Income Policy # 2: Licensing Requirements

Economists confirm what we already know, you don't need 30 hours of training to professionally wash someone's hair.

Original Proposal: The Myth of American Inequality: How Government Biases Policy Debate

-Phil Gramm, Robert Ekelund, John Early

Policy Proposal: Do away with unnecessary licensing requirements emblematic of regulatory capture.

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Licensing requirements exist to ensure Sweeney Todd never becomes your barber, but economists agree they've gone too far. What started as a way to protect society from inept workers is now a double punch to our fiscal health by keeping qualified people out of work and on welfare.Accusations of excessive requirements are backed by the data. The Institute of Justice compiled a review of just how difficult it is to receive job certificates for 102 low-income jobs. Since 2012, the institute periodically documented how many of the jobs require a license (breath) and how difficult each license is to obtain (burden). Both are on the rise. Since 2012, 55 more jobs have been slapped with licenses. On average, we lose 4 more month to training and pay $1,000 more in the process. This outpaced the rate of inflation by 35% over the same period. States that require the most licenses for are listed below:

1. Louisiana: 77

2. Washington: 76

3. California: 75

4. Nevada: 75

5. Arkansas: 72

6. Virginia: 72

7. Iowa: 71

8. Rhode Island: 70

9. Oregon: 69

10. Tennessee: 69

Burdens range from simple to absurd. School bus drivers in Alabama lose 3 days to training while Massachusetts requires 3 years! Applying shampoo in Utah requires less than a day's training, but Nebraska, Iowa and 6 other states require over a year of training for a task that millions do every day without accident. Variations between state's requirements inhibit freedom of movement. A hair stylist in Utah who wants to move to Colorado to be with family could be out of a job if they don't meet Colorado's standards. Even a 5-star Yelp review won't save them.

The above graph is a comparative analysis of the breath and burden of state's licensing requirements from 2017-2022. The methodology used to create the breath and burden index was to calculate t-score for each state's level of burden and comparing that to the national average to obtain the relative t-score. Then I multiplied the relative t-score by the number of occupations that each state requires licenses for.

Although this data does a good job capturing the quantitative change in requirements, there's an element missing. Missing from the data is just how punitive some of these exams can be. My barber in New Jersey said he was required to identify the cell structure of scalp bacteria to receive his license. He commented, "Most people didn't become barbers because they were good in science class."

Despite overall increases since 2012, the tide is changing. States wised up when COVID created labor shortages. Swiftly, requirements were rolled back. Reciprocity laws and compacts were signed between states, harmonizing requirements with border states to help fill needed jobs. Some states are doing away with licenses altogether.

Alabama will soon no longer require licenses for their Real Estate Commissions, nor will Colorado for their massage therapists and veterinary practices.Despite progress, problems abound. Jon Stewart once had a military medic on his show who couldn't get a job as a school nurse. In fact, only two states, Georgia and Tennessee, allow a veteran's service to count towards a licensed job. Like how a missed layup in basketball that leads to a fast break is considered a four-point swing, stringent licenses are a double gut punch to our fiscal health. Keeping people out of work decreases income while raising our costs by turning would be taxpayers into welfare recipients. Even in good times this isn't good policy. With a welfare system going bankrupt, it's negligent. Like a good parent, government should work to create an autonomous population, not one bitterly dependent on handouts.