Friday, July 16, 2010

Recession Proof Business with Rent Seeking

Apparently the tattoo business is recession proof.

Demand for tattoo parlors is still on the rise, local shop owners say.

Sage O'Connell who owns Urban Art Tattoo Studio and Urban Art Tattoo II in Mesa, said his business is booming.

"We are booked two to three months out, just like before the recession," he said.

It's also a business that's easy to start.

Dick Goldman, longtime tattoo artist and owner of Blue Dragon Tattoo in Glendale, offers an additional explanation for the increasing number of storefronts in recent years: low overhead costs. He said it takes only a few thousand dollars to set up a tattoo parlor in Glendale, and maintenance costs are minimal after that.

Not everyone is happy about that however. In any industry, large established businesses don't care much for the additional competition since it tends to lower their prices. Their response is what economists call rent seeking - attempting to get the government to restrict the market so that they can limit out put and raise prices.

Sean Dowdell, owner of Club Tattoo in Tempe, Glendale and Las Vegas, lobbied unsuccessfully in 2008 and 2009 for legislation that would require the state health department to license shops and tattoo artists. If the bill had passed, county health departments would be responsible for inspecting tattoo parlors annually.

"Because there is no regulation, that's why there are more tattoo shops popping up in the state," Dowdell said. "The quality of tattooing and the price of the tattoos are being driven down by these businesses."

Read the whole thing. There are also some interesting things about demographics and changing attitudes in the workplace.

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