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CHAPTER 4

Designed to Exclude

The Interior Design Cartel’s House of Lies

In 2006, Sherry Franzoy owned and operated an interior design firm in Las Cruces, New Mexico. The trouble was, by state law, she couldn’t tell anyone.

At the time, New Mexico enforced a “titling” law, which allowed anyone in the state to provide interior design services but restricted the use of the title “interior designer” and the words “interior design” to those with a government-issued license. To earn the license, would-be interior designers were required to complete a minimum of two years of post-high school education, possess a combination of six years of education and experience in interior design, and pass an exam. Because she lacked some of the necessary credentials, Sherry could not tell anyone of her interior design work through advertising, business cards, or even casual conversation.

Her lack of credentials did not mean Sherry had entered the business completely untrained, however. As a young girl, she’d dreamed of working as an interior designer.1 But when she married, began raising children, and started managing the business operations of a family farm in New Mexico, her dreams of being a designer faded—until life circumstances intervened. When she and her husband divorced, Sherry needed to find a way to support herself. She worked as a produce broker for a year to make ends meet, but her childhood dream remained in the back of her mind. When she explored the idea further, she came across a business franchise opportunity called Decorating Den Interiors.2 It was a prospect tailor-made for Sherry.

Founded in 1969, Decorating Den Interiors employs interior design professionals throughout the United States and Canada.3 Its work has been featured in Good Housekeeping, Better Homes and Gardens, Woman’s Day, House Beautiful, and House and Garden. In addition, the company has been featured in a variety of design segments on HGTV and the Discovery Channel.4

Decorating Den Interiors franchises are full-service businesses that specialize in complimentary, “we come to you” interior design consultations and sell everything needed to make a room over from floor to ceiling. Important to Sherry, purchasing a franchise came with intensive, condensed schooling on the intricacies of both managing a business and practicing interior design. Before being allowed to start her franchise, the company required Sherry to pass five rigorous tests covering the spectrum of operating an interior design business, including tests on interior design work, people skills, finance, entrepreneurship, and business math. Sherry passed the tests and opened her franchise in 2000. By 2006, she was managing a thriving business with a stable of subcontractors and clients from all over the country. Many of her clients have been East or West Coast transplants who lack the know-how of designing their homes in the Southwestern style that characterizes New Mexico. Sherry has provided these clients with design services ranging from window treatments to kitchen and bath remodels in homes valued from the mid-$200,000s to more than $1,000,000.

Despite her success, in 2006, if she had told anyone that she worked as an interior designer, she would have been violating state law. And New Mexico was not alone in restricting people’s right to talk about their profession. Six other states also restricted the use of the title interior designer, and the requirements for gaining use of it were almost identical across the states. To that were added sixteen other states that prohibited the use of other similar titles such as “certified interior designer” or “registered interior designer,” all on the basis of education and examination requirements similar to New Mexico’s. The presence of titling laws with similar requirements across the states was no coincidence. It was the result of a scheme of national regulation traceable back to yet another group of bottleneckers—the American Society of Interior Designers.5

The roots of the American Society of Interior Designers (ASID) reach back to the early 1930s, when it was known as the Association of Interior Designers (AID), and previously to the Association of Interior Decorators,6 which operated as a professional association for the emerging interior design industry. Even then, some in the trade pushed for regulation, but the industry rejected it as unnecessary.7 With the building boom after World War II, the 1950s saw rapid growth in the interior design industry,8 and with it the formation of a second influential association, the National Society of Interior Designers (NSID), and the beginning of a serious push for regulation of the industry.9

The movement for regulation accelerated in the 1960s, culminating in the 1968 introduction of licensing bills in California, New York, Massachusetts, and Texas.10 Although they were rival organizations, AID and NSID worked in concert to advance licensing.11 Relying on a key bottlenecker trope, industry leaders asserted that “there ha[s]to be a set of standards to protect the public,”12 but their economic motivation was plain to see. As the Boston Globe put it at the time, Massachusetts’s bill was designed to stop “amateurs” from “undercut[ting] the professional by selling at a lower margin of profit.”13

Support for regulation was not, however, unanimous within the industry. Many working designers believed accreditation would be adequate to protect consumers.14 Others portrayed licensure as “professionally unnecessary” and best left to occupations that required science and mathematical skills, like architecture, as a former chairman of NSID later wrote to the New York Times.15 With the industry divided on regulation, none of the bills passed into law.

