License to Exclude: Black Barbers in Arkansas

By Tanner Corley, Wendy Lucas, and Marcus Witcher.

When I taught micro, I used a supplemental text, The Economics of Public Issues, by Roger Miller, Daniel Benjamin and Douglass North. They had a chapter titled  "Keeping the Competition Out."

In the 2018 (20th) edition they wrote:

"Thirty years ago, there were about eighty occupations  for which one or more state governments required a license. Today, there are over eleven hundred occupations that require a license in at least one state, ranging from secretaries in Georgia to wallpaper hangers in California. Roughly 30 percent of the U.S. labor force, about forty-eight million individuals, now belongs to a licensed profession."

Now the abstract from the article linked above

"Abstract

In the early twentieth century, predominantly white union barbers in Arkansas implemented voluntary regulations that dictated business practices to create a voluntary cartel. Black and other minority barbers who often had more success than white barbers prior to unionization tended to ignore these regulations, destabilizing the union’s cartel. Lacking a strong enforcement mechanism, white union members turned to the state to eliminate what they saw as unfair competition. By implementing a licensure law and creating the Board of Barber Examiners in 1937, established barbers were able to give themselves a stark advantage over future entrants into the profession. The law was detrimental to minority barbers. Black barbers failed to pass barber licensure exams at an equivalent rate as their white counterparts, and the number of Black barbers in Arkansas decreased significantly over the decade that the regulations were implemented. In making our assertions, we examine primary sources regarding the Journeymen Barber’s International Union of America, while also keeping in mind the data on pass rates, the composition of regulations, and exams that the Board of Barber Examiners implemented. Though scholars often assume that licensure laws harm minorities, we provide a detailed case study to support those claims."

Related post:

Licensing Laws Are Shutting Young People Out Of The Job Market (2016)