Our findings offer no reason to believe licensing, and progressively stricter forms of it, promotes safe, quality service. Instead, in the occupations and states we studied, licensing appears to force workers to fulfill various requirements while fencing others out needlessly, imposing costs not only on workers but also on consumers and on society and the economy at large. In light of these findings—including our finding of no difference in manicurist quality between unlicensed Connecticut and licensed Massachusetts and New York—Connecticut’s decision to relicense manicurists seems particularly unwise. 1
And it is unlikely the occupations we studied are the only occupations to which our findings apply. The diversity of the occupations we studied—representing general services, home improvement services and personal care services—means it would be surprising if licensing failed to produce quality only in these occupations.
Moreover, licensing likely fails to produce higher quality in other states that regulate the occupations we studied. This is because the states we compared had some of the starkest differences in licensing burdens. As Figure 2 illustrates, while some of the occupations we studied are licensed by fewer than half the states, others are universally licensed. For example, interior designers are licensed by only two states and the District of Columbia, while barbers and cosmetologists are licensed by every state and the District. In recent years, states have delicensed some of these occupations, 2
suggesting they realized their licenses were not in the public interest.
Figure 2: Licensing Likely Fails to Produce Higher Quality in Other States That License the Occupations Studied Here
All of this suggests our findings apply to other occupations and states not included in our analyses. If this is true, the benefits of licensing may be exaggerated, particularly compared to the costs as cataloged by others. This may mean there are many licenses that serve as nothing more than needless barriers to work and consumer choice.
Moreover, although lawmakers, and others, often assume licensing is the only way to protect the public from occupational harms, there exists a whole range of alternatives between no regulation and licensing (see Figure 3), including voluntary measures and less restrictive government interventions. 3
Depending on the harms presented by an occupation—if any—one or a combination of some of these alternatives may be adequate to protect the public without all of licensing’s costs.
Figure 3: The Inverted Pyramid Offers Many Less Burdensome Alternatives to Licensing
Many occupations may not require any government intervention. If there is no threat to public health or safety, the government should not get involved. Not only is poor, though safe, service—a bad haircut or an ugly floral arrangement, say—an illegitimate reason for government intervention, but, as our results and the results of other research show, government intervention may not even work to promote quality. 4
In fact, the costs of government intervention are likely to outweigh any benefits where there is no threat to public health or safety.
Occupations that the government does not regulate are not “unregulated.” Indeed, ordinary market competition gives businesses incentives to provide safe, quality service. Businesses that fail to provide such service will suffer loss of reputation—and customers. 5
This has always been the case, but it is truer now than ever thanks to the ease with which modern telecommunications and consumer review platforms such as Yelp and Tripadvisor allow consumers to share information, not just with people they know but with complete strangers. 6
Alone, or in tandem with other voluntary alternatives, market competition may be enough to ensure safe, quality service in many occupations. For example, service providers who want to assure prospective consumers of their commitment to safety and quality can proactively share prior consumer feedback, such as by linking to their Yelp or Tripadvisor pages from their websites or other marketing materials. Such quality self-disclosures can send a powerful signal to consumers.
Service providers can also signal their commitment to safety and quality by voluntarily obtaining and maintaining third-party professional certifications, or pursuing other training, or becoming bonded or insured. Tara Swagger, the Connecticut salon owner from our introduction, for example, can boast numerous credentials that she obtained voluntarily. As she put it, her clients are “very happy to know [her] long list of credentials and commitment to education has them in safe hands.” 7
If these fully voluntary measures are not enough to protect the public, consumers can bring lawsuits against service providers under private causes of action. And all 50 states and the District of Columbia have consumer protection laws called deceptive trade practice acts that allow both attorneys general and consumers to sue service providers engaged in certain practices deemed false, misleading or deceptive. 8
Governments should consider more restrictive alternatives if and only if there is systematic, empirical evidence of a significant threat to public health and safety not adequately addressed by voluntary alternatives or less restrictive preexisting government interventions such as those described above. Where they find real evidence of such threats, governments should adopt the least restrictive intervention (or combination of interventions) that would address the problem, with licensing being their last resort.
They may well find that inspections, mandatory bonding or insurance, registration requirements, or state certification as a condition for using a particular title are adequate to protect the public. And if governments determine licensing is the only way to protect the public, they should ensure licensing requirements are no more restrictive than necessary. 9
Following this approach would help ensure any new licenses or other occupational regulations are both necessary and no more restrictive than necessary to protect the public. But as this and other research suggests, 10
many unnecessary licenses are already on the books. And many requirements of existing licenses seem dubiously related to health and safety. For example, a recent study found that, on average, only about 25% of barber and cosmetologist curricula and 40% of manicurist curricula cover health and safety. 11
Governments should therefore review existing licenses and other occupational regulations to determine whether they are necessary and properly targeted to protect the public.