Occupational Licensing and Student Outcomes
In the United States, licenses are required for entry into many different occupations, such as cosmetology, massage therapy, nursing, teaching, construction contracting, medicine, and law. Requirements vary by state and by occupation: common elements include a particular level of schooling, passing an examination, a minimum number of hours of training, on-the-job experience, and/or continuing education. In this report, we consider licensing in sub-baccalaureate fields, with a particular focus on cosmetology and massage therapy programs, which require a minimum number of training hours in the largest number of states. We ask whether these requirements to become licensed pay off for students. The answer, in short, is no. We find that licensing hours in these occupations are correlated with higher levels of student debt, as students must attend more postsecondary education and pay more tuition. The increased debt and additional training that students obtain in states and programs with higher hours does not appear to be rewarded in the labor market: licensing hours requirements show no correlation with wages.
Training or instructional hours requirements are the among the most salient for higher education policy and practice. Institutions offering programs in licensed fields must ensure that they provide sufficient hours to meet state-mandated minimums to allow students to practice in that field upon graduation. These types of requirements have important implications for students. All else equal, students in states with higher training hour requirements will need to stay in school longer than their counterparts. They will not only incur more direct costs in terms of tuition and fees, but they will also incur larger indirect costs: they need more time to complete their credential and must delay the start of their career. These additional costs may be reasonable if higher required training hours translate to higher earnings post-graduation, but it is not at all clear that this is the case.
In this report, we examine the correlation between required licensing hours and student outcomes. We review the theory and literature on occupational licensure, then document training hours requirements for about 30 popular sub-baccalaureate fields across 50 states and the District of Columbia collected by the National Conference of State Legislatures. We then investigate whether required training hours are correlated with student debt and post-college earnings drawing on the two fields that have sufficient data and variation to identify correlations—cosmetology and massage therapy.
Cosmetology and massage therapy have also been the source of recent debates. News reports suggest that state cosmetology boards may be requiring an excessive number of training hours in some states and data on the debt and earnings of cosmetology graduates suggest disappointing outcomes for students in this field. There is less research on massage therapy programs and licensing, but reports of impropriety and criminal behavior in the field are not uncommon.
We find that for both cosmetology and massage therapy, higher licensing hours requirements are associated with higher levels of student debt. The additional debt that students incur does not appear to translate to higher earnings. Rather than raise wages, as economic theory predicts, we find no correlation between licensing hours and wages in these fields. Our results suggest that the elevated hours of training required for cosmetology and massage licensure in some states may not pay off for students.
