The Limits of Antitrust Enforcement

By Brishen Rogers

Just a few years ago, the mainstream economic and legal opinions held that labor markets basically tended to “clear,” and that employer’s market power did not have a significant impact on wages or other terms of employment. Today, however, the issue of economic power, especially in the labor market, has made a startling reversal. A number of economists and legal scholars have recently argued that declining antitrust enforcement has harmed not just consumers, but also workers. Employers’ use of non-compete agreements and compulsory arbitration have also come under public scrutiny: non-competes because they limit workers’ ability to leave their employment, and arbitration because it prevents workers from protesting unfair treatment and enforcing their own legal rights.
Left and right seem to be converging here. Progressives are concerned that corporate power threatens equality, conservatives are concerned that it threatens individual liberty, and both are concerned that it threatens innovation. A populist critique of corporate power run amok may also be good politics. Political culture in the United States has never abandoned the Jeffersonian ideal of the yeoman farmer or independent artisan, nor has it abandoned its characteristic distrust of major institutions. There is now a Congressional Antitrust Caucus, and numerous foundations are sponsoring research into the causes and consequence of market concentration. This is all part of a renewed and essential focus on structural inequality and generally for the good.

I nevertheless want to sound a note of caution. More aggressive antitrust enforcement probably won’t do all that much to help workers, since the problem of employer power runs much deeper than monopsony, covenants, and other restraints on workers’ mobility. Capacious employer rights are written into the basic structure of our labor and employment laws and corporate laws. Those laws encourage investors to aggregate into corporations, while leaving workers atomized, and therefore largely powerless, unless the state encourages them to aggregate into unions or otherwise to exert countervailing power from below. Still more troubling, the basic logic of antitrust—that combinations in restraint of trade are forbidden—is in serious tension with workers’ organizing. Unions are literally cartels for the sale of labor, and unions’ major legal battle prior to the New Deal was to stop courts’ use of antitrust and related doctrines to thwart their efforts. Contemporary antitrust doctrine still has that effect in many instances.

Continue Reading…