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City Hall's License to Kill Civil Society

Monday, July 1, 1996

The sharp knock at the door provoked a frown on the face of Taalib-Din Abdul Uqdah. As the co-owner and manager of Cornrows & Co., the first African hairbraiding salon in the District of Columbia, Uqdah was in the midst of another busy day, and the persistent knocking was an unwelcome interruption.

Uqdah found himself face-to-face with the enforcement officer from the D.C. Board of Cosmetology, who demanded to see Uqdah’s cosmetology license. Uqdah replied he had not realized that he needed one, and promised to apply promptly.

Imagine his surprise when he found out that in order to braid hair in the District of Columbia, he had to complete at least 1,500 hours of prescribed training (more than eight months full time) in one of a handful of licensed cosmetology schools, which charged between $3,500 and $5,000. Applicants were required to master chemical and heat treatments of hair (which are irrelevant to braiding) and spend 125 hours practicing shampooing techniques. Each of the 10 people employed by Uqdah had to be licensed this way, and as a manager, Uqdah was required to take further training.

Unable to afford such time and expense, Uqdah and his wife, Pamela, decided to stay open without a license. Soon the cosmetology police returned, this time with a cease-and-desist order. Uqdah faced a choice: close his business for months while he went to school, or continue to operate without a license and confront the prospect of hefty fines and up to 90 days in jail. Uqdah came to us at the Institute for Justice for help.

In the ensuing months, we fought the D.C. Board of Cosmetology in court while Uqdah continued to practice his trade and drew national attention to his plight. The city council finally capitulated and deregulated the cosmetology profession to permit hairbraiding without arbitrary and excessive licensing requirements. Today Cornrows & Co. continues to thrive; ABC’s 20/20 has called the business a "shining example of neighborhood success." But the victory did not come cheap. "I fought the cosmetology board for 10 years," Uqdah says. "I think about all the things I could have done . . . if I hadn’t been so consumed by my struggle just to earn an honest buck. That’s when I get mad."

The lost opportunity, frustrated dreams, and wasted energy that Uqdah laments should outrage all who care about civil society. Not because of this injustice alone, but because the story of Cornrows & Co. is repeated endlessly in cities nationwide, in countless other business and social-service ventures. The cumulative harm casts a pall over the initiative, voluntary association, and spirit of self-help essential to the well-being of individuals and communities.

Policymakers speak of the need to foster vibrant neighborhoods and end the culture of welfare dependency. The devolution of federal power to the states is in vogue among conservatives, but will do nothing to alleviate the suffering of Uqdah and others like him, because their sorrows stem almost entirely from the actions of state and local governments.

All across America, licensing and credentialing requirements imposed by law set the conditions of entry into an astonishing array of activities. These requirements block individuals from engaging in perfectly legitimate enterprises. Sometimes the government sets arbitrary limits on the number of licenses or permits it will grant. For instance, until recently New York City’s notorious medallion system had for 60 years capped the number of taxicabs in Manhattan at 11,787. Often the requirements imposed by the credentialing process are so onerous that many find the cost of compliance prohibitive.

The main rationale for this government credentialism is, of course, protecting the health and safety of the public. And indeed, our Constitution gives state governments the authority to regulate activities for this purpose. Thus the government may legitimately require restaurants to maintain sanitary food-preparation facilities, set speed limits for public roads, and demand that taxicabs carry adequate liability insurance. The very nature of credentialism, however, provides governments with opportunities and incentives to attach conditions to the licenses. As the number of conditions grows, their link to legitimate public concerns wears thin.

Thirty-four years ago, Milton Friedman offered an indictment of occupational licensing and government credentialism that is even more compelling today. Licensure, Friedman noted in Capitalism and Freedom, "almost inevitably becomes a tool in the hands of a special producer group to maintain a monopoly position at the expense of the rest of the public. There is no way to avoid this result." Indeed, the D.C. Board of Cosmetology that pursued Uqdah with such determination was composed entirely of other cosmetologists.

