitution, which is hard to prove and in any event is a misdemeanor, but with performing massages without a license. Not only is that much easier to prove, having massage tables and oils is usually enough, but it's also a felony carrying much more severe penalties.

6 Hieronymus Goat February 7, 2011 at 8:31 am

Safe management may be to avoid the worst solutions, but proper authority can provide the best solutions.

Not here though. Here the authorities are rent-seeking special dispensation, and bureaucratic aggrandizement.

7 Kevin February 7, 2011 at 8:41 am

Whenever I pitch scaling back occupational licensing as a means cutting costs for health care with my friends (liberal or conservative), all I get back is something to the affect of "but then cats could perform neurosurgery while high on meth!!!".

It doesn't matter what the empirical evidence shows. Saying that licensing improves quality/safety has the ring of truthiness to it.

8 Bernard Yomtov February 7, 2011 at 9:03 am

Several academic studies in the 1970s and '80s found that licensure boosted quality in professions such as dentistry, optometry, plumbing and real-estate sales.

Kevin: It doesn't matter what the empirical evidence shows.

Why not?

9 Doug February 7, 2011 at 10:07 am

Here in Florida, Gov. Rick Scott is trying to remove the licensing requirements for hair stylists. In response the most ridiculous editorial I think I've ever read was produced. Among other things it 1) implies Rick Scott is doing this because he's bald and hates people with hair, 2) compares people cutting hair in their garage to back alley abortion clinics, and 3) warns about the threat of an epidemic of "blood-borne parasites."
http://www.palmbeachpost.com/news/cerabino-could-

10 endorendil February 7, 2011 at 10:58 am

Here's a thought: suppose you replace licensing with certification for medical practice. Every would-be professional would have to sit for a series of exams run by a recognized private organization, pass and that would be it. I think the most immediate consequence would be the sudden disappearance of medical university educations. Why bother, when you can get training anywhere in the world.

This would probably be a problem with any professional education: the US would be flooded with foreign-educated professionals until visa limits were reached. Foreign-educated Americans would the continue the flood after a couple of years. Globalization would finally come to the professional field, driving down salaries and – with a short lag – the cost of education in the US.

Would this be a good thing? Doctors wouldn't be starving, but they wouldn't be making six figures anymore unless they were really, really good. Nursing staff could be positively cheap. The only guaranteed losers would be the universities and other educational systems, which would rapidly lose their edge in a global market. But with professional careers no longer leading to the high middle and upper classes of American society, would this not also further drive a wedge between the lower and middle classes and those at the very top?

11 Jay February 7, 2011 at 1:01 pm

How do those licensing figures correlate with global temperatures and U.S. income growth? For the correlation proves causation/post hoc ergo propter hoc crowd.

12 Bernard Yomtov February 7, 2011 at 1:49 pm

Kevin,

My point was that apparently there is evidence that licensure helps in some areas.

13 Elias February 7, 2011 at 4:36 pm

The NREMT isn't a very good example of a "certification" system. Some states require that you get an NREMT certification prior to the state issuing a license to you. Even if they don't, the NREMT certification can be handy if you ever intend to move to another state as it resolves a lot of reciprocity issues. That's about it though. You can't actually work as an EMT if all you have is an NREMT certification. You need a state license.

14 Ape Man February 8, 2011 at 4:35 pm

My take is similar to Tarzan. Almost every professional license I have ever come across has been a joke. The one that really stands out to me is the EPA's universal refrigerant license. This test has not been updated for well over a decade and is hopelessly out of date. Yet even though the EPA can't be bothered to keep the test current, they still require you to get the appropriate license in order to be legally allowed to open up a refrigerant system (the universal lets you work on everything but automotive a/c. That is another stupid thing about the system).

But like Tarzan observed in a different context, private enterprise still values the universal refrigerant license as a screening method even though everyone knows the test is stupid. Very few people HVAC techs actually need the universal license because few people actually work on all the things that universal license covers. But it seems like HVAC employers almost always want people to have the universal license even if all they do is residential work. I can only imagine that the reason is that the universal license is harder for most people to get. Given that there are so few legal ways to discriminate between people looking for entry level position in the field, I guess I can see why business use it as a screening mechanism.

I still think that it is criminal that the EPA can't be bothered to update a test that they require.

15 Tarzan February 10, 2011 at 1:39 am

The professional engineering license/certification (recognized by government but administered by a (semi)private group) refigures what was taught in school. But the main criticism of the schooling is always that it is not realistic to what is actually done in practice. So, you have to wait 4 years after graduation working for someone else (apprenticeship) and then have to go back and try to remember what you learned in class. Some people may use some of that, but noone uses all of it. Maybe someone working for a textbook publisher or a computer aided design software company might, though even then it's not likely. For the majority of practitioners I'm not sure what is actually being certified other than an over-narrowing specialization in non-practical knowledge. But, they have to give the test on something. My guess is that this flawed approach is one of the better examples out there.

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