[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
REVIVING COMPETITION, PART 4:
21ST CENTURY ANTITRUST REFORMS AND THE
AMERICAN WORKER
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ANTITRUST, COMMERCIAL, AND
ADMINISTRATIVE LAW
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
TUESDAY, SEPTEMBER 28, 2021
__________
Serial No. 117-40
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via: http://judiciary.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
48-614 WASHINGTON : 2022
-----------------------------------------------------------------------------------
COMMITTEE ON THE JUDICIARY
JERROLD NADLER, New York, Chair
MADELEINE DEAN, Pennsylvania, Vice-Chair
ZOE LOFGREN, California JIM JORDAN, Ohio, Ranking Member
SHEILA JACKSON LEE, Texas STEVE CHABOT, Ohio
STEVE COHEN, Tennessee LOUIE GOHMERT, Texas
HENRY C. ``HANK'' JOHNSON, Jr., DARREL ISSA, California
Georgia KEN BUCK, Colorado
THEODORE E. DEUTCH, Florida MATT GAETZ, Florida
KAREN BASS, California MIKE JOHNSON, Louisiana
HAKEEM S. JEFFRIES, New York ANDY BIGGS, Arizona
DAVID N. CICILLINE, Rhode Island TOM McCLINTOCK, California
ERIC SWALWELL, California W. GREGORY STEUBE, Florida
TED LIEU, California TOM TIFFANY, Wisconsin
JAMIE RASKIN, Maryland THOMAS MASSIE, Kentucky
PRAMILA JAYAPAL, Washington CHIP ROY, Texas
VAL BUTLER DEMINGS, Florida DAN BISHOP, North Carolina
J. LUIS CORREA, California MICHELLE FISCHBACH, Minnesota
MARY GAY SCANLON, Pennsylvania, VICTORIA SPARTZ, Indiana
SYLVIA R. GARCIA, Texas SCOTT FITZGERALD, Wisconsin
JOE NEGUSE, Colorado CLIFF BENTZ, Oregon
LUCY McBATH, Georgia BURGESS OWENS, Utah
GREG STANTON, Arizona
VERONICA ESCOBAR, Texas
MONDAIRE JONES, New York
DEBORAH ROSS, North Carolina
CORI BUSH, Missouri
PERRY APELBAUM, Majority Staff Director & Chief Counsel
CHRISTOPHER HIXON, Minority Staff Director
------
SUBCOMMITTEE ON ANTITRUST, COMMERCIAL,
AND ADMINISTRATIVE LAW
DAVID N. CICILLINE, Rhode Island, Chair
PRAMILIA JAYAPAL, Washington, Vice-Chair
JOE NEGUSE, Colorado KEN BUCK, Colorado, Ranking Member
ERIC SWALWELL, California DARREL ISSA, California
MONDAIRE JONES, New York MATT GAETZ, Florida
THEODORE E. DEUTCH, Florida MIKE JOHNSON, Louisiana
HAKEEM S. JEFFRIES, New York W. GREGORY STEUBE, Florida
JAMIE RASKIN, Maryland MICHELLE FISCHBACH, Minnesota
VAL BUTLER DEMINGS, Florida VICTORIA SPARTZ, Indiana
MARY GAY SCANLON, Pennsylvania SCOTT FITZGERALD, Wisconsin
LUCY McBATH, Georgia CLIFF BENTZ, Oregon
MADELINE DEAN, Pennsylvania BURGESS OWENS, Utah
HENRY C. ``HANK'' JOHNSON, Jr.,
Georgia
SLADE BOND, Chief Counsel
DOUG GEHO, Minority Counsel
C O N T E N T S
----------
Tuesday, September 28, 2021
Page
OPENING STATEMENTS
The Honorable David Cicilline, Chair of the Subcommittee on
Antitrust, Commercial and Administrative Law from the State of
Rhode Island................................................... 2
The Honorable Ken Buck, Ranking Member of the Subcommittee on
Antitrust, Commercial and Administrative Law from the State of
Colorado....................................................... 4
The Honorable Jerrold Nadler, Chair of the Committee on the
Judiciary from the State of New York........................... 5
The Honorable Jim Jordan, Ranking Member of the Committee on the
Judiciary from the State of Ohio............................... 7
WITNESSES
Eric A. Posner, Kirkland and Ellis Distinguished Service
Professor of Law, Arthur and Esther Kane Research Chair,
University of Chicago Law School
Oral Testimony................................................. 10
Prepared Testimony............................................. 12
Brian Callaci, Chief Economist, Open Markets Institute
Oral Testimony................................................. 23
Prepared Testimony............................................. 25
Dan Gross, Feeder Driver, United Parcel Service; Member,
Teamsters Local 177
Oral Testimony................................................. 33
Prepared Testimony............................................. 35
Nila Payton, Medical Administrative Assistant, University of
Pittsburgh Medical Center
Oral Testimony................................................. 38
Prepared Testimony............................................. 40
The Honorable Christine S. Wilson, Commissioner, Federal Trade
Commission
Oral Testimony................................................. 43
Prepared Testimony............................................. 45
Bruce H. Kobayashi, Paige V. and Henry N. Butler Chair in Law and
Economics, Antonin Scalia Law School, George Mason University
Oral Testimony................................................. 63
Prepared Testimony............................................. 65
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
An article entitled, ``Trump to leave office with the worst jobs
record since Herbert Hoover,'' Fortune, submitted by the
Honorable David N. Cicilline, Chair of the Subcommittee on
Antitrust, Commercial and Administrative Law from the State of
Rhode Island, for the record................................... 20
Materials submitted by the Honorable Matt Gaetz, a Member of the
Subcommittee on Antitrust, Commercial and Administrative Law
from the State of Florida, for the record
An article entitled, ``Tech Giants, Fearful of Proposals to
Curb Them, Blitz Washington With Lobbying,'' The New York
Times........................................................ 76
An article entitled, ``Tim Cook called Nancy Pelosi to warn her
against disrupting the iPhone with impending antitrust
bills,'' The Verge........................................... 81
An article entitled, ``House Speaker Nancy Pelosi's husband
cashed in on Big Tech just as Congress was set to pounce,''
Fortune...................................................... 83
Materials submitted by the Honorable Darrell Issa, a Member of
the Subcommittee on Antitrust, Commercial and Administrative
Law from the State of California, for the record
An article entitled, ``California's Occupational Licensing Laws
Shouldn't Kick People When They're Down,'' The Federalist
Society...................................................... 94
An article entitled, ``California Occupational Licensing:
Barriers to Opportunity in the Golden State,'' The Mercatus
Center....................................................... 98
Materials submitted by the Honorable David N. Cicilline, Chair of
the Subcommittee on Antitrust, Commercial and Administrative
Law from the State of Rhode Island, for the record
An article entitled, ``Report Update | Eyes Everywhere:
Amazon's Worker Surveillance Continued,'' Open Markets
Institute.................................................... 122
Statement from Lina Khan, Chair, Federal Trade Commission...... 141
A letter from Greg Nowak, Director and Secretary-Treasurer,
Brewery and Soft Drink Workers Conference addressed to Amy
Greenberg, Director, Regulations and Rulings Division,
Alcohol and Tobacco Tax and Trade Bureau..................... 151
Statement from the International Brotherhood of Teamsters,
Service Employees International Union, and the Strategic
Organizing Center............................................ 152
Statement from Richard T. Cassidy, Chair, ULC Drafting
Committee for Uniform Restricting Employment Agreement Act,
and Stewart J. Schwab, Reporter, ULC Drafting Committee...... 161
APPENDIX
Statement from Kyle Bragg, President, Service Employees
International Local 32BJ, submitted by the Honorable David N.
