The U.S. Department of the Treasury issued a new report that says the lack of competition in the labor market has caused wage declines of roughly 20 percent for workers.
The State of Labor Market Competition in the U.S. Economy report found that labor market competition is lacking due to employer concentration and anti-competitive labor practices. This lack of competition has caused wage declines of roughly 20 percent for workers relative to what they would otherwise earn.
Further, the report says that employers use their market power to impose other costs on workers, including unpredictable just-in-time schedules, punishing work conditions, and no opportunity for advancement. It adds that the lack of labor market competition inhibits innovation, increases prices, and curbs economic growth.
The report cited noncompete agreements and misclassifying employees as independent contractors as some of the practices that have forced workers to accept lower wages and worse working conditions. In addition, the decline in unionization has left workers with less bargaining power to counteract employers’ power.
“A competitive labor market is a key element of a well-functioning economy,” Secretary of the Treasury Janet Yellen said. “The Biden-Harris Administration’s policies, taken together, will substantially boost competition and increase the relative bargaining power of workers. In turn, these reforms will meaningfully raise wages and boost the wellbeing for workers in markets around the country. The Treasury Department, along with its partners throughout the Administration, will work with urgency to further the recommendations laid out in this report.”
The report was done in consultation with the U.S. Department of Justice, the U.S. Department of Labor, and the Federal Trade Commission.
“Workers across the country are demanding more from their jobs, and anti-competitive practices like the ones addressed in this report undermine broader market forces that allow workers to advocate for themselves,” Secretary of Labor Marty Walsh said. “Addressing these issues will not only be good for workers, but it will allow more companies to recruit and retain a skilled workforce and will keep our nation moving forward.”
The report includes recommendations to revitalize competition in labor markets, such as increasing antitrust enforcement in labor markets, raising the minimum wage, and making it easier for workers to organize.
The White House held a roundtable discussion on March 7 to discuss the report. In attendance were Yellen, Walsh, Attorney General Merrick Garland, Chair of the Federal Trade Commission Lina Khan, Chair of the Council of Economic Advisors Cecilia Rouse, and Director of the National Economic Council Brian Deese. The report is a product of President Biden’s executive order on Promoting Competition in the American Economy.