'The Licensing Racket’ Review: There's a Board for That
74 comments
·February 8, 2025donatj
My wife cut hair professionally for twenty years. Between COVID, the birth our first child and going back to school she stopped.
Now she wants to go back part time to make some extra money, but her license expired and that means she has to get her license back. That includes having to attend over 100 hours of class, for a slightly above minimum wage job many people do themselves, at home, with zero experience.
It's absurd. Maybe an hour or two refresher is justifiable, but I assure you she had not forgotten how to cut hair to the extent that she needs 100+ hours of retraining. It's deeply embedded in her psyche at this point.
My wife says she basically just needs to go hang out at a cosmetology school to make the hours but doesn't need to actually do anything while she is there.
It is absolutely a racket.
thijson
I can think of so many examples of protectionism in society. In Canada the dairy industry is a quota system, not just anyone can sell milk or eggs. The article suggests that there should be government bodies to regulate these industries instead of self regulation, however that lends itself to regulatory capture. It probably would be better than self regulation though, similar to a school board.
I think that AI will fundamentally change health care, it's as good as a primary physician in a lot of cases. The barriers need to come down, that's what is driving the costs.
sarchertech
> that's what is driving the costs.
Physicians salaries make up 8.6% of medical spending.
Kaiser did a study that found a 40% reduction in physician salaries would result in a 3% savings to consumers on medical costs.
thijson
Where are the costs then? Is it the MRI that costs $1000?
omgJustTest
I hear you about the schooling requirement / hours. However if the "racket" were not there, the vast surplus of labor providing "slightly above minimum wage" services would depress wages down to the legal minimum.
The government would then be the only thing preventing a race-to-the-bottom in your wife making any money.
I have seen deregulation of industries decimate trucking, giving rise to subhuman organizations like Prime Trucking.
I would strongly advise anyone seeking deregulation to really consider... does this mean - literally - the only thing that one can offer as a competitive edge is how little money you are willing to take for this service?
Additionally, given the wrecking ball currently applied to the us govt, I would strongly advise that "no tax on tips" and "default gone regulations" may help some minimum wage people, but they have super nefarious implications for other parts of the govt. "Tips" for example are now legal to politicians, per the US Supreme Court [Snyder v US, 2024] and "no tax on tips" implies that politicians do not have to record those tips as income on their taxes... which was possibly one of the last ways in which they could have been documented in any way.
Aurornis
> However if the "racket" were not there, the vast surplus of labor providing "slightly above minimum wage" services would depress wages down to the legal minimum. > The government would then be the only thing preventing a race-to-the-bottom in your wife making any money.
Licensing is supposed to protect the consumer from bad practice, not to inflate wages and decrease competition for those who have licenses.
It’s not good. You might imagine it being good if you think it would protect yourself from competition, but if everyone practiced this way you’d be forced to pay inflated prices and wait excessively long for every service. It would be a net loss.
> I would strongly advise anyone seeking deregulation to really consider... does this mean - literally - the only thing that one can offer as a competitive edge is how little money you are willing to take for this service?
If there was literally nothing to distinguish your services other than price, then artificially inflating prices through excessive licensing would be nothing other than stealing from consumers through force of law.
In the real world, quality of service matters. People don’t go back to a hair stylist who does a bad job, though they may not immediately recognize one that doesn’t practice proper hygiene practices.
This is where licensing should apply: Teaching and enforcing the practices that are not obvious, but nevertheless important for societal benefit. Barbers need to practice proper hygiene to prevent spread of disease. Builders need to practice proper constriction to avoid dangerous buildings. There are numerous real problems that aren’t obvious at the point of purchasing a service, but must be enforced at a society level to avoid widespread problems.
These often go unappreciated in modern societies because we take them for granted. Spend some time in developing countries, though, and you’ll hear and experience a lot of negative stories from unregulated services.
RajT88
I did not realize that last bit, but am not surprised.
Just about every time a politician champions some legislation for "the little guys" it turns out it overwhelmingly benefits monied and powerful interests more. Definitely a trend I have observed when you scratch beneath the surface of things.
donatj
I disagree 100%, there is a big difference in quality between a haircut from an experienced stylist and your cousin Vinny. People right now go to fancy expensive salons when they could get a $15 haircut.
