Antitrust, the Gig Economy, and Labor Market Power

Source: Marshall Steinbaum, Law and Contemporary Problems, Vol. 82 no. 3, 2019

Worker bargaining power has diminished over the last forty years. Between 1948 and 1979, median wages closely tracked output per worker. Since then, productivity has continued to increase (until leveling off in the decade of the 2000s), while median pay has stagnated, creating an ever-widening gap between median wages and productivity. The widening gap contrasts with the central prediction of neoclassical economic theory about the labor market: that workers are paid what they are worth. At the same time, inequality within the distribution of labor income is higher, and has risen faster, than can possibly be explained by any notion of a skills gap between workers and the needs of today’s employers. And since the 2000s, these dual trends demarcating the declining bargaining power of workers in the economy have been joined by a third: the reduction in labor’s share of national income, which economists had assumed was stable over the long run. In fact, it has ratcheted downward over the last two business cycles.

The aim of this paper is to augment the interpretation of these trends with an element that has received very little attention from labor-oriented scholars: the decline and erosion of antitrust law and its enforcement. Whereas there was once a sharp line where labor law ended and antitrust began, there is now a gray area, within which a more powerful firm can tell a less-powerful contractor or worker what to do without being liable under antitrust or labor law. The erosion of the statutory employment relationship, and thus the ability of employers to evade the obligations that go along with it, has received wide attention from labor scholars and in public debate. What has been ignored is that the deterioration of antitrust is what legally allows more powerful firms to tell subordinate firms, contractors, and workers what to do even if those subordinates are not, legally, their employees. Antitrust has also prevented those same subordinates from coordinating among themselves to strengthen their own hand in negotiations.

This paper considers two different ways that antitrust has contributed to the increasing imbalance of power between employers and workers. First, antitrust has legalized vertical restraints, allowing the economy’s most powerful actors to closely direct and supervise the behavior of less-powerful actors. Second, antitrust has been used by those same powerful actors to prevent less-powerful actors from organizing and coordinating on their own behalf against such concentrations of power. Parts II and III of this article deal with each of these, and the Part IV proposes a policy agenda for putting the antitrust laws to work in the labor market according to their original purpose: namely, to deconcentrate economic power…..