Cicilline, Chair of the Subcommittee on Antitrust, Commercial
and Administrative Law from the State of Rhode Island, for the
record......................................................... 170
Materials submitted by the Honorable Matt Gaetz, a Member of the
Subcommittee on Antitrust, Commercial and Administrative Law
from the State of Florida, for the record
An article entitled, ``Nancy Pelosi's husband up $700K on
CrowdStrike stock purchase,'' FOX Business................... 173
An article entitled, ``6 Stocks Nancy Pelosi's Husband Is
Buying,'' 24/7 Wall St....................................... 176
REVIVING COMPETITION, PART 4:
21ST CENTURY ANTITRUST REFORMS AND THE AMERICAN WORKER
----------
Tuesday, September 28, 2021
House of Representatives
Subcommittee on Antitrust, Commercial, and
Administrative Law
Committee on the Judiciary
Washington, DC
The Subcommittee met, pursuant to call, at 10:04 a.m., in
Room 2141, Rayburn House Office Building, Hon. David Cicilline
[Chair of the Subcommittee] presiding.
Present: Representatives Cicilline, Nadler, Jones, Raskin,
Demings, McBath, Dean, Johnson of Georgia, Jordan, Buck, Issa,
Gaetz, Johnson of Louisiana, Bishop, Fischbach, Spartz,
Fitzgerald, Bentz and Owens.
Staff Present: David Greengrass, Senior Counsel; Moh
Sharma, Director of Member Services and Outreach and Policy
Advisor; Cierra Fontenot, Chief Clerk; John Williams,
Parliamentarian and Senior Counsel; Gabriel Barnett, Staff
Assistant; Joseph Van Wye, Professional Staff Member and
Legislative Aide; Slade Bond, Chief Counsel; Phillip
Berenbroick, Counsel; Ella Yates, Minority Member Services
Director; Douglas Geho, Minority Chief Counsel for
Administrative Law; Elliott Walden, Minority Counsel; and Kiley
Bidelman, Minority Clerk.
Mr. Cicilline. This Subcommittee will come to order.
Without objection, the Chair is authorized to declare
recesses of the Committee at any time.
Good morning, and welcome to today's hearing, the fourth in
the Subcommittee's series focused on the development of
legislative proposals to strengthen and modernize the antitrust
laws. This hearing is an opportunity to examine competition in
labor markets, as well as ways to promote the economic
opportunity of hardworking Americans through robust enforcement
of our antitrust laws.
Before we begin, I would like to remind Members that we
have established an email address and distribution list
dedicated to circulating exhibit, motions, or other written
materials that Members might want to offer as part of our
hearing today. If you would like to submit materials, please
send them to the email address that has been previously
distributed to your offices, and we will circulate the
materials to Members and staff as quickly as we can.
I now recognize myself for an opening statement.
Across the political spectrum, Americans know that the
economy is not working for them. They feel it in every
paycheck, every surprise medical bill, and every credit card
payment. Nobel Laureate George Stigler described this as, and I
quote, ``a widespread sense of powerlessness, both in our
economic and political life. We seem no longer to control our
own destinies.'' That is because wage consolidation in recent
decades has led to the rise in market power among employers,
decimating jobs and wages, and weakening the economy against
the American worker, independent businesses, and entrepreneurs.
In the midst of this trend, corporations are earning monopoly
profits that are not being reinvested in higher wages or our
economy, threatening the financial security of working people.
As Professor Ioana Marinescu testified last Congress, the
economic concentration of labor laws across the country has
given employers market power over their workers. Employers with
market power, also called monopsonies, have the incentive and
ability to pay lower wages than they would in the competitive
market. It is nearly impossible to overstate how harmful this
is to the American worker.
In the absence of competition, employers have virtually no
incentive to pay fair wages to retain workers or track new
talent. Workers are trapped in low-paying jobs. Many workers
aren't able to escape low-paying jobs or find new jobs after
being laid off simply because there are fewer alternatives than
would exist in the competitive marketplace.
As Professor Eric Posner will testify today, because
employers push down wages by hiring fewer workers, fewer people
end up working. That means there is less output which also
results in higher prices for consumers.
While the effects of economic concentration have been
devastating for nearly all workers, it most severely harms
workers in vulnerable groups, such as women and people of
color, who have less bargaining power against wage
discrimination and other forms of workplace inequality. This
economic catastrophe has been compounded by the ubiquitous
presence of noncompete and no-poach agreements in employment
contracts.
As Professor Evan Starr testified last congress, these
restraints have become, and I quote, ``so pervasive that even
volunteers in nonprofit organizations in states that do not
even enforce them are asked to sign away their post-employment
freedom.''
Unfortunately, these trends have only worsened in the wake
of the pandemic. Last year, despite record levels of
unemployment, employers continued to go to court to enforce
noncompete clauses that prevented workers they had laid off
from taking new positions. For example, as Bloomberg Law
reported, in Pennsylvania, a sports retailer laid off a
salesman who had worked there for 31 years and then tried to
keep him and other sales staff from taking new positions. A
medical provider sued to keep a Houston doctor from opening new
offices.
This, of course, is bad for business. From engineers to
healthcare workers, the presence of noncompete clauses in
employment contracts has undoubtedly contributed to labor
shortages that have weakened America's economic recovery from
the pandemic. There's also no shortage of examples of collusion
among employers to fix wages or agree not to hire workers in
competing firms. Even though these restraints are criminally
illegal, noncompete clauses appear in everyday employment
contracts including nearly 60 percent of agreements among major
franchises in the United States, driving down wages and
preventing workers from moving to better job opportunities.
Finally, nearly a third of jobs require licensure,
including many jobs that have little impact on public health or
consumer safety. Although there are many benefits associated
with establishing credentials for professions, particularly
those with important public health and safety considerations,
excessive licensing can create barriers to entry in the
workplace, impose additional costs on workers, and result in
job losses. Moreover, because these standards differ by State,
licensing barriers can disproportionately harm military
families which are ten times more likely to relocate across
State lines than other working families.
As the late economist, Alan Krueger, has explained, and I
quote, ``the most common jobs for military spouses are nurses
and teachers who often have to get licensed in the new State
when they move, pay a licensing fee, and by the time they're
committed to working in those states, they often move again.''
Although some States have eased the burdens of interstate
compacts on healthcare workers, this continues to be a problem
today. In recent years antitrust enforcers under both
Republican and Democratic leadership have begun paying more
attention to the effects of economic concentration on labor and
producers.
Under the Obama Administration, the antitrust agencies
issued joint guidelines, clarifying that no-poach agreements
and wage fixing could be criminally prosecuted. This important
work continued under the prior Administration and continues to
be a priority of the Biden Administration.
In July, President Biden issued Executive Order 14036 which
outlines a pro-worker, anti-monopoly agenda for the 21st
century. As the order states, excessive market concentration
threatens the economic welfare of workers, a while competitive
marketplace creates more high-quality jobs and the economic
freedom to switch jobs or negotiate a higher wage.
Earlier this month, Vanita Gupta, the Associate Attorney
General of the Justice Department, said that the Antitrust
Division will make ending collusion among employers a top
priority. As she said, and I quote, ``American workers who are
struggling to make ends meet may not always be able to stand up
to their employer, but the department can and will.''
Congress also has an important role to play. Although more
vigorous enforcement in competition rulemaking can address some
of these concerns, the antitrust agencies cannot change the law
on their own. Moreover, in recent years courts have shown
hostility to bold enforcement activity in this area in the
absence of legislative guidance. As Professor Posner will
testify today, legislation that more clearly lays out the
elements of labor's antitrust claims would help push the courts
in a positive direction.
As I've said before, I firmly believe that we must explore
every path to create economic opportunity for all working
Americans as we Build Back Better. This must be a national
priority. With that in mind, today's hearing is an opportunity
to examine these concerns and explore potential legislative
solutions.
I look forward to hearing testimony from our esteemed panel
of witnesses on these matters, as well as potential paths
forward for fixes these problems.
I now recognize the distinguished gentleman from Colorado,
the Ranking Member of the Antitrust Subcommittee, Mr. Buck, for
his opening statement.
Mr. Buck. I thank the Chair.
