Fourteen-year-old Felicia wanted a new outfit. To earn money for it, she offered to do the hair of some little girls in her neighborhood. One of them had a birthday party coming up, and they all wanted their hair done in "gold braid."
Felicia washed and dried the kids' hair, separated out the part to be curled, and put the rest in neat braids against the head. Then she wove gold-colored twine through the braids in hearts, zig-zags, simple rolls, or whatever pattern the girls asked for. Finally she curled the bangs. She charged $5.00 each.
Her customers, pleased with her work, recommended her to others. Felicia's business experienced a miniboom; in all she did the hair of about 10 children, some at her house and some at the children's houses. She estimated her income at $50.00 and her expenses, for gold twine and styling gel, at $6.75. Her net was enough for the new outfit. And she had a promising source of future income.
A happy story of a good kid moving ahead through free enterprise in the land of opportunity? The story isn't finished.
A neighbor stopped six-year-old Devin, one of Felicia's clients, on the sidewalk one day and asked who had done her hair. Now in Maryland, where Felicia lives, hairdressing is reserved by law for those to whom the state has granted licenses. The neighbor happens to be scrupulous about the law—or at least this law. She sent a warning through the grapevine to Felicia's mother, who reluctantly told her daughter to give up her business. "We don't want any trouble."
The neighbor who inquired about Devin's hairdresser and sent the warning has a niece…who is a licensed hairdresser. The mother of one of Felicia's clients had canceled a $32.00 hair appointment with that niece, choosing Felicia's $5.00 services instead.
So the plot is complete. It is one of enterprise, opportunity, and consumer benefit cut short by legally enforced jealousy.
I learned about this incident from Felicia when I was making a point to her seventh-grade social studies class—that occupational licensing hurts people, especially disadvantaged people, by cutting off their opportunities. I had mentioned hairdressing as an example, but there are some 490 occupations licensed in various states of the union, and virtually any of them might have served to illustrate my point. Licensure hurts consumers by reducing the number of providers, thereby allowing existing providers to charge higher prices. It benefits members of the special-interest group of licensed providers, such as the niece. Felicia's classmates got the point.
I was already well acquainted with the economist's analysis of who benefits and who loses from licensing laws. I know Walter Williams's penetrating observations in The State Against Blacks about the adverse racial effects of occupational licensing that forecloses employment opportunities. I find compelling the political scientist's thesis that public-safety arguments for licensing are the clothing in which the affected professions dress up legislation actually designed to protect their incomes.
But Felicia's story piqued my curiosity about the particulars, and I decided to find out more. Just what was the law? What penalty was Felicia subject to? How severely did the law exclude people from hairdressing, and how far removed was it from any connection to the public safety? So I did some exploring.
First I made an attempt to reach another young hairdresser mentioned by one of Felicia's classmates. But no one would give me her name and address, because while she is licensed, she sometimes does hair at her home—that's illegal. (By the way, "Felicia" is not the young woman's real name; at her request, I changed it.)
The next step was to go right to the source: the offices of the Maryland State Board of Cosmetologists at 501 St. Paul Place, Baltimore, which regulates the work of hairdressers, manicurists, and cosmeticians. The dingy building reeks of bureaucracy. Row upon row of thick files in high open cabinets line the walls of the office—musty records of control over the livelihoods of thousands.
A secretary told me that Eunice Alper, executive director of the board, was unavailable at the time, but I could call her the next day. She gave me a copy of the booklet of regulations: The Annotated Code of Maryland, Article 56, Sections 479–507, with Code of Maryland Regulations 09.22.01, 09.22.12, 09.01.02, and 09.01.03. When I asked for a copy of the licensing examination, she gaped and shook her head—no one ever gets to see it.
On reading the Maryland cosmetology regulations, one cannot be absolutely certain that their purpose is to exclude competition, nor that claims about the public safety are mere window dressing. But any other interpretation defies credulity.
The booklet contains 56 pages of definitions, directives, prohibitions, eligibility requirements, procedures, and exemptions. They deal with practice, schooling, examinations, applications, sanitation, advertising, display of certificates, penalties, equipment, owners, managers, teachers, apprentices, inspectors, reading disabilities, hours, dogs, cats, birds (it's true), and so on. Out of these 56 pages, slightly less than four deal directly with health and safety, in two virtually identical passages, one for beauty salons and one for beauty schools. And these are either so obvious as to go without saying or so petty as to be as much a nuisance as anything.
It is required, for example, that salon employees wear clean clothes, wash their hands, and keep their curling irons "free from rust, grease, and dirt." Some other important rules:
- A minimum of 12 combs and 4 brushes shall be available for each on-premises employee licensed to perform beauty culture.
- Implements to be used for pressing and thermal waving shall be adequate in quantity and variety to perform the complete service.
- Protective neck bands shall be used on each patron.
- Fluids and powders shall be applied to patrons from a bottle or shaker dispenser.
