Do big companies, like Big Tech firms, leave workers worse off by limiting their earnings and opportunities? Are big companies “abusing” their powers over workers through non-compete agreements, misclassification, and opposing unionization? These were the questions that a congressional hearing attempted to answer, at least kind of.
Traditionally, antitrust enforcement has focused on how the consolidation of industries (i.e. mergers) has led to harm for consumers (particularly in higher prices). A focus on worker wages and employment is a different approach.
Even if the issues raised are important to discuss, why now and what is the end goal? Your guess is as good as mine about the timing. Some conservative regulators think that liberals aim to stretch the federal government’s antitrust powers for social ends.
What happened
A House Judiciary Committee subcommittee convened a hearing entitled Reviving Competition, Part 4: 21st Century Antitrust Reforms and the American Worker. It was held just as Congress is up against significant fiscal deadlines and priorities: funding the government to avoid a shutdown after tomorrow and hitting the debt ceiling in a few weeks. At the same time, Democrats have charted a go-it-alone path to pass $3.5 trillion of spending on liberal wishlist policies from universal Pre-K to Green New Deal initiatives along with over $1 trillion for infrastructure (only some of it on roads and bridges).
With so much on their plates, they decided it was a good time for a discussion about the merits of non-compete agreements, unionization, and occupational licensure, which they lumped together as ways that companies limited competition and hinder the labor force.
Ranking Member Ken Buck from Colorado picked up on this in his opening remarks:
“I’m baffled by this hearing. I’m not sure what specific legislation we’re going to take up today or in the future based on the opening statements and the nature of this hearing.”
We were baffled too. Buck then rattled off ways that the current administration’s current and proposed policies undermine work in America from inviting illegal immigration to an open border to unemployment benefits that pay workers to remain at home. In addition, instead of lowering taxes, the Democratic-led Congress intends to raise corporate taxes and increase regulations to fund the $3.5 trillion Bernie-Biden budget plan.
“The idea that we will strengthen workers’ positions with non-compete agreements… or tinkering around the edges of antitrust is laughable when you look at how far this administration has gone in the wrong direction.”
In addition, inflation eats away at workers’ ability “to increase their lot in life.” He’s right and the workers most harmed by inflation are the people least able to afford rising prices: the poor, minorities, and older Americans.
Occupational licensure, non-compete agreements, unions oh my
The bulk of the hearing was devoted to several specific labor practices. Some reflect more anti-competitive behavior than others, but all were considered as a drag on wages and opportunities for workers.
It’s worth noting the labor market we are in currently. When there are fewer employers, workers may have fewer employment options and less leverage to negotiate the pay and benefits they desire. However, fewer jobs are not the situation we have today. There are nearly 11 million open jobs in our economy and wages have risen for workers. If anything, real wages are falling because of inflation, not because of employer actions.
Unionization: The need for worker rights to be delivered by unions was a common theme of the hearing. This hearing was a PR opportunity for unions to trumpet their benefits. Good luck convincing regular Americans of that. Private-sector workers have rejected unionization for decades. The Amazon Bessemer vote provides the clearest and freshest evidence that workers at the largest national online retailer prefer to keep unions out of their workplace. Organized labor is trying every lever of this administration and Democratic-led Congress to boost their power. They are pushing for the pro-union Protecting the Right to Organize (PRO) Act that would repeal right-to-work laws and force the reclassification of millions of independent contractors.
Occupational licensing: Occupational licensure is truly an area that both Democrats and Republicans agree needs reform. Both the Trump and Obama administrations called on states to reform these state permissions to work that often have no health or safety rationale but only limit competition in different industries and keep new workers out of gainful employment.
Because licensure falls under state jurisdiction, the federal government is limited in what it can do, but as one of the hearing panelists, Trump-appointed Federal Trade Commission (FTC) Commissioner Christine Wilson noted in her written testimony:
“In addition to bringing enforcement actions, the FTC has a rich history of analyzing, and seeking to inform policymakers of, the impact of occupational licensing restraints. The agency provides input to courts, legislatures, agencies, and self-regulatory entities on initiatives that may raise barriers to entry, limit choice, or otherwise hinder competition.” We welcome drawing national attention to occupational licensing reform.
Non-compete agreements. NCAs were also raised as harmful to worker wages and, therefore in need of federal regulatory intervention. However, unlike occupational licensure, the data is mixed on the impact of such agreements on workers’ earnings. Furthermore, there are other benefits that should be considered. George Mason University Professor Bruce H. Kobayashi explained in his testimony:
“While there is some evidence that the application of NCAs in some settings harm workers, there is also evidence that NCAs, when accompanied by notice and consideration, result in benefits to both workers and the firms that employ them. In addition, NCAs can simultaneously reduce worker mobility or wages and produce consumer benefits by decreasing prices and increasing output, quality, and innovation. Because NCAs can benefit both consumers and workers, a broad ban on the use of NCAs would potentially harm workers, firms, and consumers. Thus, the conditions that would support use of the federal antitrust laws to ban the use and enforcement of NCAs irrespective of the context in which they are used do not exist.”
Furthermore, states are leading in their own reform efforts. Federal action now may be premature. Commissioner Wilson summed up this point well with a quote from Justice Brandeis:
““[t]o stay [state-by-state] experimentation in things social and economic is a grave responsibility.” The elected officials in each state are best situated to weigh the costs and benefits of non-competes and make decisions tailored to the unique circumstances in their jurisdictions.”
What’s next?
This was the fourth in a series of hearings on legislation or potential antitrust policy changes. As we have written about several times, conservatives may view antitrust reform as a punitive tool for censorship by big tech firms. However, the bills under consideration do nothing to address censorship but could result in negative outcomes for consumers and the stifling of innovation.
Progressives view antitrust efforts from a different perspective. They want to advance their own objectives that have little to do with allowing the market to function more freely, but rather increase government control of the market.
As Commissioner Wilson noted:
“I am deeply troubled by proposals to replace modern antitrust enforcement and market forces with government micromanagement. Attempting to regulate the economy into competition, instead of engaging in antitrust enforcement based on sound economic principles, has harmed Americans in the past. This approach will undermine the American economy at the very moment it is struggling to recover from the COVID-19 pandemic.”
Hopefully, Commissioner Wilson’s concerns do not come to fruition.