Economics

The New York Times Spotlights Occupational Licensing Abuse in Utah

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The New York Times Magazine profiles Jestina Clayton, an immigrant from Sierra Leone now living in Centreville, Utah, where state occupational licensing requirements prevent her from operating an African hair-braiding business. As the story notes:

A cosmetology license required nearly two years of school and $16,000 in tuition. But Clayton hoped for an exemption. After all, many Utah cosmetology schools taught little or nothing about African-style hair-braiding, and other states allowed people to practice it after passing a hygiene test and paying a small fee. Clayton made her case (via PowerPoint) to the exhaustively named governing body of Utah hair-braiding, the Barber, Cosmetology/Barber, Esthetics, Electrology and Nail Technology Licensing Board. The board, made up largely of licensed barbers and cosmetologists, shot her down.

This isn't just a random Utah law. There are more than 1,000 licensed professions in the United States, partly a result of more than a century of legal work. As the country industrialized, state governments wanted to protect their citizens and create standards not just for lawyers and doctors but also for basic services. It didn't take long for professional groups to find that they also stood to benefit from the regulations. Over the years, more and more started to lobby for licensing rules, often grand­fathering in existing professionals while putting up high barriers to new competitors. In fact, businesses contorting regulation to their own benefit is so common that economists have a special name for it: regulatory capture. "Everyone assumes that private interests fight like crazy not to be regulated," says Charles Wheelan, who teaches public policy at the University of Chicago. "But often, for businesses, regulation is your friend."

Read the whole story here. I wrote about Florida's bogus occupational licensing requirements for interior designers last year.