Few regulations are more blatantly anti-competitive than occupational licensing. Incumbents place barriers to entry to keep pesky competitors out of the market. Licensed occupations also enjoy an artificial 15 percent wage premium because of the supply restrictions. The Economist recently ran a column on licensing’s rent-seeking aspects:
But the people who care most about this issue—the cartels of incumbents—lobbied the loudest. One predicted that unlicensed designers would use fabrics that might spread disease and cause 88,000 deaths a year. Another suggested, even more alarmingly, that clashing colour schemes might adversely affect “salivation”. In the early hours of May 7th the bill was defeated. If Republican majorities cannot pluck up the courage to challenge a cartel of interior designers when Florida’s unemployment rate is more than 10%, what hope has America? The Licence Raj may be here to stay.
Businesses often use regulations as a cudgel to bludgeon their competitors. Occupational licensing is one of the most-abused types of regulation. John Stossel’s latest column shows how by telling the story of Jestina Clayton, an immigrant from Africa who braids hair for a living.
Her customers are satisfied. But now her competitors want her to take 2,000 hours of classes and spend thousands of dollars to get a cosmetology license. This even though braiding is the only service Jestina offers. And because the her competitors are the very people who grant or deny licenses, it will be easy for them to keep entrepreneurs like Jestina out of business even after she completes the licensing requirements.
Jestina’s story repeats itself every day in any number of occupations. Stossel writes:
Once upon a time, one in 20 workers needed government permission to work in their occupation. Today, it’s one in three. We lose some freedom every day.
“Occupational licensing laws fall hardest on minorities, on poor, on elderly workers who want to start a new career or change careers,” Avelar said. “(Licensing laws) just help entrenched businesses keep out competition.”
This is not what America was supposed to be.
Posted in Competition, Economics, Regulation of the Day
Tagged avelar, competition, cosmetology, cosmetology license, counterproductive regulations, ij, institute for justice, jestina clayton, john stossel, licensing, occupational licensing, restricting competition
Business Insider has a list of 12 of America’s most ridiculous regulations. Many of them have been covered on this site. But some of them haven’t, including:
-In Texas, computer repair technicians are required to get a private investigator’s license.
-In Milwaukee, it is illegal to close a business without a license. Closing businesses must also pay a tax of $2 for every $1,000 of inventory intended to be sold in a going out of business sale.
Government does more wacky things than anyone could possibly write about in any detail. Listed here are just a few that I dug up over the course of the week. If you have more, I’d love to hear about them.
– 206 occupations require licenses in New Jersey.
– Federal money is paying for a museum exhibit called “Race to the End of the Earth.” (Note: the earth is round.)
– In the market for a new air conditioner? Act fast, because new regulations are on the way.
– The federal government pays for a website that monitors jellyfish sightings.*
– Fear not: the federal government has a Potato Research and Promotion Plan.
– Last year, the feds started a Dairy Industry Advisory Committee. Let the rent-seeking begin!
– And finally: 2,000 House staffers make $100,000 or more per year.
*CORRECTION: Commenter Steve, who works at jellywatch.org, writes that “Our web site is NOT supported by the federal government in any way. It would not be a bad thing if it were, since people are dependent on fish which interact with jellyfish. However we are presently supporting the site through our volunteered time and money from our own pocket. The article you cite refers to associated research which our project will contribute data. Please correct your site accordingly.”
I take Steve at his word, thank him, and issue this correction. Federal money does go to jellyfish research, but not to jellywatch.org.
I also received a thoughtful email from a colleague of Steve’s that deserves a thoughtful reply. I will post it this weekend.
Posted in regulation
Tagged ac, air conditioner, dairy, energy efficiency, jellyfish, license, licensing, museum exhibits, museums, new jersey, occupational licensing, potatoes, race to the end of the earth, regulation, usda
You need a license to be a bounty hunter in New Jersey. You can apply by clicking here.
The license comes with a cool bounty hunter identification card that you must keep on your person whenever you’re on the job.
But let’s not get ahead of ourselves. There are lots of hoops to jump through first. For one, you need valid photo ID. And you need to pass a criminal background check, and give five character references.
You must also have at least five years of experience in either bounty hunting, law enforcement, or a related field. No one under the age of 25 may be a bounty hunter.
The license fee costs $300; biennial renewal costs $200.
You also need to take a 2-day, 16-hour bounty hunter training course at the Middlesex County Fire Academy in Sayreville. Topics covered range from Constitutional law to proper boundaries on the use of force.
If you want to hire a secretary or other administrative worker, that employee has to register with the New Jersey State Police and go through a background check at his or her own expense. If the employee quits or is fired, you have to let the state know within ten days.
If you can get through all that, happy hunting!
Posted in General Foolishness, Regulation of the Day
Tagged bounty hunter, bounty hunters, dog, dumb laws, license, licensing, new jersey, occupational licensing, regulation, Regulation of the Day, regulations, silly
It is illegal to be a peddler in Wisconsin without a license. One of the requirements is five years of residency in Wisconsin. Because clearly, no one is trustworthy unless they’ve lived in Wisconsin for at least five years. The full list of requirements is here.
You can apply for your peddler’s license here.
(Hat tip to Jim Ulbright)
It is illegal to conduct an auction without a license in Alabama. Unlicensed auctioneers can be punished with fines of up to $500.
Applicants must pay nearly a thousand dollars for 85 hours of coursework. 8 additional hours are required every two years to keep the license.
It’s worth asking: Does this benefit anyone besides the people teaching the courses and the auctioneers who get to limit the amount of competition they have to face?
Posted in Antitrust, Economics, Public Choice, Regulation of the Day
Tagged alabama, auction, auctioneer, auctioneer license, auctioneers, occupational licensing, Public Choice, restricting competition, unlicensed auction
Want to be a barber in Nevada? You’ll need to get a license first. One of the requirements is a chest X-ray, of all things. And a blood test.
More onerous is the 18-month apprenticeship under a licensed barber, which requires its own license – plus another chest X-ray and blood test.
Occupational licensing regulations are rarely in place to benefit consumers. Their primary purpose is often to limit competition by putting up barriers to entry. Why do this? Because keeping the supply of barbers artificially low means that existing barbers can keep their prices artificially high.
Three of the four licensing board members must be licensed barbers. They write the apprenticeship rules and the license examination. They decide who gets in, and who gets left out. They have plenty of excuses built into the rules for excluding potential competitors.
Owing child support payments, for example, is by itself grounds for exclusion. What this has to do with cutting hair is beyond me. And getting a job cutting hair is one way to be able to make those payments. But there it is, encoded in state law. The board can legally keep you from being a barber if you owe child support.
A sure sign of an anti-competitive practice is using the force of law to prevent competitors from entering the marketplace. Where is the antitrust investigation into Nevada’s barber licensing?
Posted in Antitrust, Regulation of the Day
Tagged absurdities, barbers, certification, child support, nevada, occupational licensing, protectionism, regulation, Regulation of the Day, regulations, x-rays