I have to admit to the Chair that I'm a little baffled by
this hearing. I'm not sure what specific legislation we're
going to take up today or in the future based on the opening
statements and the nature of this hearing. Certainly, those of
us on this side of the aisle have done our best to work with
the Chair and others on this Committee when it comes to big
tech and when it comes to reforms in the pharmaceutical
industry. This, frankly, is baffling to me.
We do know that the Biden Administration has taken a number
of steps that have hurt workers in the economy. For example,
we've learned through the Obama Administration and the really
measly economic growth that occurred during the Obama
Administration is that you offer individuals unemployment
benefits, and they can stay home and make a living off of
unemployment benefits and other benefits, they won't go into
the workplace. We've seen that. We saw also that when we have
millions upon millions of illegal immigrants in this country
and they are driving down wages for all American workers, it is
significant.
When we look at what's happening on the border with the
Biden Administration, we see an open border. We see a really a
sad situation, a humanitarian situation where we are inviting
people into this country by sending all the wrong signals. We
have as a result this crisis. We have a Border Patrol that's
overwhelmed. We have a country that is now accepting tens of
thousands, if not hundreds of thousands, of people into our
country on top of the millions who are already here illegally.
We don't deal with an immigration issue. We don't deal with the
unemployment benefits and their effect on our economy.
We also saw from the Trump Administration that if we really
want to raise workers' wages and we want to help our economy,
we lower taxes. This week we may very well be taking a step
towards raising corporate taxes, raising other taxes. When we
lowered taxes, what we saw was a significant investment from
overseas coming into this country. Even companies and
individuals in this country that had their money on the
sidelines were willing to invest that money because there was a
climate and an optimism about our economy that doesn't exist
anymore.
We also saw the Trump Administration reduce regulations
significantly. We saw at one point in time there were 27
regulations repealed for every one new regulation that was
enacted. The Biden Administration's going the exact opposite
direction. We're seeing the effects of that on our economy.
We also know that it's important to have strong trade
agreements, and those trade agreements lift American workers'
wages and create a robust economy. The disastrous surrender,
not withdrawal but surrender, from Afghanistan has put the U.S.
in a situation where we are weak or we are perceived as being
weak by our allies and, frankly, adversaries also. So, the idea
that we will strengthen workers' positions with noncompete
agreements or changing the nature of noncompete agreements or
tinkering around the edges of antitrust is laughable when you
look at how far this Administration has gone in the wrong
direction.
Last but certainly not least, by spending the trillions of
dollars, $6 trillion on COVID alone, what we see is inflation.
If there's one thing that eats away at workers' ability to
improve their life, it's inflation. We see inflation. It's
going to be with us, and it's going to be part of the new
reality of this Biden economy. I think it's terribly sad.
I have faith that the Chair is holding this hearing in good
faith and wants to accomplish some worthy goals. I really think
that our time would be much better spent battling against the
$1.2 trillion infrastructure bill, the $3.5 trillion
reconciliation bill, dealing with the immigration crisis at our
border, talking about how we need to get people back to work
and stop giving them unemployment benefits. I think we have to
make sure that we lower taxes, not raise taxes, that we reduce
regulations, and that we do everything we can to improve our
trade agreements.
With that, Mr. Chair, I yield back.
Mr. Cicilline. I thank the gentleman for yielding back.
Before I recognize our next Witness, I should have done
this at the beginning. I would remind everyone on the current
guidance of the Office of the Attending Physician it is this
Committee's policy that Members and staff in the room wear face
coverings at all times, except when they've been recognized to
speak.
I now recognize the Chair of the Full Committee, the
gentleman from New York, Mr. Nadler, for his opening statement.
Chair Nadler. Thank you, Mr. Chair.
Mr. Chair, as we all well know, America's economy has
become highly concentrated in recent decades. A small number of
firms dominate a variety of markets that Americans rely on
including pharmaceuticals, airlines, broadband, online
platforms, and meatpacking. Just as consolidation in other
markets tend to result in higher prices and lower quality in
the goods we buy, consolidation has led to high levels of
concentration in labor markets.
As in any other market, when a lack of competition gives
employers excessive power over workers, employers have the
incentives and the ability to abuse that power. In many
industries, these dynamics have led to depressed wages and
opportunity, limited worker mobility, misclassification of
workers, and discrimination against the most vulnerable.
Employers of market power can abuse their power over
workers in several ways. Some have imposed anticompetitive
terms in employment contracts such as noncompete agreements
that ban workers from finding a better job or starting a
competing firm. Others collude with rivals to fix wages to
prevent workers from changes jobs. With the rise of the gig
economy, we see a rising number of employers misclassifying
employees as independent contractors. These practices harm
workers. They exacerbate wealth inequality. They frustrate the
ability of workers to earn a living wage and to support their
families. These practices have no place in a free and fair
economy.
For decades, the antitrust agencies have been too weak or
too timid to vigorously enforce the antitrust laws to stop and
deter abuses across the economy. As Professor Eric Posner will
testify today, these trends have been worse in labor markets
where enforcement has been virtually nonexistent until very
recently. These failures have undermined opportunity in the
financial security of American families and small businesses.
In the wake of the pandemic, the impacts of these developments
have hit our frontline workers the hardest. Healthcare workers,
delivery drivers, grocery workers, meatpackers, and other
frontline workers have been heroes, keeping us safe and keeping
our economy going under the most challenging of circumstances.
Unfortunately, where these workers have saved us during the
pandemic, all too often our society has failed them. Many of
these workers, where many industries are overwhelmingly made up
of women or people of color, often work for wages that are too
low and in conditions that are unsafe. In many cases, they are
stuck working for corporations that have cornered the market,
undermining their ability to find better jobs or higher wages
in their field because they simply do not exist.
For example, as Ms. Payton will testify today,
consolidation in the hospital and physician market in western
Pennsylvania has led to lower wages and fewer choices for
employment. As she notes, there is almost nowhere else to work
if you're a healthcare worker. Moreover, as other Witnesses
will testify today, many of these workers are subject to
anticompetitive restrictions on their mobility, such as
noncompete and no-poach agreements. These abusive contracting
practices have become ubiquitous in the workforce, further
entrenching the power of employers over workers, and preventing
the unemployed from getting a new job.
This must change, and I am encouraged by recent steps by
the Biden to address this problem meaningfully through all
available tools. In July, President Biden issued Executive
Order 14036, a sweeping and historic approach to building an
economy that works for everyone through the benefits of
competition. As this order States, quote, ``consolidation has
increased the power of corporate employers, making it harder
for workers to bargain for higher wages and better working
conditions.''
In response to this concern, the President's order
encourages the antitrust agencies to undertake a series of
actions that will protect workers and promote competition in
labor markets. These include adopting rules to curtail the use
of noncompete and other agreements that unfairly limit worker
mobility, as well as policing collusive behavior among
employers such as wage fixing. This is a critical effort, and I
look forward to updates from the Federal Trade Commission and
the Antitrust Division at the Department of Justice on their
work to combat market concentration and abuses to market power
that harm workers.
Congressional action is also necessary. There is a pressing
need to update the antitrust laws to ensure the antitrust
agencies have the necessary tools to stop and deter
anticompetitive conduct and mergers that harm workers.
As I have said before, it will also take a comprehensive
set of reforms to recover economic opportunity and dignity for
working people. These problems must be addressed with lasting
solutions like guaranteeing equal pay for equal work,
prohibiting forced arbitration agreements in employment
contracts, establishing a living wage, stopping worker
misclassification, and strengthening unions. The legislation
that will revive competition in labor markets competition is a
critical part of this agenda.
I want to thank all our Witnesses for testifying this
morning, and I especially want to thank Ms. Payton and Mr.
Gross for appearing today and for sharing their testimony. We
appreciate that working, in the healthcare and logistics and
delivery industries, you have been on the front lines during
the COVID-19 pandemic. Without you and workers in other
frontline professions, our economy and our society cannot
function. So, I thank you.
I also thank the Chair for holding today's hearing on this
very important topic.
With that, I yield back the balance of my time.
Mr. Cicilline. I thank the gentleman.
