Government’s new report shows that employers face little competition for workers, allowing companies to pay employees substantially less than a so-called “free” market would manifest

A new study has been released by the U.S. government revealing that despite a purported “tight” labor market that should give workers leverage, in fact the system is deeply flawed by improper and illegal practices on the part of employers, such that employees are experiencing serious reductions in pay and job mobility. The explosive new report makes a new declaration of the government’s future stance on the enforcement of the antitrust laws across U.S. labor markets.

As reported in the New York Times, the report states that lack of competition in the job market “costs workers, on average, 15 to 25 percent of what they might otherwise make [emphasis added].” The paper adds that the Treasury Department report goes on to make it clear that the administration will deploy all the tools at its disposal “to restore competition in the market for work.”

“There is a recognition that the idea of a competitive labor market is a fiction,” said Ben Harris, assistant Treasury secretary in the office of economic policy, which prepared the report. “This is a sea change in economics.”

Economic experts point out that throughout almost all industries, workers gain wage increases when they change jobs or secure a credible offer from another company that will cause the employer to increase their wages. They go on to note that since companies are keenly aware of this fact, they “rally” around the solution of eliminating competition to keep wages depressed and keep employees struggling where they already are.

The Treasury report, notes the Times, “lays out the many ways in which employers do this. There are noncompete agreements that bar workers from moving to a competitor, and nondisclosure agreements that keep them from sharing information about wages and working conditions — critical information for workers to understand their options. Some companies make no-poaching deals.” No-poaching deals are illegal agreements between companies to expressly avoid hiring each other’s employees. (Note: Lieff Cabraser’s antitrust practice group has led many of the earliest and most significant private actions successfully challenging such practices by companies across multiple industry sectors.)

Treasury’s report builds on comprehensive economic research developed since the 1990s, when a groundbreaking study by two eminent economists observed that raising the minimum wage not only didn’t necessarily reduce employment, and could in fact produce more jobs in a given sector.

The Biden Adminstration sees that lack of competition plays a large part in explaining why American worker pay, even accounting for inflation, is barely more than it was 50 years ago. Previous checks against unfair corporate power have diminished considerably over the decades, and workers are literally paying the price. Put another way, the uncompetitive labor market is “reducing the share of the nation’s income that goes to workers while increasing the slice that accrues to the owners of capital.” Put less fancily, your boss is getting rich while you get comparatively less and less. This also has the effect of shrinking employment overall, and reducing overall productivity — to almost everyone’s detriment.

Lieff Cabraser remains committed to vigorous and unceasing civil enforcement of America’s antitrust laws. If you suspect that your pay or mobility have been artificially suppressed by improper actions by your employer, contact us securely by using the form on this page for a free, no-obligation review of your case.

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