I think people would certainly pay more for a reliable and stylish haircut even if they could get a bottom barrel haircut from a high schooler. You just pay for the quality of work you want done.
What you call race to the bottom, I as a consumer call fair pricing not controlled by syndicates.
Controlling the market by limiting the job pool to just the people who can already afford the time let alone the licensing fees really just serves to keep people in poverty. How many people could be working right now but can't afford the time and money to get licensed?
omgJustTest
In every industry there are creative people who make more than the average.
This is about policy for a group of nearly 600k people. If there were no 'racket' I think that most people who want to cut hair are capable of stylish and reliable - above the Great Clips standard.
"No regulation" could increase the labor pool a factor of 10x, given the propensity for these businesses to be 100% small $ transactions.
[Editted in response to your edit] Every industry should have competition, but the national average for hair-cuts is near minimum wage. WTF are you smoking? Do you really believe if the minimum was gone there's a chance "fair pricing not controlled by syndicates" would be just above minimum wage? Is the govt minimum wage a "pricing controlled by syndicates"?
ty6853
Board differences in medical field have been interesting to watch.
For instance NP and PA have very similar skills, but the nursing board goes to bat for nurses allowing independent practice while doctors have chosen in some states to sabotage PAs as they live under the medical board fiefdom. There is little other explanation for the divergence in practice privileges.
If you are a licensed professional and your profession doesn't own the board, what often ends up happening is competing professions under the board sabotage each other.
Aurornis
> but the nursing board goes to bat for nurses allowing independent practice while doctors have chosen in some states to sabotage PAs
The way Nurse Practitioners are allowed to practice independently now is a contentious topic in the field because they’re now operating essentially as doctors, but with much less education and hands-on training.
The original idea was that NPs could handle a subset of simple and routine issues and leave the more complex issues for fully trained doctors. The current situation has NPs and doctors performing the same functions but with very different training, while patients are mostly unaware that there’s a difference.
It’s a common complaint on forums like /r/medicine because doctors are seeing a rapidly growing number of patients who have gotten bad advice or prescriptions from overconfident NPs, especially in states where NPs can prescribe controlled substances. Going the NP route is also the preferred direction for people who want to practice alternative medicine but have a prescription pad, leading a lot of patients unknowingly into the hands of NPs who actually shun large parts of traditional medicine.
Common problems around here are NPs who prescribe antibiotics on demand, some times dangerously powerful ones for extended periods of time. NPs writing long-term benzo prescriptions as first line treatment for anxiety (very bad practice) has created a mess of dependent patients who didn’t know what they were getting into, who end up back at fully trained providers who need to taper them off for sometimes as long as a year.
So it’s not as simple as medical licensing boards being mean. There are some very real problems with the current double standard of training between NPs and doctors.
sarchertech
NP education is basically the Wild West. Much of it is practical training under a doctor, but unlike residency there is very little oversight and standardization.
n8henrie
Can you explain what you mean about doctors sabotaging PAs? In what way? And which doctors are to blame?
ty6853
In some states dragging their feet on supporting independent practice and chaining them to more onerous doctor oversight/collaboration requirements vs NP. I'm referring to doctors with/of influence in the medical board.
NP are under the nursing board so doctors are less entrenched in their influence.
Aurornis
Letting NPs practice independently as doctors is increasingly viewed as a mistake, not a model that should be emulated more widely.
There are a lot of problems coming out of the fact that NPs are now basically practicing medicine in parallel with doctors despite vastly different education and training experience.
Many patients don’t even understand the difference. It doesn’t matter for common things like a simple sprain or common cold usually, but cases of medication overprescribing (think antibiotics for colds, etc) are commonly traced back to NPs and specialists will complain about the deluge of incorrect referrals from NPs who don’t know what they’re doing.