To understand the pervasiveness and danger of government credentialism in everyday affairs, one can find no better environment than New York City. Thanks largely to immigrants, New York is famous the world over for its history of enterprise. Today, new waves of immigrants from the Caribbean, Latin America, and Eastern Europe, along with the native-born New York poor, are following the entrepreneurial path of previous generations. By many accounts, the city is enjoying a boom in enterprising persons of modest means.

The city’s ubiquitous Korean grocers are perhaps the best known. Consider some other examples drawn from research undertaken for the Institute for Justice by Howard Husock of Harvard’s John F. Kennedy School of Government:

• In Brooklyn and Queens, hundreds of vans, most of them owned and operated by immigrants from the Caribbean, carry passengers from the subway lines to the city’s growing middle-class minority neighborhoods. Their fares are lower than those of public buses, and many patrons believe the van service is more comfortable and reliable.

• In Harlem, as well as in many black neighborhoods in Brooklyn and Queens, salons specializing in African-style hairbraiding spring up almost overnight. These stylists are so popular that they can fetch prices of up to $200 per customer.

• On street corners, in vacant lots, and in weekend street fairs, street vendors—some Caribbean, some West African—from Harlem to the Jamaica section of Queens hawk basic commodities such as ties, umbrellas, and T-shirts, along with imported "Afrocentric" books and novelties. Southern-born African Americans, too, are involved in individual enterprise, preparing barbecued foods or sweet potato pie in their kitchens for sale on street corners or in neighborhood "farmer’s markets." An estimated 25,000 such street vendors do business in the city.

• Outside of Manhattan, there are more than 20,000 providers of "car service," radio-dispatched taxis that pick up customers who call and transport them for a pre-arranged fee. Car-service drivers with their own cars can easily enter the business in a city where almost half of all households do not own cars.

It is in many ways an inspiring picture—until one realizes that all of these self-employed entrepreneurs may face arrest at any time.

Most van drivers—or providers of "community transportation," as they like to say—are unlikely to receive a license. Even if they do, they face fines or even confiscation of their vehicle for such offenses as picking up passengers at public bus stops. In essence, their activity is illegal because they compete with publicly operated buses.

Hairbraiders cannot be licensed by the state of New York and face peremptory shut-down, unless they take more than five months of classes. Much of this curriculum teaches aspects of hairstyling and treatment they will never need. Many are said to move from one clandestine location to another, particularly in and around Harlem’s 125th Street, to avoid closure.

Street vendors who want a legal permit to sell their wares find that there are three to four times more working vendors than permits available. The city’s Office of Consumer Affairs, to which vendors must apply, knows that the permits become available so rarely that it will not even hand out the permit application to prospective vendors.

Car-service drivers face no such limit on their number. But should they seek customers by responding to a simple hail on the street, like traditional taxis, rather than through a radio dispatch, they face discipline by the city’s Taxi and Limousine Commission. Drivers who aspire to operate a taxi legally in the city’s lucrative markets in midtown and lower Manhattan will find it is next to impossible. The city has placed a cap on the number of taxi medallions, which authorize drivers to pick up passengers on the streets of New York. The price of a medallion on the private market exceeds $200,000.

The city’s occupational license and permit laws occupy 73 pages in the Official Directory of the City of New York. One needs a license to offer a weight-reduction class, to repair videocassette recorders or install ventilation systems, to work as an usher or sell tickets at wrestling matches, to work as a security guard or remove and dump snow and ice, to set up a parking lot or a junk shop.

The requirements of this omnipresent licensing regime lacks any semblance of coherence. Compare the 1,000 hours of training needed to become a cosmetologist with the 116 hours to qualify as an emergency medical technician (with advanced training in the use of heart defibrillation), and the 47 hours to be an armed security guard trained in the use of deadly force.