I now recognize the Ranking Member of the Full Committee,
the gentleman from Ohio, Mr. Jordan, for his opening statement.
Mr. Jordan. Thank you, Mr. Chair.
Before President Biden, before Democrats controlled all of
government, there was never a better time for American workers.
Manufacturing was on the rise. According to one estimate,
President Trump's first 30 months, manufacturing jobs were up
314,000 over where they were under President Obama. We had low
employment, In fact, the lowest in 50 years. Wages were booming
across the board, and we saw massive job growth across all
sectors of our economy. Anyone paying attention knows that,
even with the virus, our job market is resilient.
Drive through any town in America, anywhere. You will see
dozens of hiring signs, with many offering high starting wages
and signing bonuses. Talk to any employer right now, and their
biggest problem is actually getting people to come to work.
So, the biggest threat to the American worker is not any of
the things you brought up in your opening statement. Frankly,
the biggest threat to the American workers are far left
Democrat policies.
Democrats are using the pandemic to have a government
takeover of our economy. They want to make permanent the
extraordinary welfare programs enacted in the last 18 months.
On top of that, they want to ram through trillions of dollars
more of spending. We have seen an eviction moratorium, vaccine
mandates, paying people not to work, not to mention higher
taxes, rampant inflation, and undoing much of the Trump
Administration's regulatory reform.
I mean, the Democrats' economic plan seems to be lock down
the economy, spend like crazy, pay people not to work, tell
them they can't be evicted. Then for everyone who is working
and is paying their rent, oh, they're going to raise your
taxes. Such a deal. Maybe the dumbest economic plan I've ever
heard of, but that's their plan. Make no mistake, the Biden
economy is not helping American workers unless these workers
are Federal bureaucrats in Washington.
The radical Democrat policies are leading to higher prices
for American consumers in the short run, and in the long run
they will only increase the already crushing debt burden we're
placing on our children and grandchildren. That's not even to
mention what Democrats on this Committee have imposed doing,
including empowering the Biden Administration's radical Federal
Trade Commission to attack our freedom-in-price system by
overhauling antitrust laws and upsetting precedent that applies
to the economy as a whole.
You thought corporate America was in bad shape now. Just
wait until Lina Khan and other Biden bureaucrats get more
power. The chair of the FTC is already abusing the power she
does have and is ruling the FTC in an authoritarian compassion
in a total departure from the way the commission has worked for
the last half century. In fact, I look forward to hearing from
Commissar Wilson on some of these concerns.
This Committee ought to be conducting far more oversight of
the FTC and how it has moved away from its original mission.
The best thing we can do for the American worker is getting
were wash off their back. I look forward to today's discussion,
and I want to thank all our Witnesses for being here today.
Mr. Chair, I yield back.
Mr. Cicilline. The gentleman yields back.
It's now my pleasure to introduce today's Witnesses.
Our first Witness is Eric Posner, the Kirkland and Ellis
Distinguished Service Professor of Law and the Arthur and
Esther King Research Chair at the University of Chicago Law
School. He's been a member of the faculty at the University of
Chicago since 1988.
Before teaching in Chicago, Professor Posner spent five
years as a Professor of Law at the University of Pennsylvania
and one year as an Attorney Advisor at the Office of Justice's
Office of Legal Counsel. He's written a number of highly-
regarded books including ``Law and Social Norms'' and ``How
Antitrust Failed Workers.'' Professor Posner is a fellow at the
American Academy of Arts and Sciences and a member of the
American Law Institute. Mr. Posner received his bachelor's and
master's degree from Yale University and his J.D. from Harvard
Law School.
Today's second Witness is Brian Callaci, the Chief
Economist at Open Markets Institute. He's a leading expert in
worker's rights issues and has served as senior research
analyst for both the Service Employees International Union and
the Change to Win Strategic Organizing Center, as well as a
consultant for the Communications Workers of America.
Additionally, Dr. Callaci has extensive experience as a
union leader, having held multiple leadership posts with the
Graduate Employee Organization and the Washington-Baltimore
Newspaper Guild. His work has been featured in journals
including the Journal of Law & Political Economy and the Labor
Studies Journal.
Dr. Callaci received his bachelor's degree from Franklin &
Marshall College and both his master's and Ph.D. from the
University of Massachusetts Amherst.
Our third Witness, Dan Gross, is a feeder driver at the
United Parcel Service and a member of Teamsters Local 177 in
New Jersey. Mr. Gross has been an active union member since he
began his employment at UPS 22 years ago. Mr. Gross knows
firsthand how important collective bargaining, direct action,
and organization are to the American worker.
Because of his Membership in the teamsters, Mr. Gross has
been able to build a career with an upward trajectory at UPS
and to earn a stable living. Mr. Gross is a prominent leader in
his union community, serving as shop steward for Local 177.
Our fourth Witness is Nila Payton, a medical administrative
assistant at the University of Pittsburgh Medical Center. She's
worked at UPMC for almost 16 years and is the primary
breadwinner for her family.
Since 2015, Ms. Payton has been a vocal advocate for
improved pay and benefits, expanding workers' rights and
unionization at UPMC. She helped to organize Hospital Workers
Rising, an organization of hospital workers in western
Pennsylvania dedicated to improving their working conditions.
Ms. Payton has spoken at multiple rallies and panels,
submitted testimony to her wage review board, and organized her
colleagues to build support for forming a union at the medical
center. In 2017, she was included on The Incline's ``Who's
Next'' list of community leaders and activists working to build
a better Pittsburgh.
Our fifth Witness, the Honorable Christine Wilson, is a
Commissioner at the Federal Trade Commission. She was sworn in
by former President Donald Trump in 2018. Before her nomination
to the FTC, Commissioner Wilson served as the Senior Vice
President of Legal, Regulatory, and International at Delta
Airlines. She also practiced antitrust law at Kirkland Ellis,
LLP, and O'Melveny & Myers, LLP.
During the Bush Administration, Commissioner Wilson served
at the FTC as Chair Tim Muris' Chief of Staff. Commissioner
Wilson received her bachelor's degree from the University of
Florida and her JD from the Georgetown University Law Center.
Today's last Witness, Bruce Kobayashi, is the Paige V. and
Henry N. Butler Chair in Law and Economics at George Mason
University's Antonin Scalia Law School. Most recently Professor
Kobayashi served as the director of the Federal Trade
Commission's Bureau of Economics. Additionally, he's worked as
an economist with the FTC, a senior research associate with the
United States Sentencing Commission, and an economist at the
Department of Justice.
He's widely published, with works appearing in highly
regarded publications including Competition Policy
International and the Journal of Competition Law & Economics.
Professor Kobayashi received his bachelor's and master's
degrees, as well as his Ph.D., at the University of
California--Los Angeles.
We welcome all our distinguished Witnesses, and we thank
them for their participation.
I will begin by swearing in our Witnesses. I would ask our
Witnessing testifying in person to rise and ask our Witnesses
testifying remotely to turn on their audio and make sure I can
see your face and you raise your right hand while I administer
the oath.
Do you swear or affirm, under penalty of perjury, that the
testimony you're about to give is true and accurate to the best
of your knowledge, information, and belief, so help you God?
Let the record show the Witnesses answered in the
affirmative.
Thank you and you may be seated.
Please note that your written statements will be entered
into the record in their entirety. Accordingly, I ask that you
summarize your testimony in five minutes. To help you stay
within that timeframe, there's a timing light in WebEx. When
the light switches from green to yellow, you have one minute to
conclude your testimony. When the light turns red, it signals
that your five minutes have expired.
I now recognize Professor Posner for five minutes.
TESTIMONY OF ERIC A. POSNER
Mr. Posner. Thank you, Mr. Chair. It is truly an honor to
be invited to speak to you. I am sorry not to be there in
person. Unfortunately, for pandemic-related reasons I was asked
to stay here, although I'm perfectly fine.
As you mentioned, I recently published a book called ``How
Antitrust Failed Workers.'' The book is the result of several
years of research into this topic, and I'll spend a couple of
minutes telling you what I found.