One example: I heard a specialist explain that they had to stop taking referrals for Ehlers-Danlos evaluation from NPs because the local NPs were referring people at impossibly high rates due to misdiagnosis. Ehlers-Danlos has become a popular (though incorrect) TikTok diagnosis for vague symptoms and rather than push back, many local NPs were running with it. Social media is full of people who are convinced they have Ehlers-Danlos and a lot of NPs were leaning into the trend instead of realizing that it’s not real.
trillic
Just last week I saw an NP, PA - someone with both degrees, didn’t understand why they’d have both. This makes sense now.
ty6853
I bypassed trades and engineering licensing to build my house, which is usually only legally possible if you do basically everything yourself ( at least in my state diy work and even owner/builder amateur structural engineering is exempted from licensing since there is no compensation involved). End results, costs <30% of anything comparable offered commercially.
spicyusername
How much of that 30% is just labor costs?
If you total up the time you spent doing the work, and multiply that by what you could have been paid working doing something else, how does the savings change?
People should definitely build their own houses. Its custom fit to you and you get the satisfaction of doing it. But its also a lot of work, requires considerable time investment, and requires quite a bit of specialized knowledge.
ty6853
Not sure. I lost about 4 months of work, rest was time where I didn't have other work offered to me so the opportunity cost was 0.
But consider if I hired someone, I would lose 30% of my earnings to taxes. And then 50% of what I pay others goes to insurance/licensing/taxes/transportation etc. So really your labor costs should be about 30% if you bill your own time since it is tax free both ways and no overhead.
Aurornis
When I was on Reddit I browsed the /r/DIY subreddit every once in a while. It was amazing to see all of the self-built decks, sheds, and unpermitted home modifications that were death traps.
I’m sure you did your homework and did everything by the book, but I’ve seen enough both online and in my experience with old houses (commonly modified without permit) to have an appreciation for licensing and permitting requirements.
A few years ago my friends’ landlord tried to rebuild the house’s deck until it got shut down by an inspector driving by. I thought it was outrageous until I walked over and saw what was being built, which was a laundry list of engineering and design failures. After that I was thankful that the inspector noticed and stepped in.
Licensing (and permitting) doesn’t exist for the ideal case where people practice perfectly without licensing. It exists for the average case, where people like to guess and improvise.
> End results, costs <30% of anything comparable offered commercially.
If you did the work yourself I’d expect similar savings. I think this is an example of DIY labor, not the cost of licensing.
mhb
Prerequisite of 1,000 hours of classroom instruction to qualify as a barber in Rhode Island. [216-RICR-40-05-4.4 C]:
"Students enrolled in programs of hairdressing/cosmetic therapy or barbering may enter into a work-study arrangement after they have completed at least one thousand (1,000) hours of classroom instruction."
RajT88
1000 hours is enough to grind out every activity in the original Destiny.
Destiny is designed to be as much a day job or more as cutting hair.
gosub100
Contrast that to flying a plane:
"Key points about PPL classroom instruction: Ground School: In addition to flight hours, you must also complete a ground school course covering subjects like aerodynamics, weather, navigation, and regulations, which typically involves around 36-40 hours of dedicated classroom instructi"
pseingatl
This subject was addressed comprehensively in Milton Friedman's Capitalism and Freedom.
BTW, Friedman makes DOGE look life a fearful, cautious agency. He would have eliminated dozens of federal agencies; perhaps 80% of them.
spicyusername
The world Milton Friedman lived in was very different than the world we have now. Much of what he had to say no longer applies, today. Its analogous to reading philosophy from pre-enlightenment or pre-naturalist philosophers. Academically interesting, but totally irrelevant.
Economists like to masquerade as hard-scientists, but once you get past supply and demand and behavioral economics, its just academics making things up that sound good.
The world we live in is globally interconnected with civilization and planet-sized problems. The actors squabbling in today's world are no longer small local groups, focused on community-sized problems, as they mostly were pre-1900. They are impossibly large, country-spanning, corporate entities with huge reach and influence.
Public institutions need to be sized appropriately to solve modern problems and to properly contend with their corporate competitors. Tiny pre-WWI-sized governments are not going to cut it with post-WWII-sized problems.
BlandDuck
Interesting ideas. I respectfully disagree with all of them.
Do you have any evidence to back them up, or are you yourself "just [...] making things up that sound good" ?
spicyusername
The outcomes of public policy throughout the 1900s, particularly pre-Reagan and post-FDR. Quite expansionary, but nearly all of the bedrock institutions most people have come to rely on and take for granted materialized in this period.
