Testimony before the California Senate Business, Professions, and Economic Development Committee
Matthew Glans, Senior Policy Analyst
Lindsey Stroud, State Government Relations Manager
The Heartland Institute
April 16, 2018
Chairman Hill and members of the committee, thank you for taking the time to discuss the issue of occupational licensing reform today. The Heartland Institute is a 34-year-old independent, national, nonprofit organization whose mission is to discover, develop, and promote free-market solutions to social and economic problems. Heartland is headquartered in Illinois and focuses on providing national, state, and local elected officials with reliable and timely research and analyses on important policy issues. Heartland would like to submit the following testimony in support of occupational licensing reform.
Occupational licensing laws are burdensome regulations imposed by states that produce a slew of negative economic effects, such as increasing the costs of goods and services. Occupational licensing creates to barriers to entry which reduces business competition, leading to fewer jobs and lower-quality services. In most cases, these rules are unnecessary and counterproductive because government involvement guarantees neither better nor safer services.
According to the Goldwater Institute, occupational licensing enables special interest groups and established businesses “to use the force of government to control monopolies, drive out competition, and punish upstarts.”[i]
California currently has some of the most burdensome occupational licensing laws among all the states. Astonishingly, California “requires a license to work in 62 of the low- and moderate-income occupations surveyed — more than any state but Louisiana and Arizona,” according to a study by the Institute for Justice (IJ).[ii] California’s licensing laws are the seventh-most oppressive, and on average, applicants to licensed occupations “can expect to pay $300, lose 549 days to education and experience requirements and pass one exam,” according to IJ’s analysis.
California also has some of the most extreme cosmetology laws. Currently, only a licensed cosmetologist “can arrange, dress, curl, wave, permanent wave, cleanse, cut, shampoo, relax, singe, bleach, tint, color, straighten, dye, brush, apply hair tonics, beautify, or otherwise treat by any means the hair of any person.” These onerous regulations decrease opportunities and innovations in California’s cosmetology field.
For residents of the Golden State to become licensed cosmetologists, they must complete 1600 training hours and pass a written and practical examination. [iii]While California lawmakers believe such regulations ensure consumer safety, the Buckeye Institute notes consumer information websites, such as Angie’s List, Yelp, and the Better Business Bureau are better consumer information sources. Occupational licensing regulations are little more than “government seals of approval and permission [that] are superfluous, and their coercive [nature] invites corruption.”[iv]
Unfortunately, California has used occupational licensing programs to alleviate state budget shortfalls. In the 2008-09 fiscal year alone, “California’s general fund borrowed $96.5 million from its regulatory bodies’ ample reserves.”[v] Expanding burdensome licensing laws allows state lawmakers to rely on the ample revenue stream licensing fees bring to state coffers courtesy of hard-working taxpayers.
Like all states, California should focus on establishing an economic environment for existing industries to expand and new businesses to open. Eliminating unnecessary occupational licensing laws would be a good step toward incentivizing large and small businesses to create additional jobs in the Golden State, altogether benefiting job seekers and consumers.
For more information about The Heartland Institute’s work, please visit our websites at www.heartland.org or http:/news.heartland.org, or call Lindsey Stroud at 312/377-4000 or reach him by email at [email protected].
[i] Mark Flatten, “Protection Racket: Occupational Licensing Laws and the Right to Earn a Living,” Goldwater institute, Dec. 6, 2017, https://goldwaterinstitute.org/article/protection-racket-occupational-licensing-laws-and/
[iii] California Board of Consumer Affairs, “Board of Barbering and Cosmetology,” http://www.barbercosmo.ca.gov/forms_pubs/publications/faqs.shtml
[iv] Greg R. Lawson, “Past time to end the permission slip policy on jobs,” Watchdog, Nov. 21, 2017, https://www.watchdog.org/ohio/op-ed-past-time-to-end-the-permission-slip-policy/article_603e74bc-cec8-11e7-9e31-7bf1f920d060.html
[v] Stephanie Simon, “A License to Shampoo: Jobs Needing State Approval Rise,” The Wall Street Journal, Feb. 7, 2011, https://www.wsj.com/articles/SB10001424052748703445904576118030935929752