If such regulations do improve safety, the effect is surely minuscule, since any beauty shop must stay clean and sanitary enough to keep its customers coming back and to convince the insurance inspector that lawsuits are unlikely. But in any case, the other 96 percent of the regulations give plenty of evidence that customer health and safety is at best a minor goal.
Only those who practice cosmetology "for compensation" are covered by the statutes; this is made clear three times on the first page. If hairdressing is dangerous, and if the law were meant to protect the public safety, wouldn't any practice, whether for compensation or for free, be covered?
The first of many obstructions to legally getting into the business for compensation is a requirement excluding outright anyone under the age of 17. (Felicia, no matter how competent, may not begin to practice for three more years.)
The regulations are detailed and vary with a number of hairdresser classifications: operator, demonstrator, junior manager, senior manager, junior teacher, senior teacher. For example, a beauty shop "owner" (distinct from an "owner-manager"), may not simply promote a capable employee from junior manager to senior manager. He or she must first take a test, but not until "such person has had twelve months' experience working as a junior manager."
Consider the requirements for simple entry into the business at the lowest level—the qualifications that Felicia, were she old enough, would have to fulfill in order to put her proven skills to work as a legal "operator."
First, she would need to pass the board's examination. A test of competence seems reasonable if the state is to regulate the industry at all. But being competent enough to pass the examination is not sufficient. Would-be hairdressers have to fulfill a number of other requirements before they are even eligible to take the exam.
The 17-year age limit, eighth-grade education requirement, and $5.00 examination fee become minor obstacles. The daunting one is that no one may take the examination until having already put in 1,500 hours training or served as an apprentice in an approved beauty shop for at least two years. I made some calls and learned that in Maryland the total price of beauty school (enrollment fee, kit, tax, insurance, and tuition) runs about $3,300—not counting forgone income from a job.
So the requirements are costly in time and money. They surely drive many potential practitioners into other, less encumbered fields. And their effect is greater the more disadvantaged the would-be applicant, although such a relatively accessible skill could provide a place on the employment ladder.
Regulation of beauty schools themselves has the same effect. The schools must be duly licensed, too, and hire the right number of duly trained and licensed teachers, as well as a licensed physician "as a consultant." Their terms may not run less than 9 consecutive months nor give more than 40 hours' training per week (for day school; for night school it is 18 months and 20 hours per week). These requirements prevent the able and industrious from saving time and money by working more quickly, and they prohibit more flexible arrangements by those who need them.
Would-be hairdressers can avoid beauty school by going the apprenticeship route, but similar restrictions apply. Apprentices must be licensed as such and "shall be required to work at least 40 hours per week, for a period of 24 months. Apprenticeship training shall be completed in not less than 24 months, nor more than 30 months." Mothers with school-age children who want to be home by mid-afternoon can forget about it.
Beauty shops may take on only a limited number of apprentices. They may not charge for "operations performed completely by an apprentice," and these operations must in any case have the "complete and constant supervision of the designated operator or the junior-manager." Hiring apprentices must not become too easy or advantageous.
A regulation that indirectly reduces competition, but in a potent manner, is number 09.22.01.11 B: "Operations may not be performed at the dwelling house of the licensee, or at any other premises other than the dwelling place of the patron, without the permission of the Board, which shall be received in advance of the operation, in writing."
The transparent point of the whole maze of regulations is to restrict entry into the field of hairdressing. If competence were the object, a suitable examination would do the trick. But one cannot even get to the exam without extraordinary costs in money and time, and at what may well be an inconvenient schedule.
Having illegally gold-braided 10 heads, Felicia could have been fined $250. Under the law, it is a misdemeanor to practice or teach beauty culture without a license, with offenses to be punished by a fine not less than $10.00 or more than $25.00.
When I called Eunice Alper at the Board of Cosmetologists the day after my visit, I asked her whether the fine still stands at $25.00. Yes, she answered, but that would be outside her board's jurisdiction, which encompasses only people who are licensed or applying for a license. Someone who practices without a license would be handled through criminal procedures, with a maximum fine of $25.00.
This didn't sound like much of a deterrent. "But you have to remember," she went on, "that law was passed in 1938, and that was a lot of money." She added that the licensing board, with the support of the state hairdressers' association, keeps trying to increase the penalty to $500–$1,000. Then people would "not be so inclined to do somebody's hair in their kitchen." Agreed.
Most illegal hairdressing, explained Alper, is performed not by unlicensed people but by licensees operating outside the rules. Over such miscreants the board does have control, since it issues the licenses. When the board hears that someone is practicing illegally—in his or her home, say—it conducts a formal hearing, after which it may impose a fine ($500 per offense) or suspend or revoke the license. There is no court of appeal on these decisions, as the board is answerable only to the governor, who does not intervene.
This sole authority to suspend or revoke licenses is the crucial power that makes the board fearsome to the young hairdresser I tried vainly to contact. Her license is her bread ticket, her livelihood. And the board controls it.
"What is the reason for licensing?" I asked Alper directly. "Why not let be a hairdresser who wants to?" Her answer came immediately and firmly: "To protect the public health and safety." But her subsequent comments reveal the thinness of this rationale.
