New Treasury Report Highlights Ubiquity of Employer Power in Labor Markets

Open Markets urges leaders to move beyond reports and take action to protect workers

WASHINGTON— The Treasury Department released Monday a wide-ranging new report on the State of Labor Market Competition. The report helpfully highlights the ubiquity of employer power in labor markets, pointing out that some ability to unilaterally set wages is likely inherent in the employer-employee relationship, necessitating policies like minimum wages and institutions like collective bargaining as core features of fair labor markets.

This baseline power imbalance has been exacerbated in recent decades by factors such as deunionization, the declining value of the minimum wage, workplace fissuring, and increasing employer concentration in labor markets, as the report makes clear.

This report follows President Joe Biden’s Executive Order on Promoting Competition in the American Economy on July 9, 2021, which brought a welcome new focus on employer power and unfair competition in the labor market.

In response, Barry Lynn, executive director of the Open Markets Institute, issued the following statement:

“We applaud the Treasury’s emphasis in this report on the negative effects of coercive contracts like non-competes and no-poaching agreements, and on legal gimmicks like misclassification and fissuring that often place workers outside the protections of either antitrust or labor laws. We are concerned, however, by the report’s focus on occupational licensing. While occupational licensing is a complex issue, it simply is not an important contributor to wage suppression and can indeed enhance worker power and raise wages.

“We hope to continue to work with the Biden administration as it aims to protect workers and the health of the economy from unfair competition in labor markets. Now that the workshops and reports are finished, it is time for the administration to take concrete actions to protect America’s workers, such as a regulatory ban on non-compete clauses by the Federal Trade Commission. ”

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