Upon the legislative failure, AID and NSID regrouped to better organize their efforts. They began by merging in 1975 to form ASID, becoming, with thirteen thousand members, the world’s largest interior design association.16 According to one commentator, the new organization “consider[ed] itself an exclusive group” in which “membership to frustrated housewives and exiled princesses [was] not available on demand.”17

The core of ASID’s efforts was the development of model legislation—funded by a $13,000 grant from the National Endowment for the Arts18—and a detailed plan for a state-by-state campaign to regulate interior designers.19 The plan called for the “establishment and maintenance of a state-wide interior design society in each state where none now exists. The state society should be the vehicle for conducting the legislative program and public dialogue on the licensing issue.”20 The guidelines also stressed the importance of determining how to raise and distribute funds, producing “educational” (i.e., lobbying) materials for use by legislators, conducting personal lobbying, establishing priority states, and coordinating the effort nationally.21

ASID wasted no time in implementing the recommendations. In 1976, in an attempt to coordinate efforts, it adopted a policy that required state chapters to seek permission from the national organization to pursue regulation in their respective states. That same year, the Florida chapter was granted permission to do so.22 Four years later, ASID established a state legislative network to equip state chapters in licensing efforts.23 The creation of the state network coincided with plans for a national campaign, kicked off in 1985, to support state-by-state regulation of interior designers. ASID announced the start of the campaign at a well-attended press conference, with its then president, Gail Hayes Adams, declaring, “In our role as the leader of the design profession, ASID has declared title registration its top priority in 1986.”24 The campaign included training and resources provided to state chapters by the national organization and the commitment of $275,000 in the first year alone to fund the efforts.25 By then, ASID could count twenty-eight thousand of the nation’s two hundred thousand interior designers among its membership.26

The campaign’s launch was aided by the fact that three states had already adopted titling laws, one in each of the three preceding years—Alabama in 1982, Connecticut in 1983, and Louisiana in 1984.27 The experience of working with the state chapters, which had in each case been instrumental in the adoption of legislation, was invaluable for the national ASID organization, as it worked to craft and implement the national campaign.

The first state to adopt a titling law as a result of the national campaign—and after years of lobbying on the part of its ASID chapter—was Florida in 1988.28 New Mexico followed a year later, also as a result of intensive campaigning by the national and state divisions of the ASID.29 Apart from Florida the other states that adopted titling laws throughout the 1980s were small, but 1990 saw three of the nation’s largest states take up such regulations—California, Illinois, and New York.30 New York’s passage of the bill was particularly noteworthy, given New York City’s status as the fashion-and-design capital and the onerous certification requirements—a minimum of seven years of education and training and two examinations.31 This victory for the bottleneckers came as a result of a vigorous five-year campaign by a coalition of four design associations led by the state ASID chapter with support from New York City’s Office of Business Development.32

Whereas most of ASID’s efforts were focused on title acts, 1987 saw Washington, DC, pass the nation’s first practice act under the influence of ASID.33 Practice acts go a step further than titling laws, legally restricting interior design work to those who have earned a license, the requirements of which are often the same as those of title acts. As with the title acts in New York and other states, the practice act in Washington, DC, came about after years of intense pressure from the interior design community.

In 1983, an interior design coalition had formed in DC with the initial goal of achieving a titling law.34 The coalition included members of ASID and other design organizations,35 nonaffiliated designers, and educators and students from area colleges and universities with interior design programs.36 It hired an attorney to craft a bill and focused its lobbying efforts on the mayor and nine members of the city council.37 The lobbying effort required the coalition to remain active in DC’s political process and to donate to individual council members’ election campaigns.38 Even the manner in which the coalition donated to political campaigns was strategic: it maximized the number of people donating and presented them in such a way as to suggest a greater constituency. As one leader of the coalition explained, “It demonstrated the breadth of the support, so it was better to have a list of 100 donors rather than two big contributors.”39

