Licensing Regulations Drives Out Entrepreneurs
A Morning Call article brings to light the anti-entrepreneurship policy of occupational licensing. The article focuses on fines imposed on folks trying, in most cases, to earn a living: “cosmetologists were the most heavily fined professionals, totaling $1.1 million in assessments since 2008.”
Yes, the people that paint your nails have to be licensed by the government; so do natural hair braiders. Recently, there was a push to force interior designers to get a license from the state, apparently to protect citizens from ugly living rooms. The state even licenses small shops offering to sell your stuff on eBay, and folks giving rides to the Amish—all in the name of your safety.
Many of the fines were for working (e.g., painting fingernails) without a proper license, or on an expired license. (Curiously, one of the fines not collected was $2,000 for … murder! Somehow, I think that fine isn’t much of a deterrent.) Supposedly, this practice is justified on the grounds that “salons deal with harsh chemicals, and unlicensed operators often lack liability insurance,” thus the state needs to protect customers.
Balderdash! Occupational licenses exist primarily to protect existing businesses against potential competitors. They favor big business against emerging entrepreneurs. Those most harmed by occupational licensing are low-income individuals—those who can’t afford to spend 300 hours at a licensed cosmetologist school to be approved to braid hair.
What is the result? “… in many cases, these people move on to other states, for example, and can make it hard to collect [fines].” Hmmm…isn’t the goal of economic policy to attract business, not drive out entrepreneurs?