You Got a License to Do That?

“A bad haircut is the last thing that a person is going to put up with and return to. It is the ultimate example of self-regulating industry.” Mark Hutchison, a Republican and the lieutenant governor of Nevada

The old rule of thumb was that if you are in China, you can do only what is specifically permitted, but in the United States, you can do anything that is not forbidden. But over the years, states have continuously added regulations to limit, regulate and generate fee income from a host of jobs and prevent those licensed in other states from crossing over. Such regulations also have a de facto exclusionary pressure against those without the means to qualify, usually the poor, immigrants and ethnic minorities. Funny how licensing in states with rather clear anti-immigrant, anti-minority biases is often more stringent than in states with more open hearts. In many ways, we are becoming more restrictive than China.

“Today, nearly 30 percent of the American work force needs a license to work, up from about 10 percent in the 1970s, according to Morris Kleiner, a professor of public affairs at the University of Minnesota, who has studied the issue.

“The Obama administration and the conservative political network financed by the Koch brothers don’t agree on much, but the belief that the zeal among states for licensing all sorts of occupations has spiraled out of control is one of them. In recent months, they have collaborated with an array of like-minded organizations and political leaders in a bid to roll back licensing rules.” New York Times, June 17th.

From hairstylists and barbers to those who raise money for small business, and obviously doctors and lawyers. “In Tennessee, a license is required to shampoo hair; in Florida, to sell a yacht. In Montana, you need the state’s approval to be an egg candler [pictured above]; in Utah, to repair upholstery; in Louisiana, to be a florist.

“No one disputes that health and safety concerns make licenses indispensable in certain demanding professions, like nursing or flying a commercial airplane, and they are sometimes helpful in improving standards and providing quality assurance to consumers.

“But the current mishmash of requirements is too often ‘inconsistent, inefficient, and arbitrary,’ a White House report concluded last year. Many of them, the report said, have little purpose other than to protect those already in the field from further competition.

"Requirements for the same job often have whiplash-level variation. South Dakota requires 2,100 hours of education and a cosmetology license to braid hair — a popular entry point into the labor force for African-American women. South Carolina demands only a six-hour course.” NY Times. Arizona resident, Grace Granatelli, made her living massaging animals, a service that is not provided by veterinarians. “But in 2013, Arizona’s Veterinary Medical Examining Board sent her a cease-and-desist order, demanding that she close up shop for medically treating animals without a veterinary degree. If not, the board warned, every Swedish doggy massage she completed could cost her a $1,000 fine.

“To comply with the ruling and obtain a license, Ms. Granatelli would have to spend about $250,000 over four years at an accredited veterinary school. None require courses in massage technique; many don’t even offer one.” NY Times. Such restrictions are particularly hard on military families, who are often transferred from state to state, where the spouse was licensed in the last state but has to jump through major qualifying hurdles in the new state.

These deeply anti-competitive requirements, particularly those that do not reflect on health and safety or obviously complex and demanding job skills, are of little benefit to anyone except those already in the restricted field. The licensing boards are usually “insiders” with an even stronger reason to keep competitors out. “Economists on both the left and the right argue that excessive licensing raises prices for consumers without improving services; it can also deter potential workers from moving across state lines, dragging down employment growth.

“‘There is no labor economist who thinks it is good for the economy,’ said Lee U. McGrath, legislative counsel in Minnesota for the Institute for Justice, a libertarian organization whose lawyers are representing Ms. Granatelli in a lawsuit against the Arizona veterinary board.” NY Times. For those with prison records, the ability to return to society is hard enough without the 27,000 licensing restrictions across the country aimed at keeping them out.

“The most regulated states, paradoxically, are red. ‘Even Republican governors with Republican legislatures in pretty conservative states have still found it extremely difficult to effect change,’ said Dick M. Carpenter, strategic director of the Institute for Justice. ‘When there is an effort to dial back legislation, then the licensed industry turns out with huge counterattack. This is the same story that plays out in every state.’” NY Times. The discrimination is often less-than-subtle discrimination. Incumbents love reducing competition and in conservative states, anything that “keeps them out” and insures a rough road for minorities, likely to hold more liberal views. Folks who “are different from us.”

So what’s being done about these obviously biased laws? “The power of licensing boards was challenged last year when the Supreme Court ruled that the North Carolina dental board could be sued under federal antitrust laws for shutting down teeth-whiteners because they were not licensed dentists… The court’s decision may prompt some states to monitor licensing boards more closely, said Robert C. Fellmeth, executive director of the Center for Public Interest Law at the University of San Diego.

“At the state level, the Institute for Justice has filed lawsuits arguing that various licensing boards are unconstitutionally interfering with the right to earn a living. That includes the one brought by Ms. Grantelli and two experienced horse massagers, Celeste Kelly and Stacey Kollman in Arizona…

“On [June 17th], the White House announced that it would provide $7.5 million in grants to organizations interested in working with states to reduce overly burdensome licensing and make it easier for licensed practitioners to work across state lines, an issue of particular importance to military families.

“‘This grant is the first time the federal government has directly gotten involved to help states that want to reform their licensing practices,’ Jason Furman, chairman of the White House Council of Economic Advisers, said in an interview. ‘It was something a Democratic president proposed and a Republican Congress passed.’” NY Times.

Increasingly, protectionism – versus justifiable regulatory oversight – is the motivator. Keep the darker-skinned people out. Keep migrants out. Keep less affluent people out. Keep even qualified people who would compete with local business out. And protectionism means higher prices, fewer services and less competition. Not to mention the moral questions.

I’m Peter Dekom, and more and more, the new American value seems to be “I get to keep what I have and make sure you never get a shot at having it too.”