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How Waning Competition Deepens Labor’s Plight

Tuesday, November 1, 2016 10:19
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Eduardo Porter:

How Waning Competition Deepens Labor’s Plight: …collectively, mergers … are reconfiguring the American economy in ways that seem to be tilting the scales toward the interests of ever-larger corporations, to the broad detriment of labor. …

Three years ago, the Nobel laureate economist Joseph Stiglitz proposed that increasing profits from companies managing to avoid normal competitive forces — what economists refer to as “rents” — appeared to be an important factor in the rising share of the nation’s income flowing toward corporate profits and top executive pay in recent years. He surmised that weak labor unions … did not have the clout to protect the workers’ share.

Since then, several other studies have presented various channels through which a lack of competition between employers could keep wages down. …

Waning competition in employment can muck up the economy in more ways than one. It slows wage growth, of course. Lacking outside options, workers are much less likely to leave a job. But economic output and employment will suffer, too, because fewer workers will be willing to work for the lower wage. …

Policy makers can push back against employers’ market power. Strengthening labor unions… Raising the minimum wage… But it seems there is an opportunity to rethink the nation’s approach to antitrust law, too. It shouldn’t be seen exclusively as a tool to protect consumers from sticker shock.

In a speech in September, Renata Hesse, the Justice Department’s acting assistant attorney general for antitrust, argued forcefully that “the antitrust laws were intended to benefit participants in the American economy broadly — not just in their capacity as consumers of goods and services.”

Antitrust enforcement efforts, Ms. Hesse said, “also benefit workers, whose wages won’t be driven down by dominant employers with the power to dictate terms of employment.” …

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