Similarly, when the proposed bill entered a phase for review by a council committee, numerous coalition members testified at a contentious public hearing about the need to protect public health and safety by regulating interior designers.40 Their assertions were refuted by city officials, among others. Deputy Mayor Carol Thompson, then director of the Department of Consumer and Regulatory Affairs, told the council that licensing designers was unnecessary and redundant: “This industry does not provide services . . . essential to the well-being of the residents of the District of Columbia.”41 Likewise, Valerie Barry, head of the Occupational and Professional Licensure Administration, opposed the measure, calling it an “unnecessary government intervention.”42

Nevertheless, after the hearing, council member John Wilson changed the bill from a titling law to a practice act, citing the need to better protect the public. Based on the committee’s approval, council members approved the bill on the first vote in October 1987. The congressional review approved the bill, and the mayor signed it into law.43 Upon the law’s adoption, a five-member board was created, composed almost entirely of bottleneckers. The membership included three interior designers, one interior design educator, and one consumer, all appointed by the mayor.44

The payoff for the bottleneckers was immediate. One of the first appointees to the board was Martha Cathcart, the president of a local interior design firm and an active member of the coalition that had lobbied for the bill’s creation.45 Designers also saw the new Washington, DC, practice act as a momentum builder. At the time of its passage, almost two dozen other states were considering interior design regulation,46 and design activists were hopeful about the DC bill’s effect. As one regulation proponent said, “It’s a long, uphill battle. . . . Hopefully, this will have a domino effect.”47

Whether DC’s law actually set a domino effect in motion is unknown, but the rapid pace with which states began to adopt interior design regulations suggests that it may indeed have done so. Between 1991 and 2002, eleven states passed titling laws, and three instituted practice acts. Although design regulation enthusiasts chalked the new legislation up to an increased awareness among consumers and legislators “about interior designers’ responsibilities for the public’s health, safety, and welfare,”48 the true impetus was relentless lobbying by the bottleneckers. This can be seen in the example of Alabama converting its titling law into a practice act in 2001, upon which a leader in the state’s design coalition acknowledged the efforts by state activists in support of the transition and also noted that “it was ASID that provided the constant focus for us and kept us steady in our efforts until we were successful.”49 And when New Jersey created its titling law in 2002, a coalition leader said,

I am not sure we would have achieved passage of the [bill] without the help of ASID. Through training sessions, lobbying templates, financial support and links to a nationwide network of politically knowledgeable designers who helped establish legislation in their respective states, ASID buoyed a committed group of New Jersey volunteers during a 10-year voyage to certification.50

Multiyear efforts like New Jersey’s were common. Virginia’s 1990 titling law, for example, came about after an eight-year campaign.51 A coalition had formed in Virginia in the early 1980s to begin lobbying for a bill sponsoring certification of interior designers.52 It hired attorney and lobbyist Mark Rubin, who had recently succeeded in achieving licensure for landscape architects.53 The interior design coalition worked with Rubin to draft legislation, identify bill sponsors, and monitor the timing of bills.54

Simultaneously, the coalition organized a grassroots lobbying effort. Lacking substantial funds to donate to legislators’ campaigns, it instead relied on its wide support base of interior designers to engage in grassroots lobbying, which Rubin had trained it to do.55 After the national ASID organization began its campaign in 1985, the Virginia coalition benefitted from its substantive legislative materials and resources for lawmakers. One coalition member recalled that the new resources enabled the group to go to their first legislative hearing “loaded for bear.”56

Nonetheless, Rubin paid close attention to legislators’ support and had to pull the bill from consideration in 1986 and again in 1988, when it lacked the requisite number of votes to pass.57 The bill was brought back in 1990, at which point the coalition took advantage of three nursing home fires that had happened in Virginia that year to generate support for the legislation, with one coalition leader saying, “Nobody wants a disaster, [but] if it happens, grab-a-hold of it.”58

In addition to exploiting nursing home fires for their benefit, state and national members of ASID poured resources into the 1990 licensing push. Financial aid from the national organization paid for Rubin’s lobbying, representatives from ASID provided guidance and training to the state coalition, and the national office monitored all the bills in the legislature to alert the committee of other proposed legislation that might threaten the Virginia licensing act.59 After almost a decade of relentless petitioning, the designers received their titling law in 1990.