Let's start with the simple example which I'm sure other
people will talk about as well. Imagine that we have in a small
town, two hospitals. The hospitals would like to merge. Now,
traditionally, if the hospitals want to merge in America, they
may need to obtain the consent of the government, the FTC, or
the DOJ.
The FTC and DOJ will look at whether the merger will have
negative effects on what's called the product market, that is,
the price and quantity of medical services to the surrounding
population. If the two hospitals are very large, the government
may well try to block the merger. The merger would be illegal
because it would predictably raise prices and reduce medical
services.
What the government agencies have virtually never done, I
guess literally never done, is look and see whether the merger
might have negative effects on labor markets. If two hospitals
merge, they employ, most of them, nurses and doctors, medical
technicians, and other specialists in the area.
According to economic theory, if the hospitals are very
large, one would expect the merger to result in lower wages,
less employment of the professionals, less output, and so
ultimately higher prices.
Labor market-oriented anticompetitive behavior is just as
bad as product market-oriented anticompetitive behavior. It's
also a violation of the antitrust laws. I'm not just talking
about mergers. I'm talking about conventional forms of
collusion. There's price-fixing on the product market side,
wage fixing on the labor market side. There are market
divisions on the product market side.
There are no-poaching agreements on the labor market side.
These are all equally harmful types of conduct, harmful for
workers, and harmful for consumers. Of course, workers and
consumers are the same people.
Now, antitrust law, just as it is on the books and as it
has been recognized by the courts, applies in the same way to
labor markets as it does to product markets. Yet--and this is
what my book is about--there have been virtually no labor
market cases.
There have been a handful in this country. Yet, there have
been no merger reviews that resulted in a merger being blocked
because of the labor market effects. In fact, there's been
virtually no consideration at all the labor market effects of
mergers.
Similarly, there's been very, very little antitrust
litigation that deals with no-poaching agreements, wage-fixing
agreements, covenants not to compete, and other forms of
anticompetitive behavior by employers.
There literally are zero cases involving true monopsonies
where you have a very large employer who uses its monopsony
power, its market power over the labor market to suppress
wages, to prevent competition.
This is a puzzle, given that the law applies equally. The
puzzle is not easily answered. This probably is the result of
certain historical traditions including the primary
responsibility of unions to protect workers.
Of course, union density has declined significantly over
the last 50 years. So, they're no longer able to do that to the
same extent as they did in the past.
The explanation for this difference, what I call litigation
gap, between antitrust litigation focused on product markets
and antitrust litigation focused on labor markets does not have
anything to do with market structure. This is the conclusion of
research by Ioana Marinescu and her colleagues and, by now,
dozens and dozens of labor economists who have found with
complete consistency that many labor markets in this country
are extremely highly concentrated.
Other economists have found that anticompetitive
arrangements like noncompetes and no-poaching agreements are
extremely common. So, there does seem to be a problem with
labor markets that antitrust law should be used to address, and
yet until very recently this has not been done.
The FTC to its credit, by the way, during the Trump
Administration issued a public comment on a merger in Abilene,
Texas, where they did point out that, as a result of the
merger, the merged entity, the hospital, would control 94
percent of the labor market for nurses. So, there has been some
movement recently.
I see that I'm out of time, but I'd be happy to answer
questions and provide my ideas about what Congress can do about
this.
[The statement of Mr. Posner follows:]
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Mr. Cicilline. Thank you, Professor Posner. Although you're
not in the room, I want you to know you're here in spirit
because I have your book.
I do want to, before I introduce our next Witness, I do
want to ask unanimous consent to place into the record a
Fortune Magazine article to respond to Mr. Jordan's
representations that is entitled, ``Trump to Leave Office With
the Worst Job Record Since Herbert Hoover.''
Without objection.
[The information follows:]
MR. CICILLINE FOR THE RECORD
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Mr. Cicilline. I now recognize Dr. Callaci for five
minutes.
TESTIMONY OF DR. BRIAN CALLACI
Mr. Callaci. Thank you.
My name is Brian Callaci. I'm Chief Economist at the Open
Markets Institute. I want to thank Chair Cicilline, Ranking
Member Buck, and the other Members of the Subcommittee for the
opportunity to participate in this hearing. I will just say at
the beginning I feel a little bit at home here.
I grew up in Cranston, Rhode Island just outside of Chair
Cicilline's district. Just yesterday, I was in Crowley,
Colorado, visiting my in-laws in Ranking Member Buck's
district, these problems are happening all across the country.
So many of the issues we're discussing today have been
around really as long as there have been markets for labor, as
long as there have been labor markets. Back in 1776, Adam Smith
argued that there was a baseline power imbalance between
employers and workers.
Furthermore, Smith was outraged that parliament, the
British parliament, put its thumb on the scales in favor of the
employer, for example, by authorizing employers to get together
and lower wages, while prohibiting workers from getting
together, what we now call unionizing, to attempt to raise
wages.
Now, since that time, our laws have evolved quite a bit to
address some of the issues that troubled Smith we left the
United Kingdom and Great Britain, for example. Congress passed
antitrust laws specifically to prevent and restrain
combinations of capital. Then it passed laws allowing, and even
encouraging, workers to legally combine into unions. Congress
also legislated specific labor protections to regulate wages
and working conditions.
However, over the past few decades, antitrust has
unfortunately taken a step backwards toward the conditions that
so outraged Adam Smith. In particular, antitrust has largely
missed the boat as large corporations have consolidated buyer
power over both local labor markets and entire supply chains,
suppressing wages and worsening working conditions throughout
the supply chain.
Recent research shows that local labor market concentration
is high, has been increasing over time, and is especially
damaging to works lacking a union's protection. Meanwhile,
recent research has also found that buyer power in supply
chains accounts for about 10 percent of wage stagnation since
the 1970s. Even with these facts, no merger has ever been
blocked for its effects on labor markets.
Second, antitrust has also been relatively absent as
employers have supercharged their baseline monopsony power over
employees through restrictive contracts like noncompete
clauses, mandatory arbitration, and no-poaching agreements that
artificially suppress wages. The effects from this course of
contracts, as the Chair pointed out, have been doubly large for
women and nonwhite workers.
Finally, in a series of court decisions since the late
1970s, antitrust courts have facilitated large corporations'
use of restrictive contracts to dominate and control
nonemployee independent contractors and small business.
For example, Amazon outsources local deliveries to so-
called independent delivery service partners. Amazon sets the
rates that these independent businesses can charge, the routes
they have to drive, even their labor practices. This kind of
domination and control hurts workers, too.
Small businesses with no control over their own prices,
costs, and profits have little room to improve the wages of
working conditions they offer workers, while employees of these
firms lack legal rights against the corporation that actually
controls their working conditions.
Even worse is the so-called gig economy where similar
restrictive contracts are used to misclassify workers as
independent businesses, stripping workers of all employment
rights. These workers risk treble damage and trust prosecutions
and lawsuits if they try to unionize.
So, to return balance to the economy, action is urgently
needed to disburse concentrated power and prevent the abuse of
workers. In recent months Congress and the Executive Branch
have taken important steps in this direction. The July
Executive Order on promoting competition in the American
economy contains a number of positive components by including a
directive to the USDA to consider issuing new rules under the
Packers and Stockyards Act to combat buyer power in food supply
chains, and the directive to the FTC to consider issuing rules
banning noncompete clauses.
The FTC should further consider, however, using its section
5 rulemaking powers to restrict the use of exclusionary
contracts and other vertical restraints and restrictive
contracts by dominant firms to control nonemployee independent
contractors.
The package of bills that the House Judiciary Committee
passed out of Committee in June, addressed to competition
issues posed by dominant tech platforms, are a vitally
important step in the right direction to restraining corporate
power.
However, since problems of economic concentration and
coercive contracts extend well beyond tech platforms, general
antitrust legislation is needed as well. Such legislation
should explicitly protect workers and suppliers from monopsony
power, prevent judges from allowing wage suppression in the
name of consumer welfare, expand labor exemptions from
antitrust prosecution to independent contractors, and finally
close those loopholes allowing corporations to enjoy a control
over their business empires but without employment
responsibilities through the use of these restrictive
contracts.
