Not long ago, economists denied the existence of monopsony in labor markets. Today, scholars are talking about using antitrust law to counter employer wage-setting power. While concerns about inequality, stagnant wages, and excessive firm power are certainly to be welcomed, this sudden about-face in theory, evidence, and policy runs the risk of overlooking some important concerns.
Workers’ labor market power matters enormously to their lives at work and beyond. And most workers have too little of it. This Essay highlights one underappreciated set of factors in the decline of workers’ labor market power and explores policy levers that might help to rebalance the bargaining field.
Due to a lack of competition among employers in the labor market, employers have monopsony power, or power to pay workers less than what the workers contribute to the employers’ bottom line. “Worker power” is workers’ ability to obtain higher wages and better working conditions.
The field of antitrust and labor has gone through a profound change in orientation. For the great bulk of its history, labor was viewed by antitrust enforcers as a competitive threat.
Horizontal collusion among employers to suppress wages has received almost no attention in the academic literature, in contrast with its more familiar cousin, product-market collusion. The similar economic analysis of labor and product markets might suggest that antitrust should regulate labor and product markets in the same way.
This Essay is about firms as a type of economic coordination and about how we think about them in relation to other forms of coordination as well as in relation to competition and markets. A prominent stream of thought about firms—which has both strongly influenced contemporary competition law and, more indirectly, served as a support to the fundamental ideas of neoclassical price theory that guide many areas of law and policy—ultimately explains and justifies the centralization of both decision-making rights and flows of income from economic activity on productive efficiency grounds.
This Essay considers antitrust and consumer protection liability for coercive practices vis-à-vis drivers that are prevalent in the rideshare industry. Resale price maintenance, nonlinear pay practices, withholding data, and conditioning data access on maintaining a minimum acceptance rate all curtail platform competition, sustaining a high-price, tacitly collusive equilibrium among the few incumbents.
Labor unions and their leaders were cast as the perennial antitrust defendants for the first fifty years of federal antitrust law, and this historic imbalance fostered a movement in economic scholarship and labor activism to restructure American antitrust law. The progressive liberal-institutionalist movement in economics played an important role in legitimizing trade unions by recasting them, not as anticompetitive cartels, but rather as a necessary corollary to the growing market power of industrial firms.
Disproportionate employer power is at least partly responsible for the sharp increase in economic inequality in the United States, which threatens the fabric of the Republic. Workplace law reform could provide workers with an institutional source of power that countervails employer power and compresses inequality.
Bankruptcy scholars have long organized their field around a stylized story, a paradigm, of lender control. When lenders extend credit, the story goes, they insist on the borrower agreeing to strict covenants and granting blanket liens on its assets; then, if the borrower later encounters financial distress, they use their bargained-for rights as prods to steer the company toward a resolution favorable to themselves, whether or not that resolution is value maximizing for the investors as a group. As fruitful as the lender-control heuristic has been, however, it no longer corresponds to reality.
