What do monopolies have to do with workers?
Actually, a lot. It’s widely known that when industries are highly concentrated, the lack of competition can allow corporations to increase prices and limit consumers’ options. And monopolies’ harmful impact on democracy is also generally understood: Powerful corporations have too much political power and too much sway on policy.
But excessive corporate dominance also allows businesses to tamp down the price of labor (a.k.a., wages), limit people’s job opportunities and otherwise depress working conditions without consequence.
The growing understanding of how harmful monopolies can be for everyone has led astute legislators to focus on the impact of corporate concentration on workers. A bill passed by the New York State Senate this week, the 21st Century Antitrust Act (sponsored by State Sen. Michael Gianaris and Assembly Majority Leader Crystal Peoples-Stokes) would help remedy the extreme imbalance of corporate and worker power, leading to higher wages, better working conditions and more job opportunities. A similar bill is pending this legislative session in Pennsylvania, and versions were introduced in Minnesota and Maine as well.
The need for action is clear: New York’s antitrust law was first passed 120 years ago, and Pennsylvania is an outlier nationally; it doesn’t even have a state-level antitrust law. Policymakers and worker advocates in these states and nationwide should embrace this movement for antitrust reform.
While the details vary, these bills provide a concrete illustration of the kinds of reforms that are needed. One of the most important would breathe new life into efforts to police “monopsony,” or buyer power. Monopsony occurs when a buyer is so large it can dictate prices. In the labor context, employers with dominance in a field or geographic region can exercise monopsony power, using their size and dominance to push down wages. These state bills would give state antitrust enforcers new abilities to prevent this harmful dynamic.
To understand how the proposed laws would work in practice, it’s useful to consider the warehouse industry in New York.
Over the last 10 years, the growth of e-commerce in New York State, led by Amazon, has doubled employment in the industry. But that influx of positions hasn’t led to good jobs or higher pay for workers, which one might expect given increased demand. Instead, average annual pay for New York’s warehouse workers, adjusted for inflation, fell by more than $6,000 between 2010 and 2020. For delivery drivers, the reduction was $5,000.
As Amazon occupies more of the warehousing market, workers in this field have few other options using their experience in this type of job. This situation allows Amazon to push down wages and diminish working conditions, even in tight labor markets. Walmart has similar power to drive down local wages; workers in industries such as agriculture and pharmacies are also beholden to dominant employers’ excessive influence.
Under federal and state law, monopolizing labor markets is technically illegal already. But it’s rarely enforced, in part because the bar for proving a company has a monopoly is way too high. Corporations generally have to hold 70 percent or more of a market, and lawsuits get bogged down over fights about defining the relevant market, among other things.
But buyers can exert significant power over prices — and businesses can ratchet down wages — at much lower levels of concentration than 70 percent. For labor markets, that makes perfect sense: Workers can’t easily move to a different market if a dominant employer drives down wages and conditions. People are connected by family ties, children’s schools, spouse’s jobs and more.
Indeed, more wage cuts and labor violations occur in concentrated labor markets because workers can’t easily move to seek a new job, a dynamic compounded by restrictive contracts like non-competes and “no poach” agreements that further limit worker mobility. A 2022 U.S. Treasury Department report concluded that employer dominance lowers wages by about 20 percent across the economy, and even more in certain industries.
The state antitrust reform bills under consideration this year would adopt an “abuse of dominance” standard, a significant change from the current standard, which sets a harder-to-reach threshold in order to find an antitrust violation. Employers that exceed a certain market share would be precluded from using their power to harm workers. New York’s bill sets this at 30 percent for a buyer or 40 percent for a seller.
If enacted, workers at one employer could challenge a competing company that uses its power to drive down working standards across an industry. For example, the New York bill would allow UPS workers themselves — and not only the attorney general — to file a lawsuit alleging that anti-competitive labor market tactics by Amazon are degrading their own conditions.
Antitrust laws alone won’t solve the problem of degraded working conditions or the disparity of worker power relative to corporate power; the United States urgently needs labor law reform, stronger workplace protections, and adequately funded enforcement. But new antitrust laws effectively implemented could breathe life into state antitrust efforts and put workers at the heart of antitrust law — where they belong.
State governments throughout American history have often been at the forefront of challenging corporate power, regulating everything from utilities to railroads to pharmacies. States should continue to play this leading role, and set a new example for the country. Meanwhile, the public in those states and nationwide should press leaders to take action on vital new antitrust protections that can help increase wages for workers and safeguard our democracy.
Terri Gerstein is the director of the NYU Wagner Labor Initiative at NYU’s Robert F. Wagner Graduate School of Public Service.
Pat Garofalo is the director of state and local policy at the American Economic Liberties Project and the author of “The Billionaire Boondoggle.”