I see that I'm about out of time. So, thank you. I look
forward to answering any questions.
[The statement of Mr. Callaci follows:]
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Mr. Cicilline. Thank you, Dr. Callaci.
No surprise that you're bragging about your Rhode Island
roots. So, thank you for being here today.
I now recognize Mr. Gross for five minutes.
TESTIMONY OF DANIEL GROSS
Mr. Gross. Thank you, Chair Cicilline, Vice Chair Jayapal,
and Ranking Member Buck. My name is Dan Gross, Madison, New
Jersey. I'm 49 years old, husband and father of four. I drive a
tractor-trailer in the feeder network for United Parcel
Service. I'm also a proud union member and been active in
Teamsters Local Union 177 since I started with UPS 22 years
ago. I'm honored to speak with you today about why reforming
our antitrust laws is important to me and my fellow American
workers.
My career at UPS started in June of 1999. Like most of us
at UPS, I started as a part-timer. I transferred into a full-
time combination job in 2000. These combo jobs were the direct
result of our national negotiations and the three-week strike
with UPS in 1997, which created tens of thousands of full-time
jobs by combining multiple part-time jobs.
After two years in the combination job, my seniority
enabled me to transfer to a package car driver position where I
delivered packages to businesses and homes in one of those
familiar brown trucks.
In October of 2005, again using my seniority, I was able to
transfer to my current job as a feeder driver. As a feeder
driver, I drive tractor-trailers, transporting trailers full of
packages between UPS delivery hubs to and from other large UPS
customers.
I've seen firsthand what large corporations try to get away
with due to corporate greed when workers don't have a
collective voice to demand decent pay and working conditions.
My union has provided that collective voice at UPS for nearly
100 years.
Unfortunately, our standards and those of hundreds of
thousands of United States postal workers are also under attack
by a new type of company, a company that uses its dominant
presence in e-commerce to exert power over its contractors and
workers. The threat to the industry I work for is Amazon.
I know that this Committee has passed bills that are trying
to take on the special threats of Amazon and other tech
companies. I'm not here to speak to those businesses. I want to
use Amazon as one example of why you should pass antitrust laws
to address how the largest, most powerful companies have too
much power over their workers and how those effects and directs
employees and all the other workers in the industry.
As a feeder driver, it's common practice for us to be
offered access to the customers' facilities while we're waiting
for our loads. Amazon stopped this practice to limit our
interaction with direct Amazon drivers and drivers working for
Amazon subcontractors or independent contractors. It seems
clear to us feed drivers that Amazon did this to exert control
over the information the employers and contractors can share
with each other about route deliveries, but also paying working
conditions.
In addition, Amazon uses drivers that are paid varying
rates that are below industry standards, possibly by as much as
half, even before benefits are factored in. I have even been
told that sometimes Amazon restricts the ability of so-called
independent contractors to carry backhaul loads, forcing them
into nonpaying empty loads on their return trip. Amazon's
dominant position as an e-retailer enables Amazon to exert its
power in business relationships in ways that encroach upon the
teamster's collective bargaining agreement with UPS and
directly impact my working conditions.
The constant threat of losing or diminishing delivery
volume has forced UPS to comply with Amazon's demand to utilize
subcontractors and independent operators who are now subject to
the collectively bargained rules that are designed to keep
drivers in the public safe.
Collective bargaining is the antidote to corporate
dominance. My Local Teamsters 177 has won grievance settlements
to address the above subcontracting, and similar contract
violations against UPS currently has multiple pending
grievances.
However, we have limited ability to impact Amazon's
continuing demands that UPS modify its procedure to retain the
Amazon business.
Similarly, also based on my experience as a package car
driver and shops throughout UPS, I notice the growth of
Amazon's last-mile delivery network. While the drivers are in
Amazon-branded vehicles and now wear Amazon colors, they are
not Amazon employees but employees of more than nearly 1,000
deliver service partner contractors.
These DSPs work solely for Amazon. Amazon set this system
up to exert total control, while shifting all their risk and
responsibility onto smaller businesses and, of course, workers.
A direct impact of Amazon's demands can be seen in the
creation of classifications of workers to sacrifice Amazon's
insistence that its contractors provide service on the
weekends.
In 2012, the contract that the USPS negotiated with Postal
Service unions created a noncareer letter carrier position to
do Amazon package delivery on the weekends. In our UPS national
agreement in 2018, a new delivery job classification was also
created to accommodate the demands of Amazon for weekend
delivery.
If Amazon has the ability to dictate terms to entities like
the United States Postal Service and UPS, imagine the control
it has over small businesses like DSPs.
I feel fortunate to be working in a field where workers
have fought for and won industry-leading pay and benefits
standards through collective bargaining. I encourage you to
consider antitrust policy reforms that help to rebalance the
power that corporations like Amazon have over labor markets.
If we don't do something now, workers will be forced into
dead-end, unsafe, and high-turnover jobs instead of enriching
careers that allow our families to thrive.
Thank you, and I look forward to your questions.
[The statement of Mr. Gross follows:]
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Mr. Cicilline. Thank you very much, Mr. Gross, for being
here and for your testimony.
I now recognize Ms. Payton for five minutes.
TESTIMONY OF NILA PAYTON
Ms. Payton. Good morning. My name is Nila Payton. I'm an
administrative assistant in the pathology department at UPMC
Presbyterian hospital. I want to start by thanking the
Committee for inviting me to testify today.
I live in Pittsburgh with my two children. My older son,
Ty-Jahn, goes to a Pittsburgh public school. My youngest,
Roman, goes to a Pittsburgh public preschool. I do my best to
keep up with school announcements and participate in school
board meetings because I want them to have a great, quality
education.
I have worked at my job for almost 16 years. I trained for
it at the Bidwell Training Center where a lot of administrative
assistants and UPMC workers can get their training. The
pathology department is important to everything we do at UPMC.
I make sure test requests and results get to the right place.
So, I have to understand medical terminology. I also make
sure that our department remains HIPAA compliant. I'm really
good at my job, I have good relationships with everyone, and I
bring a positive attitude to work. I like knowing that my work
helps sick people.
My job does not pay as it should, and I'm not treated with
the dignity and respect I deserve. After 15 years on the job
and several promotions, I make $19 an hour. That might sound
like a lot, but a living wage for my family type in Pittsburgh
is $28 as hour. People just starting in my position or in a
service position make $15.
Every service worker I know struggles to make ends meet.
Our medical insurance is very high, and we have to use UPMC
facilities. I have medical debt to my employer, and so do many
of my coworkers. That mean we skip or postpone treatment
because co-pays and bills are just too high.
Management knows we are struggling. They sometimes send us
tips for stretching our budget. One time they told us to save
on transportation costs by riding our bikes to work, something
I don't plan to do in the snow, especially with a small child.
They direct us to apply for government assistance, which some
of us workers make just too much to qualify for. We also have
an internal UPMC food bank. Where is the dignity in that?
As for respect, here's an example. In the last big wave of
the pandemic, I told my manager that workers wanted better PPE
and information so we could stay safe in the hospital. When I
expressed that I thought we should get hazard pay, my employer
told me that because we work in healthcare that we signed up
for this and I should stop complaining. I'm sorry. Nowhere in
my orientation did it mention putting my life on the line.
I understand that we have to make a hospital run in a
pandemic, but ``you signed up for this'' is not the right
answer. The right answer is your life is valuable. Let's do
everything in our power to make sure you are informed and safe.
UPMC did not even apply for the hazard pay that the State was
offering.
Sometimes people ask, ``Why don't you just get another job
if you don't like the one you have?'' I love what I do, and
this is where you need to understand just how big UPMC is. Two
decades ago, there was no UPMC. Pittsburgh had many independent
hospitals. Over the past 20 years UPMC has grown from one
hospital, Western Psych, to become a $23 billion company. It
now owns Mercy, Presbyterian, Montefiore, Shadyside,
Children's, Magee, McKeesport, East, and St. Margaret's. That's
just in the Pittsburgh area.
