A License to Kill Shampoo

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."


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