Free Enterprise

Economic Empowerment of Women Can Improve With Licensing Reform

This article was authored by research intern Mitchell McCabe.

Occupational licensing has become a significant topic of debate in recent years. Advocates of licensing argue that licensing requirements protect public safety and consumer welfare, while critics contend that they restrict competition, raise prices, and limit job opportunities.

Occupational licensing is a series of requirements people wanting to work in certain jobs must complete before obtaining a job in their desired profession. 

This means that if you want to work as a hairdresser or a nurse, for example, you have to take certain courses, pass exams, pay fees, etc., to get a license that allows you to work in that field. These requirements can make it harder for people to get jobs, especially if they can’t afford the time or money to get a license. 

One major piece of criticism licensing has received is that licensing requirements can disproportionately impact women.

Many occupations in which women encompass the majority of employed professionals, such as daycare provider, lactation consultant, midwifery, nursing occupations, and beauty occupations like cosmetology, makeup artistry, shampooer, skin care specialist, and eyebrow threading, are often licensed. This creates barriers to entry due to the demands on time, money, or in most cases, both. The scarcity of workers in these professions can lead to long wait times, limited availability of services, and higher costs.

When licensed occupations have below-average incomes, the investment in licensing requirements may not compensate for these costs. For example, all 50 states and the District of Columbia require cosmetologists to be licensed with months of training, exams, and hundreds of dollars in fees before new cosmetologists can work. However, as of 2021, cosmetologists earn an average of $36,000 each year.

Clearly, the income of prospective cosmetologists can disincentivize individuals from pursuing these professional roles. It seems clear, especially for professions like cosmetology, which many lay people already perform in an unlicensed capacity within their own homes, that licensing is unnecessary or, at a minimum, is too regulated. 

In addition to creating barriers to entry, licensing also raises costs for women as consumers of these services, including health and personal care services specific to women. This occurs as licensing stifles competition between providers. As a result of lessened competition, already established providers can raise prices or maintain already high prices without fear of competition.

With the consequences that licensing can inflict on women, it is necessary that states review the extent to which their licensing burdens are disproportionately imposed on women and consider whether licensing is necessary or could be replaced with a less burdensome alternative. 

In the process of executing occupational licensing reform, states must also remember that concerns about protecting public health and safety can be adequately addressed through less burdensome alternatives, such as market competition, voluntary or state certification, voluntary or mandatory bonding, and liability insurance.