We all have the same corporate policies. So, what's the
point of going from Presby to Magee? There's almost nowhere
else to work if you're a healthcare worker. UPMC is so big that
they actually affect the whole labor market, even outside of
healthcare.
Last week I looked at administrative assistant jobs not at
UPMC. There were 800 of them in our region. I eliminated the
part-time jobs. I eliminated the part-time jobs, then all the
jobs that paid the same or less than mine. There were 40 left.
Then I eliminated the nightshift jobs, because I have children,
and the jobs so far where you need to have a car. There were
just two jobs left.
UPMC employs 92,000 workers. Nobody else has enough jobs to
force them to compete for our time and our skills. Instead UPMC
sets the ceiling for everybody. That's why leaving UPMC is not
a better--not a realistic path to a better life. Leaving just
means that we have to start all over again.
I do not want to waste time, looking for something that
does not exist. I want to work to improve the job that I have.
I want to improve all the jobs that thousands of my UPMC
coworkers have.
Two generations ago, Pittsburgh has an employer as big and
impactful as UPMC. It was called U.S. Steel. Workers at U.S.
Steel had their union. So, instead of a worker starting at $15,
a worker started their first day at over $21 an hour in today's
money and went up from there. A steelworker with my years of
service would be vested in a pension and making $33 an hour.
Steel jobs lifted up every other job around because, if
employers wanted workers, they had to compete with U.S. Steel.
If we create good jobs for workers at UPMC, we can do the same
thing and create good jobs for everyone. That's what I want to
do.
Thank you for listening and have a great day.
[The statement of Ms. Payton follows:]
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Mr. Cicilline. Thank you, Ms. Payton.
I now recognize Commissioner Wilson for five minutes.
TESTIMONY OF THE HONORABLE CHRISTINE S. WILSON
Ms. Wilson. Chair Nadler, Ranking Member Jordan, Chair
Cicilline, Ranking Member Buck, and Members of the Committee,
thank you for the opportunity to testify.
I will first provide context for the labor issues we're
discussing today. Then I will address antitrust issues
pertaining to labor markets. Finally, I'll touch on procedural
irregularities at the FTC that regrettably have precluded a
robust dialogue on these and other policy issues.
Our antitrust laws are more than 100 years old.
Periodically we ask: Are they capable of addressing new
industries and dynamic markets? Previous periods of reflection
have led us to answer yes. Many ask the same question now, but
the current version of the question is notably different.
First, concerns about the dynamic tech industry are not
limited to antitrust. Some focus on the collection and use of
consumer data. Federal privacy legislation, I believe, is the
solution. Others are concerned about content curation and
censorship. Reforms to section 230 may be appropriate.
These concerns merit discussion, but just because we hold
the hammer of antitrust law in our hands does not mean we
should treat every concern as a nail, or we risk bludgeoning
our entire economy. Each concern deserves the appropriate tool.
For antitrust law, the many enforcement actions and
investigations against big tech confirm that process has begun.
We should let those cases play out before overhauling our
antitrust laws.
The second difference is that current concerns about
antitrust extend beyond the dynamic tech industry. Today's
hearing on labor in monopsony highlights one of those broader
goals. The antitrust laws as they exist today embody concepts
like monopsony and prohibit no-poach agreements and
unreasonable noncompetes. Antitrust enforcement as it exists
today reaches anticompetitive conduct that harms labor and
middlemen, not just the end customer.
Today's antitrust reformers propose changes that would
transform not just our antitrust laws but our economy.
Substituting our sound economic-based approach from one that
picks winners and losers will incentivize rent-seeking and
regulatory gamesmanship instead of competition and innovation.
Everyone including American labor will suffer.
Turning to monopsony and labor issues, let's start with
occupational licensing. Licensing regimes may advance
legitimate health and safety goals, but frequently those who
are already licensed use those regimes to insulate themselves
from competition. The FTC has sued when incumbents suppressed
competition through State boards. The FTC has also submitted
hundreds of comments and amicus briefs, urging policymakers to
consider the impact of licensing restrictions on competition,
especially in the healthcare sector.
Federal and State restrictions were relaxed during the
pandemic to boost the availability of scarce healthcare
personnel. I hope policymakers assess the impact of those
changes and permanently eliminate unnecessary restrictions, and
I thank America's health-care workers like Ms. Payton for their
service to us during the pandemic.
Regarding monopsony, the FTC and DOJ have prevailed in
monopsony cases and so have private litigants. Both mergers and
business practices may create unlawful monopsony power, even
when ultimate downstream markets are not impacted. I would
welcome the opportunity to discuss the FTC's scrutiny of
mergers from monopsony issues in recent years including a
challenge to a merger involving the sale of blood plasma by
donors.
With respect to noncompete provisions, State jurisprudence
and common law provide rich guidance on noncompetes. Some
States have laws explicitly prohibiting employee noncompetes,
and other States like Pennsylvania are considering laws on this
topic. States AGs have had notable successes in this area. For
now, given that economic evidence is mixed regarding the impact
of noncompetes on employees and the ancillary impact of
noncompetes like investments in employee training in R&D are
relevant as well, I believe we should listen to Justice
Brandeis and let the states continue acting as laboratories of
democracy.
The final labor issues pertain to no-poach agreement. FTC-
DOJ guidance warrants that wage fixing and no-poach agreements
may be prosecuted criminally. Both Federal and State
enforcements have been active in this area, and the FTC brought
a case involving home health staff in 2018.
Turning to my third topic, the issues we'll discuss today
and other potential antitrust reforms merit thoughtful
discussion. Traditionally, the FTC has played a leading role in
the antitrust policy debate largely because of its strong
bipartisan dialogue which has benefited from the vibrant input
from stakeholders. Regrettably new FTC leadership has made
meaningful dialogue among commissioners and between the
commission and its stakeholders difficult.
In closing, I thank the Committee for this opportunity to
testify. I look forward to answering your questions.
[The statement of Ms. Wilson follows:]
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Mr. Cicilline. Thank you, Commissioner.
I now recognize Professor Kobayashi for five minutes.
TESTIMONY OF BRUCE H. KOBAYASHI
Mr. Kobayashi. Thanks. I thank the Committee for inviting
me to testify today.
I want to say at the outset that ensuring that the
antitrust laws protect both workers and consumers from the
effect of monopsony should be an important goal of antitrust.
The effects of classical monopsony results in harm to both
workers, consumers by simultaneously reducing output,
decreasing workers' wages, and increasing prices to consumers.
My testimony today will focus on proposals to use the
Federal antitrust laws to control the use of noncompete
agreements, irrespective of the context in which they are used.
Any suggestions should be based on robust and systematic
evidence of the negative effect and ubiquitous effect of NCAs
on both workers and consumers.
While there certainly is some evidence that the application
of noncompete agreements in some settings harm workers--and
Evan Starr has done great work in this area--there is also
evidence that noncompete agreements, especially when
accompanied by notice and consideration, result in benefits
that both workers and firms achieve. In addition, noncompete
agreements can simultaneously increase worker mobility and
wages but also harm consumers.
There's a recent article by Gurun, Stoffman, and Yonker
published this year in the Journal of Financial Economics which
studies Membership in the Broker Protocol. Protocol member
firms agree not to enforce post-employment restrictions by
promising not to sue departing brokers for taking their client
information with them to other member firms. One effect was
that the brokers were happy.
They had increased mobility, and they achieved higher
wages. Consumers were harmed. The authors present evidence that
consumers paid higher prices to protocol firms and suffered
higher levels of broker misconduct.
Second, to the extent that problematic uses of noncompete
agreements and other restrictive employment agreements have
been identified, the preferred solution would be to address
these identified problems specifically, rather that enact a
widespread ban through the use of the Federal antitrust laws.