New York may be unique, but Vietnamese manicurists in San Diego, cab drivers in Boston, and street merchants in Charlotte can testify to the pervasiveness of such barriers. Government credentialism clearly stands in the way of economic opportunity, particularly for those of modest means. Were that its only effect, its toll on civil society would be severe. But its corrosive presence extends beyond the realm of enterprise.

We see throughout our society the growing professionalization of activities and careers. This can be seen as an extension of American meritocracy, which rewards achievement and specialization. As a result, increasingly technocratic distinctions and titles separate the professional and the nonprofessional. Government credentialism reflects and enforces the stigma attached to the nonprofessional in law, policy, and social intercourse. The professional is presumed more capable than volunteers or others without the proper credentials. Such presumption, which pervades our society, is the legacy of the Progressives’ faith in experts.

This should trouble those of us who seek to foster the voluntary interaction, charitable impulses, and locally tailored programs essential to civil society. Spontaneous efforts to control crime or provide child care are viewed as quaint stopgap measures, useful only until government can impose a comprehensive professional program.

Nowhere is this more evident than in the condescension directed toward small, religiously motivated self-help programs. Typically these programs draw on the inspiration and energy of individuals imbued with a strong religious faith and personal experience with the problem they seek to address. They may have taught themselves from the Bible or Koran, or received formal education from small bible colleges far removed geographically and philosophically from the Kennedy School of Government or the Harvard Divinity School.

By contrast, the spirit of credentialing presumes that comprehensive solutions to social problems require sophistication, uniformity, and standardization. Perhaps no more telling example can be found than in the friction that exists between state licensing agencies and faith-based drug and alcohol treatment facilities.

In an effort to protect vulnerable addicts, government regulatory agencies typically oversee minute details of day-to-day treatment in state-licensed, state-funded rehab centers. The staff at these centers—clinicians, counselors, therapists—must conform to state-imposed standards. Treatment approaches are also tightly regulated by government fiat. In short, any group licensed to offer rehabilitation services will do so according to a pre-determined government script.

There are numerous privately funded treatment centers that eschew government licensing and the regulatory hooks that come with it. But their days may be numbered. Consider Teen Challenge, the largest and most successful private, faith-based program for helping drug and alcohol abusers. Lately, the government’s attitude toward such agencies seems to be this: You can run, but you can’t hide.

Like the students he taught at Teen Challenge in San Antonio, Reverend Jim Heurich was a former alcoholic and drug abuser. After years of self-destructive behavior and unsuccessful treatments for his problem, Heurich entered the Teen Challenge program and committed his life to Christ. He now runs the San Antonio office.

Teen Challenge programs in San Antonio and nationwide achieve a dramatically high success rate among individuals who complete the year-long program—as high as 70 percent, according to one government study. State-sanctioned programs manage only single-digit or low double-digit success rates. Moreover, the Texas chapter achieves its results for $25 to $30 a day, or at about 3 percent of the cost of government-licensed programs.

The Texas Commission on Alcohol and Drug Abuse (TCADA) determined that it was illegal to "offer or purport to offer chemical-dependency treatment without a license." In 1995, TCADA notified Teen Challenge of San Antonio that it had to have a license to continue its program. Fines of up to $25,000 a day and imprisonment awaited those who practiced chemical-dependency treatment without a license. It was of no importance that the San Antonio chapter had been treating addicts since 1969 and boasted a solid record of success.

Teen Challenge had to meet state standards and adopt the therapeutic model of treatment favored by the state. Under this model, staff members had to be "qualified credentialed counselors" trained to treat drug and alcohol abuse as a disease from which one is never cured. Program and reporting requirements would compel Teen Challenge to internalize this medical model of treatment in profound and subtle ways. State requirements, for instance, forbade chemical-dependency treatment programs from "shaming" an individual receiving treatment.

