New Study Reveals How Industry Insiders Use Government to Cut Out Competition
Arlington, Va.—Should you need the government’s permission to become an interior designer? Increasingly, state governments nationwide are bowing to the will of special interests and dictating who may pursue the occupation of their choice in trades like interior design. Today, one in five Americans must secure the government’s permission to pursue their occupation—a figure that has risen from about one in 20 in the 1950s.
A study released today documents how influential factions within the interior design industry lobby to create laws that erect unnecessary and anti-competitive barriers to entrepreneurship thereby creating economic benefit to those already in the industry. Among other findings, the report demonstrates that there is no evidence supporting a need for barriers to entry into the interior design trade and, in fact, the regulations that do exist have no impact on the quality of services offered. View the report, Designing Cartels: How Industry Insiders Cut Out Competition , by Dr. Dick M. Carpenter II, director of strategic research at the Institute for Justice.
Twenty-two states and the District of Columbia regulate interior designers through various kinds of “titling” laws—laws that require designers to get government permission to legally call themselves “interior designers,” “certified interior designers,” or “registered interior designers.” Under titling laws, designers may still practice, but they must get permission from the government to use the regulated titles in advertisements, websites, contracts and other communications—making it more difficult for designers to reach out to customers and for potential customers to find them. Four of those states and the District of Columbia also require designers to secure a government license to practice at all.
Examining legislative records, news reports and industry documents, Carpenter found that the push for such laws has come exclusively from influential industry leaders, such as the American Society of Interior Designers, and that those leaders use an incremental strategy, working to secure less-restrictive titling laws as a first step toward lobbying for far more restrictive licensing laws. Of the four states with licensure, three began with titling laws that, after industry pressure, evolved into licensing.
Among the report’s key findings:
- There are no statistically significant differences in the average number of complaints to the Better Business Bureau against companies in highly regulated states, less-regulated states and states with no regulation at all. In fact, complaints are slightly more frequent in more heavily regulated states.
- Better Business Bureau data also shows that interior design companies receive very few consumer complaints—an average of one-third of one complaint per company over the past three years—calling into question the need for regulation.Five state agencies have examined the need for titling and/or licensing laws for interior designers. All five found no benefit to the public and concluded consumers already possessed the means to make informed decisions about interior designers.
- When pressed by state agencies, not even interior design associations lobbying for regulation produced evidence of a threat to the public from unregulated interior designers.
“Such results challenge the logic behind occupational regulation,” Carpenter writes. “Stricter control over who practices a profession theoretically should result in higher-quality practitioners, which should then result in fewer complaints. But these results show just the opposite.”
The Institute for Justice, a national public interest law firm that defends free speech and the rights of entrepreneurs, also filed a federal lawsuit today on behalf of two interior designers challenging New Mexico’s titling law—which requires designers to secure government permission to truthfully call themselves “interior designers”—as a violation of the First Amendment to the U.S. Constitution.
“The government has no business preventing interior designers from providing truthful information about their services to potential customers,” said IJ Staff Attorney Jennifer Perkins. “Not only is New Mexico’s law unconstitutional, but, as this report shows, it does nothing to protect consumers—and plenty to protect interior designers from competition.”
“From interior designers and hairbraiders to casket-sellers and florists, there has been a proliferation of needless laws that do nothing but keep budding entrepreneurs out of business,” added Chip Mellor, IJ president and general counsel. “This report exposes the real force too often behind such regulations: industry insiders striving to protect their profits by cutting out the competition.”