How Economic Regulation Hurts the Poor – Walter E. Williams

In the name of protecting public health, California requires that an individual who seeks to perform any kind of hairstyling service must complete nine months (1,600 hours) of classes at a state-approved cosmetology school, at a tuition cost of at least $5,000, before taking the state licensing examination. This regimen is required even though the school curriculum and the exam bear little or no relation to the kind of services rendered by African hairstylists….

 

Restricted entry through licensing places disadvantaged people at a severe handicap without necessarily improving the quality of services received by the consumer, the ostensible beneficiary of the regulation.

 

In fact, one study showed that there is a significant relationship between occupational licensing and the number of accidental deaths by electrocution: the more stringent the state’s electrician licensing examination, the fewer the electricians and higher prices for an electrician’s services; therefore, the greater the willingness of amateurs to undertake electrical wiring tasks and risk electrocution in the process…

 

Occupational licensing also produces what authors Sidney Carroll and Robert Gaston call the “Cadillac effect.” By insisting on stiff requirements for entry, licensing provides high-quality services for high-income people. But people with low incomes, who cannot afford to pay the higher prices, are forced to do without the service, do the work themselves, or rely on lowpriced, unlicensed charlatans.

– Walter E. Williams, Ph.D., Race and Economics