Congressional Democrats have often argued for using antitrust laws to break up large American companies. At a recent hearing, they attempted to make the case that antitrust laws should be used for an even broader, more aggressive purpose: to implement pro-labor union policies to address problems in the labor market. On September 28, the House Judiciary Committee held a hearing titled, “Reviving Competition, Part 4: 21st Century Antitrust Reforms and the American Worker.” There, Democrats argued for an enormous expansion of the application of antitrust in order to penalize U.S. companies. While targeted reforms at the local, state, and federal level would help workers gain access to more employment opportunities, using result-oriented antitrust enforcement is heavy-handed and would ultimately harm workers, consumers, and businesses.
During the hearing, Democrats pointed the finger at the private sector, saying corporate consolidation is causing harm to workers. However, this is a narrow view of the issue. Congressman Mike Johnson (R-LA) hit the nail on the head, pointing out that heavy-handed government regulation leads to consolidation in the private sector. The health care sector was brought up multiple times as being overly consolidated with just passing mention of how it is one of the most regulated industries in the United States. Using antitrust laws to create more regulations would likely create more consolidation.
Representative Darrell Issa (R-CA) rightfully pointed out that oftentimes it is government policies that stand in the way of employment opportunities for workers. Independent workers are a critical part of the gig economy. Gig work allows workers to earn extra income through “side hustles,” and allows for a more flexible work schedule that can be valuable for parents and families. The Mercatus Center found that women who otherwise may be unable to take on employment benefit from this flexible arrangement. However, progressive pushes for “ABC testing” for worker classification, like Assembly Bill 5 in California and the Protecting the Right to Organize Act in Congress, harms workers by limiting employment opportunities and cutting off the benefits independent workers enjoy.
These are, of course, not the only examples of the government standing in their own way when it comes to helping workers and growing the economy. Onerous occupational licensing requirements restrict Americans’ access to employment opportunities. While there may be valid health and safety reasons for licenses for certain jobs, this is not universally true. The R Street Institute notes that it takes 1,500 hours of education and two state exams to work as a cosmetologist while emergency medical technicians (EMTs) only need to complete 110 hours of education. This is a growing problem with nearly 30 percent of the workforce now required to have a license.
To supposedly remedy harm to workers, some lawmakers are pushing for an overhaul of the current antitrust laws and a move away from the consumer welfare standard. This would lead to more power being vested in agencies like the FTC. However, lawmakers and taxpayers should be skeptical that more government regulations are needed to address these problems.
As Federal Trade Commission (FTC) Commissioner Christine Wilson explained in her written testimony, the FTC has taken steps to address anticompetitive practices that harm workers. The FTC challenged actions by the North Carolina State Board of Dental Examiners for excluding non-dentist providers of teeth whitening goods and services. The consumer welfare standard does not limit enforcement to short-term price effects, as it is sometimes mischaracterized. Harms to quality, innovation, competition, and other factors are considered under the consumer welfare standard. Representative Jim Jordan (R-OH) also pointed out in the hearing that workers are consumers. The consumer welfare standard does not ignore workers since most Americans are not siloed as a worker or consumer. There is widespread recognition among economists and legal experts that the consumer welfare standard is best for protecting consumers and promoting competition and innovation.
A move away from the consumer welfare standard would also give regulators and political appointees at the FTC more power, something well-intentioned lawmakers should be wary of. Rather than promote a transparent process, the FTC has created more uncertainty for businesses with little opportunity for public input. Under the facade of transparency, the FTC under Chair Lina Khan has held multiple “open meetings” where public comments are only considered after the Commission has voted on items. Khan’s FTC has also sent letters to businesses warning them to “proceed at their own risk” when engaging in mergers and acquisitions. The actions by the FTC create more uncertainty for businesses on how to proceed and have a chilling effect on innovation and growth.
Antitrust laws are not a tool for lawmakers to use to dictate the direction of the economy. Using antitrust in a result-oriented fashion politicizes government action and harms consumers. As FTC Commissioner argued, “just because we hold the hammer of antitrust law in our hands does not mean we should treat every concern as a nail, lest we risk bludgeoning our entire economy.” There are labor issues that warrant additional scrutiny from lawmakers at all levels of government, but these issues should be addressed with targeted reforms, not through heavy-handed government interference.