By Edward Longe, American Consumer Institute
In the minds of some politicians, it seems there is not a social problem antitrust reform cannot solve. Most recently, Democrats and Republicans in Washington have expressed a belief that breaking up large companies will enhance conditions for working Americans. This erroneous view was clearly displayed during the latest House Judiciary Antitrust Subcommittee hearing entitled 21st Century Antitrust Reforms and the American Worker.
Yet, contrary to their belief, using antitrust reform to enhance working conditions not only ignores the original purpose of antitrust law, but it also ignores the significant economic opportunity large companies offer American workers, especially those who have few academic qualifications or limited professional experience. As a result, expanding the scope and purpose of antitrust law could do real damage to American workers.
Critics of large companies often argue they underpay workers, especially those with few academic qualifications or limited professional experience. However, this argument ignores the reality that those working for large companies are generously compensated, both in terms of earnings and benefits.
Amazon, a company routinely accused of underpaying workers, offers its fulfillment center staff a starting salary of $16 per hour, a $3,000 sign-on bonus, and health benefits from day one. Additionally, Amazon’s fulfillment center staff only requires a high-school diploma or GED, meaning it is an employment opportunity for those who traditionally struggle to find stable, good-paying jobs.
While the work is undoubtedly demanding, smaller companies would not be able to offer the high-pay and lavish benefits. Mandating that a tech giant be broken up could ultimately deny these workers employment opportunities, forcing them to take lower-paying jobs with no or limited benefits.
Aside from offering low-skilled workers economic opportunities, large companies also offer significantly higher wages than other companies. For example, another company routinely targeted by modern trustbusters, Facebook offers an annual base salary of $120,000 with an average total compensation of $155,000. These salaries are well above the average American salary of $51,916.27.
Large companies can only offer these substantial salaries because of the significant revenue they generate each year. Therefore, breaking up large companies would only prevent them from offering these salaries, thereby depressing wages and limiting the ability of workers to achieve economic security and enhance their economic situations.
Using antitrust laws as a tool to improve working conditions also ignores the original purpose of antitrust laws: to protect consumers from anti-competitive practices.
The Sherman Act was strengthened when President Wilson signed the Clayton Act into law that created the FTC, prohibited anti-competitive acquisitions, collusive price-fixing, and predatory pricing.
The 1970s saw the last significant change to antitrust legal theory, with the adoption of the consumer welfare standard. Proponents of the consumer welfare standard believe “antitrust law should serve consumer interests and that it should protect competition rather than individual competitors.”
The consumer welfare standard first came into antitrust jurisprudence in 1974 when the Supreme Court correctly ruled, “statistics concerning market share and concentration, while of great significance, are not conclusive indicators of anti-competitive effects.”
Antitrust laws have evolved to prioritize consumers and a competitive marketplace, not workers who already enjoy protections from labor laws and regulations. Placing workers at the center of antitrust laws could lead lawmakers to enact policies that will harm consumers and lead them to pay higher prices for inferior goods and services.
If politicians truly want to enhance conditions for American workers, they would be better placed to reform employment legislation rather than antitrust laws designed to protect consumers.
While expanding the scope of antitrust laws to cover workers may be based on noble intentions, doing so could have real consequences for the very workers lawmakers seek to protect. Not only will it deny those with few qualifications the opportunity to gain employment, but it could also prevent workers from earning the substantial salaries and benefits that large companies can offer.
Expanding the scope of antitrust law to cover workers would also deprioritize consumers, exactly what antitrust legislation is designed to protect. This shift could see consumers lose protections from anti-competitive practices and antitrust laws becoming meaningless statutes that no longer serve a purpose.
Edward Longe is a Policy Manager at the American Consumer Institute, a nonprofit educational and research organization. For more information about the Institute, visit www.TheAmericanConsumer.org.