Heurich quickly realized that a license from TCADA carried with it the corruption of everything that made Teen Challenge successful. That’s because its success lies in its religious mission. Anyone seeking help, says Heurich, is challenged to "establish a personal relationship with Jesus Christ." According to Dave Batty, Teen Challenge’s national curriculum coordinator, "This central spiritual dynamic is the foundation on which all aspects of the Teen Challenge program are built."

The Teen Challenge staff views drug and alcohol abuse not as a disease, but as a sin manifesting a life lived outside the teachings of God. So when an addict voluntarily enters a Teen Challenge program, he or she renounces sin and begins to live a life built on a personal commitment to follow Christ. From that moment on, the addict is considered cured of the "life control" problems associated with drug and alcohol abuse.

TCADA frowned on such an unsophisticated and unprofessional approach, and threatened to shut the program down. When the Institute for Justice joined with the National Center for Neighborhood Enterprise to serve notice on TCADA that Teen Challenge was ready to go to court to fight the requirements, TCADA backed down. Negotiations eventually led to a consent order signed by TCADA that allows Teen Challenge to continue its program as before, uncorrupted by credentialing requirements. And Texas governor George Bush created a task force to develop legislation to ensure that faith-based treatment programs are not placed in jeopardy by arbitrary state requirements. Although Heurich breathes easier today, licensing and credentialing requirements still pose a threat to other efforts that treat drug and alcohol abuse through programs based on religious faith.

Excessive licensing requirements frustrate other important nongovernmental responses to social needs. Take, for example, child care, where the state has a long-recognized role in protecting children. The continued presence of women in the work force and increased pressure on women receiving public assistance to seek employment combine to keep demand for child care high. Why is our perception so strong that child care is scarce? It may be that those who need child care simply wish the price to be lower for service at the level of quality they desire. But what if the shortage were caused by legal requirements that make it more difficult for private providers to offer "affordable" child care?

In New York City, the latter explanation seems more plausible. A group day-care center (defined as a freestanding facility for seven or more children) outside one’s own home must be approved by inspectors from the city’s building department, fire department, and public-health department. But the city also imposes demanding occupational licensing requirements. The city’s Bureau of Day Care requires that child-care workers meet the same certification requirements as school teachers. A center director must either obtain a master’s degree or enroll in a master’s program upon being licensed. At least one staff member must have child-abuse prevention training, CPR training, and two health-related courses in child development. In addition, the city government limits the number of children in specific age groups and even regulates the type and amount of snacks to be served.

As we debate how best to move from the leviathan of the regulatory welfare state to a decentralized, voluntary civil society, we must consider how to foster the spirit of enterprise and self-help essential to successful transition. We must question the basic legitimacy of conditions imposed under police power licensing authority. Do the means used relate closely to the desired ends? Those that do not relate to legitimate public-health and safety concerns must be eliminated.

We must then look to nongovernmental means of providing information and monitoring performance of services and professions. Consumer Reports offers the best-known example of this, but professional associations, the Better Business Bureau, and consumer watchdog groups can all play a larger role.

For the matters of greatest concern to government, certification is preferred to licensing. Under certification schemes, a provider of goods or services can choose to obtain certification, but is not penalized for choosing not to do so. As Milton Friedman noted, again in Capitalism and Freedom:

"The usual arguments for licensure, and in particular the paternalistic arguments for licensure, are satisfied almost entirely by certification alone. If the argument is that we are too ignorant to judge good practitioners, all that is needed is to make the relevant information available. If, in full knowledge, we still want to go to someone who is not certified, that is our business."

The answer will not lie with uniform national solutions or the use of funds from the federal government to pave the way. These approaches, however well intended, will inevitably carry incentives and temptations that will corrupt the individuals and organizations they seek to help. Instead, we should remove the barriers erected by government that stand in the way of individual efforts to foster civil society. A good place to start would be licensing and credentialing laws that, in the name of professionalism, uniformity, and standardization, stifle the very attributes that lead individuals to make the world a better place.

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