One of the primary reasons it took so long for design coalitions like those in Virginia, Washington, DC, and other places to win the law was that the need for regulation was far from self-evident. Although proponents of regulation euphemistically cite the requirement of having to “educate” legislators about the law’s importance as a reason for the repeated attempts to pass it,60 the intensive lobbying, political campaign contributions, and politicking tell a different story. In fact, when the costs and benefits of interior design regulation have undergone genuine scrutiny, results indicate that it carries significant costs for consumers with benefits accruing for only one group—licensed interior designers.

A 2009 analysis at the University of Minnesota examined insurance premiums and fire death rates as indications of the need for regulation of the interior design industry on public health and safety grounds. The researchers found no evidence that licensing would provide any measurable benefit in these respects.61 They did, however, find that interior designers’ wages were consistently greater in states with more restrictive regulation of the occupation. For consumers, this translates to greater costs, as the regulation enables practitioners to charge more for their services—as reflected in higher wages—in the face of less competition.

A separate analysis completed in the same year by two economists at Kenyon College found similar results.62 Drawing upon national census data, the authors found that in states where the interior design profession is regulated, consumers pay higher prices for design services; fewer entrepreneurs are able to enter the market; and blacks, Hispanics, and those wishing to switch careers later in life are disproportionately excluded from the field.

These two studies are only the latest in a series of examinations of the interior design occupation. An earlier study done in 2008 compared the complaint data for interior designers in states with stringent regulation of interior design to the data for states with lighter or no regulation.63 Complaint data here acted as a measure of the quality of service, with regulation proponents frequently asserting that licensing would result in higher quality among regulated practitioners. Results from the study found that states with no or less-stringent licensing regulations did not have more complaints than those with stricter regulations.

State agencies, too, have examined the need for interior design licensing and consistently found it lacking. Throughout the 1990s and 2000s, as ASID fomented its wave of title and practice acts, several states completed “sunrise” reviews—legislatively mandated processes designed to ensure that proposed regulations are really necessary for the protection of the public interest. It is common for state agencies to complete the reviews and present the results to the legislature in sunrise reports. The reviewers typically look for threats to the public from the unregulated practice of an occupation, weigh the costs of regulations, invite input from interested parties, explore regulatory alternatives, analyze the findings, and make recommendations—the first and foremost of which is on whether regulation is even necessary and, if so, what shape it should take. A related document is the “sunset” review, which examines an existing license or regulation to determine if its continuation is necessary. The review processes are often similar, with the primary difference being their timing.

These reports can be—or at least should be—particularly helpful to part-time legislators elected to office from widely divergent backgrounds. Few of them are likely to arrive at their legislative posts with expertise or experience in general occupational regulation or with detailed knowledge of particular occupations. Term limits also mean that legislators who do develop such expertise do not remain in the legislature longer than a few terms, after which they are typically replaced by novice lawmakers. These dynamics, joined by the near-constant campaigning required of many state legislators, whose terms span only two years per election cycle, and the intensely local nature of state politics, also make legislators comparatively more vulnerable to interest groups like ASID and other professional associations. They also increase the role of state agencies and legislative staff in informing regulatory decisions, such as through sunrise or sunset reports.

In the case of interior design, five states—Colorado, Georgia, South Carolina, Virginia, and Washington—have produced sunrise reports.64 Without exception, none of these reports found sufficient and reliable evidence to suggest that harm occurs as a result of unregulated interior designers. Moreover, when given the chance to provide such evidence for the reports, interior design associations either could not produce any65 or else could only produce complaints pertaining to the practice of unlicensed interior design in which no actual harm was alleged.66 The reports further found that means were already in place to ensure the quality of interior designers’ work and failed to identify any economic benefit to the public from such regulations. All of the reports ultimately recommended against titling laws in their respective states. Added to these sunrise reports were sunset reviews in three states—California, Maryland, and Texas—that came to the same conclusions, recommending the elimination of existing interior design regulations.67

And, on a few occasions, even governors have seen through the bottleneckers’ public health and safety rhetoric, vetoing bills to regulate the occupation. In Ohio, for example, former governor George Voinovich vetoed enabling legislation in 1992, saying:

