Anti-trust enforcement is important to competitors and consumers, but don't forget workers
A recent $180 million wage-fixing settlement among the largest firms in the poultry industry shows another consequence of unchecked monopoly power. Photo by Stephen Ausmus/Agricultural Research Service, USDA.
For Minnesota legislators looking for ways to protect workers, an unlikely source has provided an important blueprint.
Federal Trade Commission Chair Andrew Ferguson is establishing a Joint Labor Task Force that will prioritize investigating corporate conduct that harms workers. In announcing the task force Ferguson wrote that 'deceptive, unfair, and anticompetitive labor practices are widespread' and identifies a range of harmful practices, including noncompete agreements, wage-fixing agreements and the abuse of consolidated power.
While an antitrust agency might not seem the obvious place for labor policy, the unchecked rise of monopoly power is a significant threat to workers. Ferguson's announcement continues the approach of his predecessor, Lina Khan, and other Biden administration regulators. That approach is not new, as the architects of our antitrust laws understood the threat monopolies pose to workers. Sen. John Sherman, author of the Sherman Antitrust Act, said in 1892 that a monopoly 'commands the price of labor without fear of strikes, for in its field it allows no competitors.'
That statement rings true today. The average local labor market in the U.S. is considered highly concentrated by federal antitrust guidelines, and one out of every eight labor markets is dominated by a single employer. The result of that, according to a 2022 study by the Treasury Department, is that the average worker earns roughly 20% less than they would if there was more competition.
In 2023 Minnesota took a step in addressing that issue by requiring the impacts on health care workers to be considered when evaluating large health care mergers. Legislators could build on that law by requiring labor market analysis as part of merger review across the economy. States across the country have proposed requiring more pre-merger notification and labor market analysis could be made a part of such a proposal. Legislators could also pass the Fair Competition Act, which would make it clear that the abuse of monopsony power — when big players use their power to push down prices from suppliers and labor — is a violation of Minnesota's antitrust law.
A recent $180 million wage-fixing settlement among the largest firms in the poultry industry shows another consequence of unchecked monopoly power. Companies not only gain greater power over workers but can also more easily collude with those firms that remain. In an economy that has grown 50% more consolidated since 2005, this behavior is likely to increase.
Unfortunately, a 2007 Supreme Court decision has made it more difficult to bring price and wage-fixing cases. Legislators could ease enforcement by amending Minnesota law to shift the burden onto defendants instead of requiring plaintiffs to provide explicit evidence of price-fixing before further facts can be obtained through discovery.
Traditional wage-fixing is just the tip of the iceberg. A recent report on surveillance prices and wages demonstrates how detailed data collection to feed algorithms and artificial intelligence will make it even easier for companies to conspire against workers and drive down wages. One approach to this emerging challenge is to prohibit algorithmic price and wage-fixing, which some legislators are seeking to do in the rental industry. The use of third-party analytics companies to fix prices and wages is not confined to housing, however. Legislators could draw on a federal proposal, Senator Amy Klobuchar's Preventing Algorithmic Collusion Act, for a way to prohibit tacit collusion against workers across Minnesota's economy.
In addition to the impact on wages and jobs, anticompetitive conduct is transforming the basics of what a worker really is. Consider a proposal to allow Uber and Lyft drivers to unionize. The underlying reason such legislation is necessary is because ridesharing platforms misclassify their workers as independent contractors and then exert control using anticompetitive 'vertical restraints,' which are contracts governing buyer-seller relationships.
This business model would have been a clear violation of antitrust laws before a multi-decade effort to weaken enforcement against anticompetitive vertical restraints. Now gig companies and others are able to maintain a system of 'control without responsibility' — firms can tightly manage individuals while avoiding the legal and financial responsibilities of formal employment. Uber controls the routes and rates supposedly independent drivers receive while the 'independent' trucking companies Amazon uses must deliver packages exclusively for Amazon in vehicles branded by Amazon, and using routes, rates and schedules dictated by Amazon.
Minnesota took steps to limit vertical restraints by banning non compete clauses and no-poach agreements in 2023. But lawmakers could build off that work by strengthening the state's antitrust laws to more clearly prohibit the use of other anticompetitive and coercive contracts that exploit workers and limit freedom and mobility.
For too long the concept of what constitutes labor policy has been narrowly confined to issues like minimum wage rates and right-to-work laws, but our antimonopoly tools are an important part of keeping workers from suffering under the thumb of monopolists.
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