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Small steps in VA occupational licensing reform

by Emily Washington on June 25, 2012

in Crony Capitalism, Economic Freedom, Economic Growth, Entrepreneurship

On July 1, hair braiding in Virginia will be deregulated. People will be free to braid hair without any license from the state saying that they are qualified to do so. The final requirements will be lifted after a 2004 move which reduced the requirement for hair braiders from a 1,500-hour course required of other cosmetologists to a 170-hour course.

The policy change came on the recommendation of the Governor’s Commission on Government Reform and Restructuring, which also recommended deregulation of landscape architecture, interior design, polygraph administrators, and mold inspectors, but only the recommendation with respect to hair braiding was adopted.

In Utah, however, hair braiders still face a much higher occupational hurdle. The Institute for Justice is suing the state in the U.S. District Court for requiring a 2000-hour cosmetology course for anyone who wants to braid hair in the state. As IJ explains:

Jestina Clayton, a college graduate, wife, mother of two and refugee from Sierra Leone’s civil war has been braiding hair for most of her life.  Now she wants to use her considerable skills to help provide for her family while her husband finishes his education.  But the state of Utah says she may not be paid to braid unless she first spends thousands of dollars on 2,000 hours of government-mandated cosmetology training—not one hour of which actually teaches her how to braid hair.  In the same number of class hours, a person also could qualify to be an armed security guard, mortgage loan originator, real estate sales agent, EMT and lawyer—combined.  Such arbitrary and excessive government-imposed licensing on such an ordinary, safe and uncomplicated practice as hairbraiding is not only outrageous, it is unconstitutional.

Unsurprisingly, cosmetologists favor keeping the law in place to protect their own investment and to restrict their potential competition. The case represents the absurdity of occupational licensing requirements and their detrimental impact on economic growth. However, the requirements that remain after streamlining efforts in Virginia beg the question of why we need licensing for just about any profession. Every exchange carries a risk that the consumer will be disappointed with her purchase, but by stifling competition we hurt consumers rather than helping them.

Occupational licensing requirements seem to be designed behind the idea that sub-par businesses are out to get their consumers. This is exactly the type of business that competition, rather than regulation, successfully eliminates. Selling consumers a poor service one time is not a winning business model, and online review services like Yelp are making it less and less possible to stay in business without providing a service that consumers love.

The case could be made that consumers can suffer irreparable damage from poor services, such as contracting an infection from an unsanitary manicure (though this type of risk seems unlikely in hairbraiding or interior design). Even so, the correct policy angle to take isn’t whether consumers would be harmed in a perfect world, but whether or not government does a better job eliminating this harm than competition and consumer choice among salons. Furthermore, without occupational licensing, consumers have legal recourse to sue in cases of damages, acting as an additional incentive for businesses to provide quality services.

In all but the most extreme cases, it’s clear that occupational licensing makes consumers worse off and limits job growth and economic productivity for the benefit of limiting competition for existing firms. Virginia offers a successful model of standing up to vested interests in favor of market competition but still has much room for improvement.

  • http://togetrichisglorious.blogspot.com Colin77

    So Virginia has a GOP government and the best they can do is deregulate hair braiding? And whatever happened to the ABC privatization. Their commitment to limited government is, per usual, rather suspect.

    • Emily Washington

      I think comparing the streamlining recommendations to actual policy changes provides a clear case of how difficult it is to challenge vested interests.

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