After carefully reviewing Senate Bill 75, it does not appear to me that it addresses a significant health and safety issue. . . . Rather, it would appear that the registration requirements . . . follow the traditional model of professional licensing standards which often have anti-competitive affects [sic] and ultimately, lead to increased cost to consumers. . . . Senate Bill 75 furthers an already bad precedent of continuing to expand the well over 400 separate Boards and Commissions in Ohio.68

Six years later, when ASID tried again to pass the bill, the governor’s administration signaled its continued opposition. “Our primary concern is that this is needless regulation, and that supporters have not demonstrated adequate health and safety concerns exist,” said Bill Teets, then public affairs officer for the Department of Commerce.69

And, in Indiana in 2007, then governor Mitch Daniels vetoed a bill that was multiple years in the making by the Indiana Interior Design Legislative Task Force, led by the state ASID chapter. After several bills had died in committee over the years,70 the coalition finally saw its legislation adopted by the legislature, only for it to be vetoed by Daniels in a strongly worded text:

I can find no compelling public interest that is served by the establishment of new registration requirements for interior designers . . . nor in the bill’s effective “criminalization” of violations of such registration requirements. Indeed, it seems to me that the principal effect of [the bill] will be to restrain competition and limit new entrants into the occupation by requiring that they meet new educational and experience qualifications previously not necessary to practice their trade. . . . [This bill] is an example of government intrusion into the private marketplace, unnecessarily expanding the power and reach of a professional regulatory board (of which we have for too many already), and protecting the “ins” at the expense of would-be competitors. The marketplace already serves as an effective check on poor performance; designers doing inadequate work are more likely to be penalized by negative customer reaction than by a government agency trying to enforce arbitrary and subjective qualification standards.71

That same year, Colorado governor Bill Ritter vetoed a voluntary registration scheme for interior designers, concluding: “This regulation does not have a public safety element. . . . I believe that it is inappropriate to use powers of the state to provide the type of additional recognition provided for in [this bill].”72

As the veto messages and sunrise reports demonstrate, a common concern among policy makers is the relationship between licensing interior designers and protecting public health and safety. Like hair braiders, funeral directors, and every other brand of bottlenecker, interior designers portray their desired regulation as being in the interest of the public. When the Texas Association for Interior Design lobbied for its titling law, for example, the group’s president insisted that the regulation was a safety issue.73 And New York’s titling law was hailed as an official demonstration that the effects of the work of designers extended beyond aesthetics into public health and safety.74

But just as rank-and-file cosmetologists let slip the true motivations behind their desire to see hair braiding covered by cosmetology licensure, interior designers have revealed that the real reason behind the push for licensure of their industry is their desire for legitimacy and professional recognition.75 “There’s been a lack of credibility,” said a Manhattan interior designer who supported New York’s licensing bill. “A segment of the population still thinks of us as glorified shoppers.”76 Another New York designer said, “I think [regulation is] a very good thing. This will divide the real workers from the ‘social’ workers.”77 Similarly, after Washington, DC, adopted its practice act, a locally based designer concluded, “The impact of the practice act has been major for interior design in DC. It raised the level of acceptance and level of authority.”78

In 2006, the scope of that professional authority reached the high watermark of twenty-six states when Oklahoma adopted a titling law after twenty years of lobbying efforts.79 The official line was, again, that licensure was necessary to protect public health and safety,80 but, as in other campaigns, designers in this campaign revealed their true motivations. Kim Paddleford, who was then the president elect of the Oklahoma ASID chapter, noted the actual motivation behind titling, in her description of the desired result of the state’s universities enrolling seven hundred students in interior design programs: “We’re trying to keep our students that we educate in our state. We wanted legal recognition for the profession to encourage our students to stay.”81

Oklahoma’s law rewarded two decades of efforts by the interior design bottleneckers to fence off an ever-larger territory. By the early 2000s, ASID was dedicating significant resources to that quest. Its legislative activities were led by a full-time government and public affairs staff that included three lobbyists registered with the US House of Representatives and US Senate.82 At the federal level, ASID legislative staff campaigned aggressively before numerous agencies, pushing for additional legislation and advocating for professional legitimacy, but because licensing is chiefly a state issue, the society’s primary efforts were dedicated to spearheading the fight for new state laws.83

