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The Solutions in Antitrust and Labor Law

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The first step to solving these problems is to recognize them, and, mercifully, that has started: the story of the competitive labor market and coddled American worker is collapsing. This book is the product of a convening of workers’ rights advocates, competition law lawyers, labor standards and antitrust enforcers, economists, and academics, and is situated in a much larger awakening and the construction of a new narrative, or a renewal of the original promise of antitrust and labor law. Antitrust law often gets painted with the broad brush of government regulation: burdensome and misguided. But antitrust law is not regulatory: it protects the free market from private regulation. Perhaps for all of the 20th century private regulation distorted and suppressed wages for American workers. Enforcing antitrust law should increase wages for many American workers and, because this would put them closer to their competitive levels, it should grow the economy as a whole by allocating resources more efficiently. Where there is a need for market regulation, it must be subject to democratic checks. Unions and cooperatives as created under the Capper–Volstead Act are pockets of targeted, and highly socially useful, democratic regulatory units to counter the power of firms. At the same time, fissuring has resulted in widespread displacement of democratically crafted regulation with the completely unfettered regulation by private parties.

There is reason for hope. Recent studies have suggested that the negative wage effects of consolidation are diminished where there is unionization (Marinescu and Posner 2019). The puzzle was overblown: protecting worker organizing actually works to fix stubborn market power effects, and results in just the kind of democratically controlled units that should be bargaining for worker power. The intellectual groundwork for these protections has always been solid.

The same sort of argument could be used about unions. Large employers have market power, can organize, have more information, and can leverage their power to push down supplier prices—that is, suppliers of labor. But we can reduce this naturally uncompetitive, inefficient outcome by allowing workers to band together to offset these problems by creating informational stores of their own and building their own market power. And really this is a sort of second-best or least-restrictive free market solution to wage stagnation.

Revitalizing the American labor movement will take more than tinkering around the edges of the National Labor Relations Act. The Clean Slate for Worker Power project (cleanslateworkerpower.org), in which we were both involved, issued comprehensive recommendations for an overhaul of the law. It calls for a new labor law that would enable workers to build collective organizations that can countervail corporate power wherever that power impacts workers’ lives. The recommendations include mechanisms that would allow workers to build power in the workplace, across industries and markets, at the level of the corporate boards, and in the political system.

Among the central Clean Slate recommendations is one to move collective bargaining from solely the enterprise level to also include the sectoral level. There is growing consensus that labor law should be reformed to allow workers to aggregate and exercise power at the sectoral level (Block and Sachs 2020b). Sectoral bargaining, which exists in much of the world, would allow unions to sit at the negotiating table with representatives of employers across an industry and then direct application of any sectoral agreements to all employers in that sector.

For reforms to labor and employment law to be effective, it is also necessary to stop employers’ from evading those laws and thereby denying their workers the law’s protection. Stopping the misclassification of employees as independent contractors is a critical first step. That means a more expansive definition of “employee,” one that is capacious enough to accommodate workers who need the law’s protection. California tried to codify just such a test to protect more Californians’ right to minimum labor standards, but the law was overturned by a company-financed ballot initiative.

Elsewhere in this book we address reforms needed for how workers exercise their individual power. In these chapters, our authors recommend prohibitions on contract clauses that limit workers’ ability to find new jobs, including noncompete agreements and forced arbitration clauses. Finally, our authors recommend an end to forced arbitration clauses as well.

And antitrust law has the tools to tackle the worst abuses of workplace fissuring. Take a franchisee domestic worker, for example. Today, many are not legally workers—instead, they are limited liability companies. But they are not free to compete with each other. Voluminous manuals and rules set the terms of competition for literally thousands of workers who are supposedly competitive businesses—which flouts basic principles of antitrust law.

Current law can kick in to remedy this oversight, and it is starting to. The fast-food franchise no-poach cases are a perfect example.16 Instead of letting franchisees compete for employees, the franchisors have made rules for how they could compete for employees—which is “not at all.” Every franchisee is forbidden by the franchisor from hiring employees who have ever worked for another franchisee. The result is that the skilled worker cannot take her knowledge to market, and cannot turn her skills and value into higher wages. She is paid the same as everyone else unless she wants to start over at the bottom with a new employer who, by the way, probably has the same rules. In addition to the practical hurdles involved in changing employers, these workers should not face a completely unified body of businesses and rules meant to kneecap their bargaining power. And what efficiency is served here? There is absolutely no justification for this restraint. It is might makes right, or bare corporate power.

Antitrust law is already starting to realize its potential as a tool for worker power. It can be used to strike down restraints like noncompetes, which have such a deleterious effect on worker power and mobility—not to mention preventing new businesses from entering markets, thus hurting consumers.17 Antitrust can also be used to stop capture of licensing boards that become guild-like and stop workers from entering lucrative professions, or even sometimes from moving from one state to another.18 Antitrust could even be used to stop the arbitrary exercise of market power to scare smaller firms and workers into compliance. Dead-letter laws like the Robinson–Patman Act and the Packers and Stockyards Act, as well as state unfair competition laws and some Supreme Court holdings,19 show that competition law could protect market fairness, especially where a monopolist abuses its power. The concept is simple: if you have market power, you cannot exercise it to merely discipline those who speak out against you or who try to innovate.20 Most importantly, antitrust can rescue workers in fissured workplaces. Fissured workplaces, checked by meaningful antitrust scrutiny, do not have to be pockets of lawlessness, where monopolists exercise unchecked power. They exist because the law has not kept up with innovation in law evasion.

Inequality and the Labor Market

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