Occupational Regulations and Gender Wage Gap

Two researchers at Utah State University have discovered a factor which may be silently impacting the much-discussed, but poorly understood, gender wage gap. Lindsey McBride and Grant Patty examined the gender bias of occupational licensing requirements. What they found is that —  at least at the lower end of the socioeconomic ladder — women are far more likely than men to need to obtain government permission to work.

The researchers focused on jobs in Utah with median yearly earnings below $40,000 (the state’s average) so as to exclude doctors, lawyers, financial professionals, accountants and other specialized professions that are universally licensed. As Economics 21 explains:

The authors then determined the primary gender of those who worked in the thirteen occupations that fell in this category. Their results are clear— in Utah. Approximately 70 percent of the people who needed licenses to work in these professions were women. Of the 13 occupations examined, 9 licensed more women than men and 6 were over 80 percent female. These occupations included dietitians (98 percent female), court reporters (80 percent), cosmetologists (94 percent), and estheticians (96 percent), to name a few.

Similar results can be seen in public interest law firm Institute for Justice’s state-by-state rankings of licensing requirements. The firm regularly fights on behalf of women whose livelihoods are endangered by regulators. For example, even though African hair braiding involves zero dangerous chemicals or implements, Dr. JoAnne Cornwell faced losing her business, Sisterlocks, because she hadn’t spent thousands of dollars and hundreds of hours learning irrelevant, outdated techniques. The truth is Cornwell had developed a new method of braiding which threatened existing businesses. IJ was successful in striking down the arbitrary, cronyist legislation.

According to IJ, the profession with the most onerous licensing requirements out of all the low- and moderate-skill professions is interior design, an overwhelming female field. To design interiors in Nevada, Louisiana, Florida, or the District of Columbia costs $364 and an average of six years of required experience. But it’s hard to understand how ugly rooms threaten public safety.

Right now IJ is fighting for Trisha Eck’s right to allow her customers to use her teeth whitener in her office, though a board of Georgia dentists wants to shut her business down. And in Arizona, Celeste Kelly and IJ are fighting for her right to operate her animal massage business.

There’s abundant evidence that attempts to mandate equal pay can actually hurt women. Legislation always carries with it unintended consequences, no matter how well-intentioned.

The truth is neither side has it right. The left says the gender wage gap results from discrimination. The evidence for this is shaky at best. The right says the gender wage gap can be chalked up to women’s choices. But this doesn’t take into account how government-mandated barriers such as the high cost of child care and occupational licensing laws influence those choices.

Who knows what choices women might make if they were allowed to work without needing permission slips from, essentially, their competitors? There can be no doubt that up-front costs of thousands of dollars and hundreds of hours to even get started in a profession effectively thwarts many women’s career hopes and dreams. By ignoring the problem of women’s underutilization in the work force, or trying to fix it with overbroad, blunt legislation, we miss opportunities to fight to simply government out of the way so women can succeed.