Senior Vice President, International Regulatory Affairs & Antitrust, U.S. Chamber of Commerce
October 25, 2022
Last year, President Biden issued an Executive Order on Competition that rested on the belief that the private sector had become overconcentrated and the economy therefore lacked sufficient competition. This belief extended to the view that corporate concentration has also led to companies holding too much power over labor markets.
The Executive Order’s core assumptions have been demolished by recent economic studies. Earlier this year, in an exhaustive analysis of all available census data from the past two decades, including data that became available only recently, a comprehensive study found that the U.S. economy became less concentrated since 2007 in both the manufacturing sector and the broader economy. The study also found that competition increased across the economy as companies both large and small used online tools to become more efficient and expand their reach across the country.
Now, a new study finds that labor markets are and have been flush with competition during the past half century. Written by Diana Furchtgott-Roth, the U.S. Department of Labor’s former Chief Economist, the study finds that America’s labor markets are flexible, with high rates of employee turnover, high rates of firm expansion and contraction, regular movement of workers between states, and an average of twelve jobs held over an individual’s career. Using public data from the Bureau of Labor Statistics, the study also finds that inequality has not been increasing and that Americans’ income has in fact been rising over time.
High labor turnover indicates that employers are having to compete for employees. As the study explains, if labor market concentration were harming workers, one would expect to see the lowest rates of movement— quits and hires—in low-wage jobs, because those workers are supposedly trapped and need government action to help them move up. Instead, the data show that separations and hiring rates for low-wage workers are higher than average.
Companies compete vigorously for workers through pay, benefits, and various perks designed to increase the company’s attractiveness as a workplace. Indeed, as shown by heavy population movements from the northeast and west coast to the south, Americans are not trapped in one state at the mercy of one employer. To the contrary, the data show that “labor concentration does not exist in the United States.”
These findings should affect the Biden Administration’s approach to labor markets, and particularly its efforts to use antitrust law as a tool to break up large employers in the name of raising wages. The administration’s broader agenda includes efforts to change labor laws to encourage unionization and to raise the minimum wage. Several months ago, the Federal Trade Commission and National Labor Relations Board signed a Memorandum of Understanding pledging to cooperate in areas of mutual interest, including the gig economy and labor market concentration. According to anecdotal reports, the FTC (Federal Trade Commission) now reviews mergers with an eye for how they might affect labor unions.
The study, however, finds that, “Antitrust law does not, and should not, deal with labor markets in the United States.” Other statutory schemes, including the National Labor Relations Act, cover labor markets. Many regulatory initiatives, such as the FTC’s efforts to crack down on the gig economy, are likely to harm workers by reducing their compensation and allowing them fewer choices. As the study concludes, “if the FTC continues down this regulatory path, the workers the agency claims to protect will suffer the greatest harm. The application of antitrust law to the labor market is unprecedented and, perhaps more importantly, antithetical to the well-being of workers.”
In the face of such facts, one hopes that the Biden Administration will abandon efforts to use antitrust law as a tool to break up large employers and focus on real solutions to raise wagers for workers.