Minnesota State Government Finance and Policy and Elections Committee – 3/2/21

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Minnesota State Government Finance and Policy and Elections Committee – 3/2/21

Trimming barber and cosmetologist regulation will not harm consumers

Dr. Edward Timmons

Director, Knee Center for the Study of Occupational Regulation, Saint Francis University

Senior Affiliated Scholar, Archbridge Institute

Minnesota State Government Finance and Policy and Elections Committee

March 2nd 2021

 

Thank you Chair Kiffmeyer and all distinguished Committee members:

 

My name is Edward Timmons and I am a professor of economics and director of the Knee Center for the Study of Occupational Regulation at Saint Francis University in PA. I am also a senior affiliated scholar with the Archbridge Institute.

The main takeaways of my comments are the following:

 

  1. More than 100 million residents in the United Kingdom and Spain, and half of the member states of the European Union, have lived without barber and cosmetologist licensing for decades and there is no evidence that consumers have suffered as a result.
  2. The state of Alabama did not license barbers for 30 years and there is no evidence of any harm to consumers during this time period.
  3. A recent research paper finds that consumers are much more interested in online ratings from peers than state issued licenses when choosing service providers.

My own research and the research of other scholars has shown that licensing restricts entry into professions and leads to higher prices for consumers. It is important to emphasize that occupational licensing is not the only way to regulate a service. Instead, occupational licensing is the most onerous way.

The UK, Spain, and half of the members of the EU do not require barbers or cosmetologists to obtain a license to work. There is no evidence that the more than 100 million consumers in the UK and Spain have been harmed as a result. Barbers and cosmetologists in the United Kingdom can obtain certification if they choose to do so—it is completely voluntary. Barber and cosmetology schools continue to exist and the market functions well.

In the US, the state of Alabama did not license barbers from 1983 to 2013. Once again, there is no evidence that consumers were harmed by the lack of licensing over this 30 year period. My own research illustrates that it was only after years of intense lobbying from the Alabama Board of Cosmetology that licensing was reinstated in 2013. Consumer groups did not ask for this regulation.

Many other important service providers like barbers and cosmetologists are not subject to licensing. Chefs and wait staff at restaurants and auto mechanics are not required to be licensed. Chefs and wait staff are regulated by random inspections and mechanics can obtain voluntary certification. All service providers are regulated by market discipline– poor quality providers will not be in business for long.

I have never asked my barber to see a state issued license. Instead, I ask my friends or visit the Internet to learn about provider reputation and quality.

A recent research paper more formally documents this behavior. In an online platform for home repair contracting services, it is shown that consumers are much more interested in online ratings of service providers than a state-issued license.

Today, it is hard to justify why barbers and cosmetologists are licensed in Minnesota– the market has dramatically changed since many licensing laws were written. This proposed bill is an important first step, but it is time to more carefully reassess the costs of these regulations.

Watch the video here!

 

Click here for the pdf version