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Cosmetology Puts a Face on Efforts to Curb Job License Barriers

July 27, 2021, 6:05 PM

Elle Scheller was a year into her 1,200-hour training to be a master esthetician before she said poor instruction and costly fees piled up. Her tuition—which she paid with loans and financial aid— was $16,000 in total and she’s still on the hook for $5,000 plus interest.

She started a new school—and had to pay through loans for tuition but all her credits wouldn’t transfer— with the hope of finishing by early next year, all to earn a license for her dream job. She feels like it was easy to fall into the trap and build debt for little payoff.

“I wanted to make people feel good and help them with their skin,” said Scheller, who is training in Salt Lake City with the intention of working in a medical spa for treatments such as facials, waxing, and microblading. “I would just want people to know getting into this to do their homework to avoid being taken advantage of.”

Tuition and fees for cosmetology training are high, but less than a third of students graduate on time and they earn an average of only $26,000 a year across the U.S, according to a report released last week by the Institute for Justice, a libertarian nonprofit that opposes government regulation.

Cosmetology is just one example of a highly licensed industry comprising lower-income workers that could be affected if the Federal Trade Commission tamps down on occupational licensing, a largely bipartisan issue that President Joe Biden targeted in a July 9 executive order.

There are cost-benefits to licensing, as they on average lead to higher wages. But there can be barriers to enter certain industries, including in low- and medium-skilled jobs that range from health positions to hair stylists and those in agriculture. Those opposed to strict licensing target jobs such as tax preparers, florists, and African hair braiders.

During the Covid-19 pandemic, states looked to relax licensing requirements, particularly for traveling nurses, and attention has focused on industries that require licenses, often to increase reciprocity across state lines or expand access to immigrants or those with criminal histories.

Roughly 23% of workers in 2020 were required to have a license, according to the Bureau of Labor Statistics. Over the years, some states—including Arizona, Connecticut, Nebraska, and Tennessee—have modified their rules to lower what they consider to be burdensome barriers to obtaining licenses.

“Licensing is definitely something that is necessary in a lot of cases, it is there at its core to protect public health and safety,” said Iris Hentze, a policy specialist with the National Conference of State Legislatures. “It needs to exists, but sometimes it gets away from health and safety and goes toward industries being protective of themselves. That’s where it can get unruly.”

State Action

The Institute for Justice’s July 22 report found that cosmetology students borrow more in federal student loans than most students and struggle to earn enough to pay them back.

The institute has filed lawsuits against licensing requirements, including in Oklahoma over licensing for eyebrow threaders and in Louisiana over education requirements for braiders. It’s also filed lawsuits in other industries, such as one on behalf of a North Carolina engineer who is being investigated for “unlicensed engineering,”and others in D.C. and New York over restrictions on teletherapy.

Some states have dropped licensing requirements for shampooing, blow drying and styling, makeup artistry, eyebrow threading, eyelash extensions, and natural hair braiding, the group said.

But other states’cosmetology license requirements make it difficult for workers to move. The number of hours needed for training can vary between 200 and 2,800 hours, Hentze said.

At the federal level, Biden promised during his campaign to “put an end to unnecessary occupational licensing requirements [and] ensure licenses are transferable from one state to the next.”

Former President Donald Trump last December signed an executive order to “reduce the burden of occupational regulations in order to promote the free practice of commerce, lower consumer costs, and increase economic and geographic mobility.” The Obama administration also focused on licensing and released a 2015 report that sparked interest from states in addressing burdensome requirements.

Changes to occupational licensing, however, will largely fall to states. “There isn’t a lot the federal government can do to change these things, other than motivate states to make changes,” Hentze said.

Some states have increased reciprocity for various licenses or reduced the fees required to work within their borders.

Other trends include removing citizenship requirements, and allowing for foreign education and training to be considered. When states use criminal background checks for various licenses, they can disproportionately affect workers of color, said Beth Avery, a senior staff attorney with the National Employment Law Project.

“Licenses and certifications can be helpful to workers and increase wages with respect to the jobs they are working in,” Avery said. “The real problem is when there are issues when there are unfair barriers that keep workers out of these professions.”

FTC’s Role

Biden’s executive order calls on the Federal Trade Commission to boost labor market competition by writing new rules that limit “unnecessary, cumbersome” licensing requirements, often imposed by states’ regulatory boards and quasi-public organizations.

The text of the order didn’t include specific directions for federal antitrust agencies. But the FTC’s anticipated actions and possible rulemaking could lead to streamlined licensing requirements across states, eliminating demands for worker information unrelated to the job, enforcing interstate commerce rules, and levying of punitive fines, market watchers say.

Occupational licensing comes from a concern for health and safety and while it is more prevalent than it used to be, it also comes at a time when workers are less protected, said Mary Alice McCarthy, director of New America’s Center for Education & Labor.

McCarthy said compared with other issues outlined in Biden’s executive order, it isn’t something that would harm workers’ wages. She said while it could increase costs for consumers to have strict licensing in place, data show that most people with licenses have higher wages than those who do not.

“I don’t know if it’s bad on its face. Being thoughtful about removing burdensome and necessary licensing is trickier than it sounds,” she said. “It appears to be a pro-business piece within a larger executive order that was focused on corporate consolidation. In the end, it’s about consumer protection and quality control.”

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editor responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com

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