- The GI Bill
- Medicare / Medicaid
- Social Security
- Unemployment Insurance
- Regulatory institutions / policies like the SEC, FDIC, OSHA, and the EPA.
- The Civil Rights Act
None of this stuff just happens by accident, and these kinds of things definitely don't magically fall out of unregulated free-markets. And they DEFINITELY don't fall out of markets where the participants are massive corporate interests.
You need institutions whose focus is solely on social / economic wellbeing and who have the power and authority to provide it.
There are also plenty of modern academics, making things up themselves, who articulate similar points.
- Joseph Stiglitz
- Thomas Piketty
- Ha-Joon Chang
- Mariana Mazzucato
- Robert Reich
- etc
bryanlarsen
Perhaps Friedman's most widely known saying is that "inflation is a monetary phenomenon". In the last 30 years the correlation between money supply expansion and inflation has been low. OTOH the correlation between supply shocks and inflation has been high.
A real science would update in the face of contradictory evidence. Some economists have, but most haven't.
ori_b
Milton Friedman died in 2006. He was two years old when the WWI started.
spicyusername
Yea, but he was born in 1916 and, like most other humans, the world that he group up in shaped him for the rest of his life.
Most of his popular works were published in the early 60's, before many of our modern problems were obvious and the outcome of many of the expansionary policies of that period had time to take root.
Aurornis
> He would have eliminated dozens of federal agencies; perhaps 80% of them.
Most licensing is state level. That’s why you so often hear that someone is only licensed to practice in a certain state.
Eliminating federal agencies wouldn’t change anything about how, for example, your barber is licensed.
Friedman also wrote for an entirely different era. The world has changed a lot since he was active, and even more since he died almost two decades ago.
krapp
For what it's worth, Musk has said his goal is to eliminate all regulations[0] (and, one assumes, all federal agencies except DOGE, assuming it even counts) and then add each regulation back one at a time if they deem it necessary.
[0]https://www.huffpost.com/entry/elon-musk-regulations-default...
bryanlarsen
Canada might see significant movement on licensing restrictions soon. There's a big movement to reduce inter provincial trade barriers in the face of potential American tariffs. It's a good political sound bite: replace American trade with Canadian trade.
But in physical goods almost all of the barriers have already been demolished. Liquor is the maon exception.
But the service industry is now bigger than the physical goods industry and there are lots of barriers in it, licensing being perhaps the biggest. Licensing is a provincial responsibility. Hopefully the rare unity the country has experienced since Trump's inauguration can be harnessed to unify and rationalize licensing country wide.
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stogot
I’d like to read books about random topics and this one is interesting, but 304 pages? It seems publishers demand most nonfiction to be that page length
Bostonian
Excerpted and discussed at https://marginalrevolution.com/marginalrevolution/2025/02/th...
The book site is https://www.hup.harvard.edu/books/9780674295421
'Clifford Winston of the Brookings Institution argues for eliminating occupational licensing for lawyers entirely and replacing it with a system of voluntary certification. Government has a role to play by collecting information about service quality and making it easily accessible to the public. Databases like the NPDB should be improved and opened for many professions.
The medical profession is unlikely to be delicensed, but as Ms. Allensworth’s book shows, we shouldn’t let the AMA dictate the terms of medical education. Many European countries offer combined undergraduate and medical degree programs that take only six years, compared to the eight or more years required in the U.S.
Advances in artificial intelligence, which Ms. Allensworth doesn’t explore, may also catalyze reform. AI is already transforming fields such as legal research and medical diagnostics, automating tasks once reserved for licensed professionals. As these technologies advance, they can reduce reliance on rigid licensing systems by ensuring quality and safety through innovative tools.'
mjd
In many cases, these licencing schemes are put in place by incumbent trade groups, to prevent comeptition.
For example, an association of funeral home owners will lobby their state representative for a law forbidding the sale of coffins by anyone other than a licensed funeral director. Ostensibly this somehow protects the public from unscrupulous coffin-sellers. In actuality, its main effect is to protect the profits of the funeral home oligopoly.
(Lest you think this is a fanciful example, see St. Joseph Abbey v. Castille.)
The AMA education requirements are of essentially the same sort, put in place by a compliant legislature to protect the profits of an incumbent cartel, at great cost to the public.
