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Changes in the market itself have exacerbated all the problems I have described. Some of the increased concentration occurred naturally, for example as a result of a change in technology or a change in the structure of demand. Industries with large network externalities are naturally concentrated, and as these sectors took on a larger role in the economy, the overall degree of market concentration increased. The same is true with changes in technology, which lower marginal cost and increase the importance of fixed costs (e.g., in sectors in which research is key) that are naturally associated with more concentration. On the demand side, the move toward a service-sector economy where the location of the provision of services is important may lead to a less competitive marketplace.

Some of the changes in market structure, induced either by changes in technology or the structure of demand, have weakened the bargaining power of workers—at least as they have played out. The changes have led to a fissured marketplace, where workers work seemingly independently, controlled or coordinated only through a platform, which is the hallmark of the gig economy. Firms have tried to treat these workers as independent contractors, thus excluding them from the rights and protections afforded employees.

Of course, in a fully competitive economy of the kind described in textbooks the change in industrial structure should make no difference. That it so obviously does—and that employers believe that it does and have fought so hard for workers to be treated as independent contractors—is another piece of evidence against the competitive model. The structural change affects workers’ bargaining power—on the platform, workers become more perfectly substitutable—and, I emphasize in this introductory chapter to the volume, when there is a gross imbalance of bargaining power, government needs to redress it.

At the same time, fissured work makes it more challenging for workers to hold employers to account; making matters worse, an increasing share of so-called independent workers are generally exempt from the Fair Labor Standards Act (FLSA) or NLRA protections.

Decades ago, stronger unions, more-effective labor laws, and better general systems of social protection would have provided more-robust protection against fissuring and its consequences. Unfortunately, labor laws have not kept up with the times; organizing workers on platforms or in the gig economy may be more difficult than it is in an industrial plant. And employers have undertaken concerted efforts, described in this volume, to hamper unionization, efforts that have been particularly effective in fissured markets. Government interventions, such as higher minimum wages and stricter labor standards, have made a difference in contexts where there is a gross imbalance in market power. By treating workers as independent contractors the platforms seek to reduce, if not eliminate, these protections. And, in some places, the law has allowed them to get away with it.

The answer, then, is to reform labor law to mitigate the harmful impacts of workplace fissuring and extend protections to misclassified employees. Congress should reform major labor laws to make it easier for workers in the fissured economy to take collective action. And recognizing that it will not be easy to fully counter the power of employers in this kind of economy, it is all the more imperative to have a good system of social protections, such as a living minimum wage, guaranteed paid sick leave, safeguarded safety and health in the workplace, and so forth.