> However if the "racket" were not there, the vast surplus of labor providing "slightly above minimum wage" services would depress wages down to the legal minimum.
> The government would then be the only thing preventing a race-to-the-bottom in your wife making any money.
Licensing is supposed to protect the consumer from bad practice, not to inflate wages and decrease competition for those who have licenses.
It’s not good. You might imagine it being good if you think it would protect yourself from competition, but if everyone practiced this way you’d be forced to pay inflated prices and wait excessively long for every service. It would be a net loss.
> I would strongly advise anyone seeking deregulation to really consider... does this mean - literally - the only thing that one can offer as a competitive edge is how little money you are willing to take for this service?
If there was literally nothing to distinguish your services other than price, then artificially inflating prices through excessive licensing would be nothing other than stealing from consumers through force of law.
In the real world, quality of service matters. People don’t go back to a hair stylist who does a bad job, though they may not immediately recognize one that doesn’t practice proper hygiene practices.
This is where licensing should apply: Teaching and enforcing the practices that are not obvious, but nevertheless important for societal benefit. Barbers need to practice proper hygiene to prevent spread of disease. Builders need to practice proper constriction to avoid dangerous buildings. There are numerous real problems that aren’t obvious at the point of purchasing a service, but must be enforced at a society level to avoid widespread problems.
These often go unappreciated in modern societies because we take them for granted. Spend some time in developing countries, though, and you’ll hear and experience a lot of negative stories from unregulated services.