Advances in artificial intelligence will do nothing, absolutely nothing, to catalyze reform of what is essentially a problem of politics and greed.
https://ij.org/case/saint-joseph-abbey-et-al-v-castille-et-a...
mjd
I would add too that these laws often serve the same interests of white supremacy that they have since the Civil War.
After the end of Reconstruction the Southern states instituted laws now called the “Black Codes”, forbidding blacks from being blacksmiths, or grocers, from owning property, or doing any sort of work other than, effectively, being sharecroppers - essentially slaves of the same white landowners as before.
Consider who is hurt most by laws requiring expensive and onerous licensing for independent hair-braiders. Are a lot of white hair-braiders suffering from this, do you suppose?
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ty6853
Same with minimum wage. Whites were tired of blacks underbidding them, so they just outlawed their jobs by making unskilled labor valued below X illegal.
pessimizer
> In many cases, these licencing schemes are put in place by incumbent trade groups, to prevent comeptition.
The worst is NAR and Realtors®. There's absolutely no professional instruction involved, just a morality test taken every few years that until the late-1940s early-1950s required that realtors maintain the racial character of neighborhoods (under penalty of disciplinary action.)
They managed to get themselves written into most state and local laws. Only the explosion of aspirational middlemen occasioned by the internet has recently managed to push back on that. Hopefully the recent antitrust case against them is catastrophic, but they spend $100M a year lobbying. Lobbying government is basically all the NAR actually does and all the real value that members are getting.
edit: https://www.notus.org/money/national-realtors-lobbying-polit...
sarchertech
It’s hard to compare medical education between countries because some counties will have shorter medical school lengths but longer residency requirements.
And official durations are often different than the amount of time it actually takes students.
In Germany for example med school is 6 years, but the average student completes it in about 7.
A US student with some AP credits from high school and a few summer classes could easy finish university in 3 years and end up taking the same amount of time as the average German medical student.
But even looking at averages at the end of the day doctor’s salaries are a small fraction of overall medical costs so shaving a year off of the average training times isn’t going to make a dent.
The US also doesn’t have a national high school curriculum, so removing general education requirements from the university + medschool pipeline, which is essentially what countries with shorter total training times do, is a harder problem than it is in Europe.
ghaff
At one point the US did have at least a couple of 6-year undergrad/medical school programs but they were discontinued I believe.
Machine learning has been talked up a lot in medicine especially in the context of radiology. I'm not sure to what degree it's really panned out to date. Legal discovery has been aided by automation of various sort for years.
senkora
The UMKC 6-year one seems to still exist as far as I can tell: https://med.umkc.edu/academics/degree-and-certificate-progra...
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turtlesdown11
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hollerith
The trouble with giving doctors complete control over doctor education is that in the US they've used that control to restrict the supply of doctors to keep the price of doctors high.
sarchertech
Right now it’s congress that is restricting the supply of doctors. The AMA’s (which only represents about 15% of doctors btw) current position is that we need more doctors and they have been actively lobbying congress to provide funding for more residency slots.
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luma
Lawyers have organized their licensing so well that they are the ONLY profession in America not being overrun by PE consolidation because they had to foresight to not allow it. The capital class was eventually going to run up against them to try and break down that wall.
beacon294
Can you provide more details on why they and not doctors can resist?
pseingatl
Accenture, E&Y, PWC and Deloitte all have a law division; not as much in the US but overseas and slowly creeping here because these firms are joined at the top and fueled by public money. The consolidation was set back by more than a decade because of Enron and the prosecution of Andersen, but now they're back. These hybrid firms, because of the requirement of annual tax filings, offer something big law firms simply cannot. Very few law firms have set up consulting arms and those who have done so have stumbled, e.g. Greenberg Traurig.
willis936
What would the motivation be for them to do that? Restricting access to law & order to the wealthy is working out great for them.
Ekaros
Extracting money. Delta between billed rate and minimum wage is pretty massive. There is lot of money to be extracted from that gap. And from pushing the billable rate and hours up at same time.
willis936
They are getting something for that money: exclusive access to the legal system. That is power they wouldn't sell.
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https://archive.is/Tcc1J