The Cato Institute

Do You Really Need a License for That?

To what extent should states require manicurists, or other professions that by and large have nothing to do with health and safety, to be licensed?

The mindset of the regulator has overtaken so many professions by imposing licensing.

The typical state licenses hundreds of professions. Some of those are largely unobjectionable—most people want doctors and anesthetists to undergo a licensing regime before assuming their professions, for instance (though, even in the medical field, licensure not only fails to protect consumers from incompetent physicians, but, by raising barriers to entry, makes health care more expensive and less accessible). But other licenses are clearly problematic.

For instance, many states require interior designers and florists to be licensed. Do we really need to be protected from a rogue designer who might do damage to the color scheme of our homes? The same question can also be asked of manicurists, barbers, aestheticians, and other professions that have little to do with health or safety. 

Occupational regulation has grown because it serves the interests of those in the occupation as well as government. Members of an occupation benefit if they can increase the perception of quality and thus the demand for their services, while restricting supply simultaneously. Government officials benefit from the electoral and monetary support of the regulated as well as the support of the general public, whose members think that regulation results in quality improvement, especially when it comes to reducing substandard services.

However, the harm in excessive licensing is twofold.

First, people with an aptitude for a profession but without the means to take the classes to obtain the license are effectively shut out of a way to earn a decent living. Second, the higher wages from excessive licensing translates to higher costs for these services as well.

Unnecessary licensing hurts the entire state, but those who come from low-income households or lack the means to obtain the training to get such jobs suffer the most.

In an economy where states have been ratcheting up their efforts to attract jobs and boost economic growth, it is time to examine the current licensing regime and think cogently about which tasks merit licensing and which can do without. 

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Is the Gender Wage Gap Real — and is Sexism to Blame?

If we care about women’s wages, then we should focus on the cultural and societal pressures which exist outside the workplace walls…

Today is Equal Pay Day, the day that marks how far into the next year women on average have to work to bring home the same income men earned in the previous year. We routinely hear that women get paid 76 cents for every dollar a man gets paid, an alarming workplace injustice — if it’s true.

Are women really getting paid less than men for doing the same work?

The 76 cent figure is based on a comparison of median domestic wages for men and women, but comparing men’s and women’s wages this way doesn’t tell the whole story. 

Empirical research finds that gender discrimination is not largely impacting wages.

This in no way discounts the negative experiences women have had, and we should not shy from denouncing inequitable treatment. Certainly somewhere a degenerate, sexist, hiring manager exists, someone who thinks to himself, “You’re a woman, so you deserve a pay cut.” But rather than that being the rule, this seems to be an exception. 

The data seems to indicate that the decisions that impact wages are more likely due to cultural and societal expectations. Simply put, men and women make different career choices that impact their wages.

After controlling for age, education, years of experience, job title, employer, and location, the gender pay gap fell from nearly twenty-five cents on the dollar to around five cents on the dollar. In other words, women are making 95 cents for every dollar men are making, once you compare men and women with similar educational, experiential, and professional characteristics.

The remaining 5 cent difference might be due to discrimination — or it might be due to differences in salary negotiations, or other reasons.

It’s possible that women would make different, more lucrative career decisions given different social or cultural expectations, but it remains the case that 1) men and women work in different industries with varying levels of profitability and 2) men and women, on average, make different family, career, and lifestyle trade-offs.

Only 35% of professionals involved in securities, commodities, funds, trusts, and other financial investments and 25% of professionals involved in architecture, engineering, and computer systems design are women. On the other hand, women dominate the field of social assistance, at 85%, and education, with females holding 75% of jobs in elementary and secondary schools.

It’s possible women may select different jobs than men because they care more about job content. On the other hand, women are considerably more likely to absorb more care-taker responsibilities within their families, and these roles demand associated career trade-offs.

Women are more likely than men to make decisions to accommodate family responsibilities, such as limiting (work-related) travel, choosing a more flexible job, slowing down the pace of one’s career, making a lateral move, leaving a job, or declining to work toward a promotion.” A full two-thirds of Harvard-educated millennial generation men expect their partners to handle the majority of child-care, and 43% of highly-qualified women with children leave their careers or “off-ramp” for a period of time.

Perhaps that’s why even though most women are convinced that other women are getting paid less than men for doing the same work, new polling data show that most women also believe they personally are being treated fairly.

While 62% of women believe that women “generally” get paid less than men for doing the same work, just 14% believe their employer pays women less than men, and 17% say women have fewer opportunities for promotions where they work.

These are nearly 50-point shifts in perception from what women believe is generally happening in society at-large, and what they collectively report is happening based on their experiences in their own jobs.

Nonetheless, while 60% of American women women’s pay is impacted by different choices about how to balance work and family, 54% of women believe that gender discrimination is a “major reason” for the pay gap, and less than half attributed it to women working fewer hours or in different occupations than men.

It’s important to balance the empirical facts with where people are coming from, be mindful about how we explain the sources of the gender pay gap, and avoid suggesting women aren’t working as hard as men.

Although differences in the number of hours men and women work (and when those hours are worked) is a significant driver of the wage gap, only 28% of women thought this was a “major reason” that women on average earn less than men. 

Just because men on average work more hours in an office setting doesn’t mean women aren’t working the same — or more — hours, when you combine hours worked in the office and taking care of family and home responsibilities.

Is there any harm in fostering the widespread belief that gender discrimination in pay and opportunity is the rule, rather than the exception?

By painting women as victims of circumstance, the “equal pay for equal work” rallying cry perpetuates a dangerous myth. Allowing women to believe that a large part of their success is beyond their control, or that they are systemically undervalued, strips them of the confidence they need to succeed. Believing that the deck is stacked against them regardless of their choices undermines women’s risk-taking, accountability, and initiative. It also unhelpfully directs focus away from dealing with the real barrier to long-term earning power — social and cultural pressures.

Convincing women of widespread, overwhelming injustice against them isn’t helping. Instead, it risks holding women back by causing the very injury that equal rights advocates fight against.

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