Corporate dominance of the labor market harms employees and economic opportunity

The United States Department of the Treasury – in collaboration with the United States Department of Labor, the Federal Trade Commission, and the United States Department of Justice – recently issued an important report: “The State of Labor Market Competition in the U.S. Economy.” In short, this report documents and analyzes the tactics used by companies across the country to reduce competition in the labor market and, consequently, to reduce employee pay and economic opportunity for many millions of people. According to the report, anti-competitive measures cost employees on average approximately 20% of the compensation they would otherwise earn. As a result, and after controlling for inflation, many employees earn little more than their peers did 50 years ago – despite the increased productivity of employees now.

The main ways that employers undercut labor market competition include imposing non-compete, no-poach, and non-disclosure requirements, misclassifying employees as independent contractors, aggressively obstructing employee efforts to unionize, and mandating unpredictable just-in-time work schedules. Not only do these corporate tactics deprive many employees of a living wage and pay equity in any event, they also inflate prices, impede innovation, and otherwise limit economic growth. In this context, the joint report makes numerous recommendations that should be adopted to increase workplace fairness. Such initiatives include improving antitrust enforcement in the labor market, making it easier for workers to form or join a union, and raising the minimum wage substantially.