Measuring the Impact of Mergers on Labor Markets

By Mellman, Aryeh | Columbia Journal of Law and Social Problems, Fall 2019 | Go to article overview

Measuring the Impact of Mergers on Labor Markets


Mellman, Aryeh, Columbia Journal of Law and Social Problems


While the Department of Justice (DOJ) traditionally reviews mergers solely in terms of their impacts of prices for consumers, the antitrust laws were enacted to deal with broader socio-political problems like industrial concentration as well as prices. A new line of research on labor market concentration suggests an additional area of concern for antitrust law, noting that even as mergers decrease prices, they can increase labor market concentration, keeping wages low for employees of merging companies.

This Note analyzes a merger through the lens of its predicted impact on wages, rather than prices. Part II lays out the evolution of antitrust law and merger review from its early multifaceted socio-political focus to its current narrow economic angle. Part III then questions whether the pricefocused consumer welfare standard is as complete as it appears to be. Next, Part IV reviews the literature on labor market concentration and demonstrates how the tools that measure concentration in the product market can easily do the same in the labor market. Part V conducts a retrospective empirical analysis of a past merger, assessing whether it would have passed DOJ muster had the agency considered its effect on wages. Finally, Part VI suggests possible changes to the merger review process in light of the research and case study.

In the years following the Great Recession, the economy has steadily strengthened, with productivity growth high and unemployment low.1 Yet even as these global indicators have improved, most workers have not seen an accompanying increase in their wages.2 This discrepancy has led commentators to suggest a range of possible explanations.3 Antitrust scholars have posited one novel reason: even as the economy has improved, a large number of mergers has reduced the number of potential employers competing for employees. In a strong labor market, employers would typically compete for employees by offering higher wages.4 Yet instead of competing, employers have consolidated, thereby restricting competition for employees by giving them little choice in whom to work for and therefore not needing to raise wages. This line of thinking is relatively new in antitrust law, which is typically concerned with the impact of mergers (and other antitrust activities) on prices rather than wages.

This lacuna in the antitrust laws should be explored further. The Department of Justice (DoJ) reviews mergers to determine whether they will substantially harm competition under Section 7 of the Clayton Act.5 Today, effects on competition are primarily assessed using the consumer welfare standard, which is only concerned with the increased prices of products, despite a long history of antitrust laws being used to remedy labor market concentration as an evil in itself.

Although barely relevant in current DOJ analysis, concentration in labor markets arising from mergers can have multiple harmful effects. Even under the consumer welfare standard, extensive labor market concentration can cause suppression of wages, which is an effective price increase for those whose wages are artificially pushed below market value, especially when jobs in many markets are concentrated. Moving beyond the traditional theory of harm, the DOJ should begin to see labor market concentration as a harm in itself. This theory is supported by existing case law and doctrine, as well as the legislative history and intent behind the major antitrust laws, yet it is rarely invoked explicitly today.6

This Note pulls together several strands of existing research to show that there is a lengthy history of using antitrust laws to attack industrial concentration, that labor market concentration is measurably high, and that many labor markets are highly concentrated.7 This Note builds on this work and presents a case study that illustrates how to measure labor market concentration by using the inverse of the DOJ's existing methods to measure product market concentration. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Measuring the Impact of Mergers on Labor Markets
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.