Correcting Antitrust Monopsony Theory and Addressing Anticompetitive Conduct in Low-Skill Labor Markets

Addressing growing income inequality in the United States should begin with the plight of low-skilled workers, many subject to below subsistence income and stressful and dangerous working conditions. Antitrust cannot offer a comprehensive solution to this problem. It can, however, meaningfully contribute to a solution in two ways. The first is to adjust the classic definition of monopsony to address the special conditions that apply to unskilled labor markets and to clear away obstacles to meritorious antitrust claims. Under classic theory, a monopsonist lowers input prices causing some input providers to stop supplying. That premise, while it may hold for some labor markets, does not accurately describe the world of unskilled labor. Numerous historical and contemporary examples show that employers can exploit a naturally inelastic supply curve, or even shift that curve, allowing them to employ workers at low wages while increasing both labor input and downstream output. Failure to recognize this reality can hamper legitimate antitrust claims that protect unskilled and other disadvantaged workers. Possible lower prices and increased output for downstream consumers should not be a defense for genuine anticompetitive abuses of workers.There is a second and vital change needed to improve wages and working conditions for low-skill workers: to eliminate antitrust conspiracy claims as a bar to reasonable collective action by workers facing an employer’s monopsony power. Allowing worker collectives to exercise reasonable countervailing power against a powerful employer is the central purpose behind labor laws that authorize unions and other worker collectives. Unions have lost much ground in the past half century. The issue needs to be revisited to empower unskilled and other workers, including independent contractors, options to bargain on more equal terms on wages and working conditions. The federal enforcement agencies can contribute to positive development of labor monopsony law through guidelines and rulemaking, clarifying circumstances in which a Section 2 Sherman Act claim for monopsonization would lie