First was her explanation of why the laws cover only those who practice for compensation. If it is a matter of health and safety, I asked, shouldn't the same regulations apply to those who dress others' hair for free or dress their own? Oh, no, she answered. Inexperienced people can "burn themselves, or scar themselves for life," but "we don't protect people from themselves. Nor do we want to. It's not that kind of society." As for restricting people from doing one another's hair for free, "the public wouldn't allow it."
The logic is very shaky. If an untrained person should be free to risk burns and scars under her own inexperienced hands, surely she should also be free to take the lesser risk of hiring someone she deems competent, even if not licensed. And if we are allowed to jeopardize our scalps by letting anyone do our hair for free, why not by letting the same person do it for a fee (in which case, anyway, she is more likely to be careful)?
The notion that licensing laws protect the public becomes more doubtful when we consider Alper's comments on how law breakers are tracked down. It is never the consuming public that complains. Sometimes a neighbor, but usually some "other cosmetologist makes the complaint." So who is being protected?
The public's attitude is well illustrated by Alper's account of one basement beauty shop that the board shut down with the help of a ruling on the particular meaning of "compensation." The shop was just that: a full-fledged salon, with people waiting in line and a closetful of supplies. But the hairdresser and her patrons all insisted that this was not a beauty shop under the law, since the service was not provided "for compensation." No cash changed hands. The patrons, in exchange for having their hair done, would do favors for the hairdresser: bake cakes, do laundry, make clothes, babysit, and so on.
The ruling was: that's compensation. For three patrons at $500 per violation, the hairdresser was slapped with a $1,500 fine. The board closed down her salon, thereby denying her customers a service they wanted. Those actions were to protect the public?
Alper added that money probably did change hands. But why wouldn't the customers have said so? I asked. "Some people are protecting their hairdressers," replied Alper, "so they lie." So the public is protecting hairdressers from the board, while the board is protecting the public from hairdressers. It doesn't add up.
The truth is that the hairdressers have a nice cartel going. They want the regulation. They fight for it. So I was informed by Thomas Berger, the cheerful executive director of the National Cosmetology Association in St. Louis, whom I called next.
Berger told me proudly of the association's successful lobbying against some states' efforts to "sunset" their licensing boards. Apparently audits had indicated to several legislatures that the licensing boards are a needless expense that could be eliminated. The NCA "took over the legislative push" to keep hairdressing regulated.
Why, I asked? "No reason other than consumer protection," replied Berger in an expansive tone. "The government could care less what would happen to the economy of hairdressers." Perhaps that is true, I thought, but politicians may care about the votes and campaign money the state associations can muster.
Berger sent me a copy of the model bill the association supplies to state legislatures. Political scientists have for a long time talked about the tendency of the regulated to co-opt or become the regulators—here is a good example of the phenomenon. Among the NCA's recommendations: beefing up Maryland's requirements by increasing the schooling minimum from eighth grade to high school graduation and boosting the training-time requirement from 1,500 to 2,100 hours. To protect the public, of course.
I asked Berger about enforcement. Again with engaging cheerfulness he explained that violations must usually be reported first. "Then there is the process of setting up a stoolie [to go in for a hairdo], paying the hairdresser, and then turning it over to the board." Stoolies. What cleverness.
"The easiest way to hit them in the pocketbook," confided Berger, "is to report them to the IRS." In some states, practicing without a license is a felony, and violators must go to court. "That in itself has an impact on them." It was all I could take. I thanked him for the information and hung up.
Felicia's tale is one more chapter in a centuries-old story. Adam Smith, the father of modern economics, observed in the 1770s in The Wealth of Nations how mercantilist laws protected the special privileges of the guilds of his day. Smith was outraged that tradesmen could protect their income at the expense of consumers, using specious rationalizations to persuade the public "that the private interest of a part, and of a subordinate part of the society, is the general interest of the whole."
Licensing laws criminalize peaceful, beneficial enterprise. They legislate voluntary exchange out of existence or drive it underground. They force up the price of services and shut off avenues of advancement for those competent to perform services but lacking the resources to meet the law's requirements. They hurt everyone except the privileged group of licensed practitioners.
But the economic ills of such laws are not so important as the moral ills, as Smith also observed so pointedly:
"The property which every man has in his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of a poor man lies in the strength and dexterity of his hands; and to hinder him from employing this strength and dexterity in what manner he thinks proper without injury to his neighbour, is a plain violation of this most sacred property. It is a manifest encroachment upon the just liberty both of the workman, and of those who might be disposed to employ him. As it hinders the one from working at what he thinks proper, so it hinders the others from employing whom they think proper. To judge whether he is fit to be employed, may surely be trusted to the discretion of the employers whose interest it so much concerns. The affected anxiety of the law-giver lest they should employ an improper person, is evidently as impertinent as it is oppressive."
Howard Baetjer is a graduate student in economics at George Mason University.