Corporate power is keeping US wages 20% lower than they should be – White House

WASHINGTON, March 7 – With inflation at its highest level in four decades, a US government report shows corporate America has used its influence in the labor market to keep wages 20% below what they should be, White said Monday House.

The report, prepared by the Treasury Department with the assistance of the Department of Justice, the Department of Labor and the Federal Trade Commission (FTC), says that companies have an advantage in setting wages because they tend to know more about the labor market than workers.

In addition, workers may not be able to relocate or afford a long job search to find better paying jobs.

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“These conditions may allow firms to exercise bargaining power and therefore offer lower wages and worse working conditions even in labor markets that are not highly concentrated,” the report says.

US Treasury Secretary Janet Yellen said at a White House forum highlighting a report that workers are often disadvantaged by mandatory non-compete or non-disclosure agreements; collusion between employers to keep wages low; or a lack of transparency that keeps workers unaware of prevailing wage rates.

“Ultimately, these conditions combine to create an uneven market where employers have more leverage than workers,” she said. “That’s what economists mean when we talk about monopsony power” among labor buyers.

The event at the White House was attended by several workers who complained about unfair hiring practices in previous jobs.

One of the speakers was Google Alphabet (GOOGL.O) temporary worker Shannon Waite, who said she was fired from her $15 an hour job for complaining on social media about a broken water bottle released by the company.

Google representatives did not immediately respond to requests for comment.

According to Communications Workers of America, Waite eventually secured a settlement agreement with Google that allows workers to negotiate working conditions.

The report discusses ways in which firms can withhold wages, including colluding with other companies to avoid hiring each other’s workers and requiring employees to sign non-compete agreements that prevent them from leaving for higher wages.

The report cites a document stating that one in five workers are currently covered by a non-compete agreement, which means they cannot leave to work for a competitor.

“A careful review of credible academic research shows that wage cuts are roughly 20% compared to levels in a fully competitive market. In some industries and professions, such as manufacturing, wage loss estimates are even higher,” the report says.

The U.S. unemployment rate fell to a two-year low of 3.8% in February, but hourly pay remained flat, in part because the return of workers to low-wage industries offset wage increases in some sectors as companies scramble for scarce workers. More

Antitrust enforcement efforts typically focus on the prices companies charge for goods and services. Antitrust authorities have filed labor antitrust cases in the past, and the Trump administration’s Department of Justice filed a case against an anti-poaching agreement between railroad equipment suppliers in 2018, but they remain rare.

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Reporting by Diane Bartz and David Louder; Editing by David Gregorio

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