ASID’s legislative staff primed the pump for new state laws by actively educating members on legislation and encouraging participation in legislative efforts. The education included legislative strategies, legislative training sessions, quarterly newsletters and updates, and tools to lobby legislators.84 Staff members also wrote model legislation and provided day-to-day support for interior design legislative coalitions working in the states.85 And, like the bottleneckers of every industry, ASID spent millions of dollars to erect legislative fences around the occupation. By 2007, the society had donated more than $5 million to legislative efforts,86 and from 2010 to 2012, it added more than $650,000 to that total, all of which was dedicated to lobbying and legislative expenses and grants to state-level affiliates for the same.87

The effect was severe. In the early 1990s, only 36 percent of interior designers were subject to state regulations of one type or another. By 2007, that number stood at more than 60 percent.88 It was right about then that New Mexico interior designer Sherry Franzoy began to push back against the rising tide.

In 2006, Sherry was five years into her growing business, and New Mexico’s seventeen-year-old titling law was having its intended effect. She could advertise her work but not with the term “interior designer.” She was forced to find other words or phrases, such as “interior decorator.” Although the difference may seem one of mere semantics, the consequences were quite real. “Interior designer” was and remains the more common vernacular, helped along by popular design magazines and entire television networks. And if potential clients went to the phone book looking for interior designers, they would not, by law, find Sherry there.

So in September 2006, Sherry sued the state of New Mexico, arguing that the titling law violated her First Amendment right to tell others truthfully what she did for a living. The approach was unique, particularly compared to other lawsuits concerning licensing laws. In the context of economic liberty, courts frequently prove overly deferential to other branches of government and the regulations they create, resulting in, among other nonsensical rules, the requirement to earn a funeral director’s license to sell caskets. But this is not so in the context of freedom of speech. In cases where the latter is alleged to be infringed upon, courts scrutinize laws much more closely, requiring governments to provide sufficient justification and evidence of the need for a law before regulating citizens’ speech. Because New Mexico regulated what interior designers could say rather than what they could do—that is, it had a titling law, not a practice act—Sherry could sue the state under the First Amendment, thereby triggering greater scrutiny by the court.

The distinction was not lost on the state’s interior design board or legislators. Facing a real possibility that their regulation would be thrown out entirely by the court, state leaders moved quickly to reduce their law’s restrictiveness in order to preserve its existence. In January 2007, a bill was introduced in the state legislature to change the titling law so that it restricted the use of the title “licensed interior designer” to those who completed the mandatory requirements and allowed anyone to use the broader term “interior designer.”

On the heels of the bill’s introduction came a fiscal note. In many state legislatures, representatives or senators can request an analysis of the estimated fiscal effect of proposed legislation. The resulting report is called a fiscal note, the results of which often proves decisive in a bill’s fate.89 Although such analyses focus primarily on budgetary matters, they can sometimes include nonfiscal issues. This was precisely the case with Sherry’s case in New Mexico.

After identifying no fiscal impact from the bill, the fiscal note observed that “the Interior Design Act is open for constitutional challenge and could ultimately be determined unconstitutional and therefore invalid.” It consequently recommended that “to avoid litigation on the constitutionality of the Interior Design Act, the term Interior Designer needs to be defined as a ‘licensed interior designer.’”90 The bill subsequently sailed through the legislature, with unanimous votes in four separate committees, approval by both chambers, and Governor Richardson’s signature on April 3, 2007. Although not a complete repeal of the regulation, the change significantly reduced the interior design bottleneckers’ power to fence off their competitors in New Mexico.

Sherry quickly capitalized on the change and began advertising—accurately—as an interior designer, and her renown grew. She was cited in local newspapers as an expert on interior design91 and featured in home-and-garden shows in New Mexico.92 In 2009, she won an international design award in a room makeover competition.93 Four years later, she received an award for being among the top forty sales producers at the Interiors by Decorating Den company.94 This success led to Sherry receiving appointments to top leadership positions within the company a year later.95 Such was the result of the freedom provided to her and others throughout New Mexico.

Bottleneckers

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