The Application of Antitrust Law to Labor Markets — Then and Now

66 Pages Posted: 12 Nov 2021 Last revised: 17 Nov 2022

See all articles by Richard A. Epstein

Richard A. Epstein

New York University School of Law; Stanford University - Hoover Institution on War, Revolution and Peace; University of Chicago - Law School

Date Written: November 9, 2021

Abstract

As of late, there has been a concerted push in the Biden administration, backed by prominent academics, to expand the application of antitrust law against major employers who exercise monopsony power that reduces aggregate demand and thus leaves too many workers on the sidelines. The effort chiefly occurs in two major areas: stricter attacks on covenants not to compete and more intense review of mergers under the Clayton Act. This paper begins with an historical account of the law in both areas, from which it concludes that there is no good reason to alter the status quo ante. The modern claims of antitrust violations are said to rest on the traditional consumer welfare standard. But the theoretical and empirical evidence on this point is thin. Turnover rates in labor markets are high, labor shortages are now common; wage growth varies by presidential administration that changes, and not antitrust law, which has been constant. Other labor policies like anti-discrimination laws, paid leave policies, and minimum wage and overtime laws exert a more direct power. No systematic evidence suggests the current (cautious) acceptance of non-compete clauses allows large numbers of major employers to extract monopsony profits. The only employers with market power work in markets (like hospitals subject to certificates of need), where these formal barriers to entry make these mergers suspect for excessive concentration in product markets, leaving it utterly unwise to pore over concentration ratios in thousands of discrete labor markets. Any concern with monopoly influence in labor markets should seek to weaken the hold of public and private unions, consistent with the consumer welfare standard.

Keywords: Biden, executive order on competition, certificates of need, covenants not to compete, mergers, monopsony power, unions, Clayton Act

JEL Classification: K2, K20, K21

Suggested Citation

Epstein, Richard A., The Application of Antitrust Law to Labor Markets — Then and Now (November 9, 2021). NYU Journal of Law & Liberty, Vol. 15, No. 2, 2021, Law & Economics Center at George Mason University Scalia Law School Research Paper Series No. 22-004, NYU Law and Economics Research Paper No. 22-005, Available at SSRN: https://ssrn.com/abstract=3960332 or http://dx.doi.org/10.2139/ssrn.3960332

Richard A. Epstein (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States
(212) 992-8858 (Phone)
(212) 995-4894 (Fax)

Stanford University - Hoover Institution on War, Revolution and Peace

Stanford, CA 94305-6010
United States

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-702-9563 (Phone)
773-702-0730 (Fax)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
336
Abstract Views
1,171
Rank
163,955
PlumX Metrics