Legislative solutions to specific issues should be
identified by robust and credible research based on the well-
developed body of State law, as Commissioner Wilson just said,
actually follows an approach that recognizes the mixed and
potentially beneficial use of NCAs.
I think that the Committee should pause and make sure that
it is not going to interfere with the robust and widespread
approach of the States where the vast majority of States allow
the reasonable use of NCAs but ban the unreasonable use. The
Uniform Law Commission just passed at the end of July a uniform
law which would take many of the protections in the majority of
States and apply them in a uniform law, if enacted.
Just as it would be wrong for antitrust policies solely to
focus on output markets and monopoly and ignore the effect of
monopsony, it is also wrong to base antitrust policy only on
the effect on workers without considering the downstream
effects.
I think that what--one example that Eric mentioned was
hospital mergers. There's actually a great article by Prager
and Schmitt that I think was just published in the American
Economic Review that shows that hospital mergers that occurred
from 2000-2010 caused wage stagnation for skilled hospital
workers.
You have to sort of understand the context of the data they
have. The period right before their dataset, the 1990s, was a
period in which the Federal agencies challenged but lost seven
straight hospital mergers. In response to that, then Chair
Yaris in 2002 convened a task force.
The task force looked at the causes of these losses
including problems with market definition and got the Bureau of
Economics to produce retrospective studies to show that these
mergers caused double-digit price increases. As a result of
this, things were turned around. It's not surprising that these
mergers which were allowed to harm consumers also harmed
workers.
I look for to your questions.
[The statement of Mr. Kobayashi follows:]
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Mr. Cicilline. Thank you, Professor.
We'll now proceed under the five-minute rule with
questions. I'll begin by recognizing the Chair of the Full
Committee, Mr. Nadler, for five minutes.
Chair Nadler. Thank you, Mr. Chair.
Ms. Payton, I was particularly struck by your testimony.
You told your manager that workers in your hospital needed more
information and better personal protective equipment to stay
safe during the pandemic. Your manager said that you signed up
for this because you work in healthcare, and you should stop
complaining.
Do you think your employer could be so dismissive about
providing PPE if there was more competition for healthcare
employees in Pittsburgh, and did you and your colleagues sign
up for an unsafe work environment?
Ms. Payton. No, we did not sign up for an unsafe work
environment. We signed up to provide quality patient care. If
we had a union at UPMC, we would be able to voice our opinion
about getting better PPE and we would have that option.
Chair Nadler. Thank you.
Mr. Gross, in your testimony, you mentioned that changes in
the logistics and delivery industry are putting pressure on
employers to reduce pay and benefits and make other changes
that reduce standards that make these jobs safe. What are the
changes in your industry that are having a negative effect on
wages, benefits, and working conditions, and are these changes
endangering workers' safety? Are they endangering the public?
Mr. Gross. Thank you, Congressman Nadler. I think the
biggest change right now in our industry is large corporations
like Amazon being allowed to use third-party workers and
subcontractors instead of actually utilizing their own
employees. So, it's putting downward pressure on wages,
industry standards, and benefits.
Chair Nadler. Are these changes endangering workers' safety
and endangering the public?
Mr. Gross. I believe that it does endanger workers' safety
because they hold them to such high levels of productivity that
it forces the workers to rush and cut corners, and they don't
follow the same safety and training that we receive at UPS or
at other unionized corporations.
I'm also aware of some of the dangers to the public would
be the DSP third-party providers that they utilize. Amazon
leans on them, pushes them, and wants them to perform. They cut
corners as far as like vehicle safety maintenance, things of
that nature, because it's under constant pressure to get out
there on the road and deliver, deliver, deliver. They're scared
of losing their business. I do believe that, in that effect, it
does cause a safety hazard to the
public.
Chair Nadler. Thank you.
Mr. Posner, you wrote an op-ed last week in the New York
Times in which you explained that monopolists use their market
power in labor markets they hire fewer workers, leading to
unemployment and lower economic growth. Because there are fewer
workers, these firms supply fewer goods resulting in higher
prices for consumers.
Other than higher prices, are there nonprice effects that
harm consumers, and how are the antitrust enforcers responding
to evidence of the highly concentrated labor markets harming
workers and consumers?
Mr. Posner. Yes. Well, one will expect that if its
employers want to save labor costs, they can do so by
reducing--sorry, if they want to save money in the product
market, they can do so by producing lower quality goods as well
as more expensive goods. There is economic evidence of that,
but I wouldn't be able to cite off the top of my head
Now, in antitrust law, there tends to be a rule that you
only look at the market directly affected by the defendant's
behavior. So, if workers bring an antitrust case, you look at
the impact of workers; if consumers bring an antitrust case,
you look at the impact on consumers.
So, normally, if workers brought an antitrust case, you
would not look at the impact to consumers. In a way it doesn't
matter, because, generally speaking, if monopolists reduce
employment, as they appear to do, then you would expect lower
output and higher prices and, as you say, lower-quality goods.
Chair Nadler. Thank you.
Mr. Callaci, mergers that enhance market power can have
non-price effects on worker safety. For example, Ms. Payton and
Mr. Gross testified about worker and workplace safety issues.
Do antitrust enforcers typically consider non-price effects in
labor markets as part of an agency's merge review, and if not,
why not?
Mr. Kobayashi. When I was bureau director, we did have a
focus on--
Mr. Cicilline. Excuse me, sir, I believe this question was
for Mr. Callaci.
Mr. Kobayashi. Oh, Callaci, sorry.
Mr. Cicilline. Yes. My fault, but also the time of the
gentleman has expired, but I'll give the Chair just a--the
Witness a few seconds to answer the question.
Mr. Callaci. Yes. Just very briefly, there is a new paper
relatively new from Aaron Sojourner, Ioana Marinescu, and I
forget their coauthors, showing that monopsony has effects on
non-wage aspects of work, including violations of safety laws.
There was also a report in the Washington Post that the
Amazon subcontracted delivery service partners have higher
injury rates than even Amazon itself, so that would seem to
back up what Mr. Gross was saying.
As my knowledge, effects on worker health and safety of
mergers have not been considered. I'd have to do a deeper
check, but I don't think that's been considered but it should
be.
Mr. Cicilline. Thank you.
Chair Nadler. Thank you. I yield back.
Mr. Cicilline. Thank you. The Chair yields back.
I now recognize the gentleman from Colorado, Mr. Buck.
Mr. Buck. With Chair's permission, I defer to Mr. Gaetz
from Florida.
Mr. Cicilline. Mr. Gaetz is recognized.
Mr. Gaetz. Thank you, Mr. Chair.
This is my favorite Subcommittee in my half decade in
Congress and in no small part because of the way you've lead
it. I am incredibly proud of the work we've done to address
some of these anticompetitive practices of these monopolistic
entities.
I was primarily persuaded by the testimony of Mr. Gross
regarding how that market power of big businesses like Amazon
can limit the ability of workers to have any type of meaningful
negotiation.
Congresswoman Jayapal led legislation that the Chair of the
Committee, the Chair of the Subcommittee, Mr. Buck and me
supported that would force the breakup of companies like Amazon
into smaller entities. I wanted Mr. Gross' perspective on that.
Do you believe, as a negotiator, that would improve the
position of workers to break up companies like Amazon and other
big tech companies into smaller entities?
Mr. Gross. Well, I'm not an expert on this field.
Obviously, I'm just a driver at UPS and a shop steward for my
union. What I would say though is that it might not necessarily
be necessary to break up the size of the company but just to
allow or force the company or encourage the company to employee
the workers that it's utilizing.
So, instead of using third-party individuals and leaning on
them and chewing them up and spitting them out, have real
employees give them real wages, allow them to have a collective
bargaining unit agreement, and I think that way you would get
more productivity out of them in the long run and still be able
to run a successful business.
Mr. Gaetz. I appreciate that perspective. My concern is
that if they're able to stay so big, even if we used the
awesome powers of the Federal government to force these
relationships out of independent contractor relationships into
employment relationships, they're still so big that they could
reduce the contributions of those employees with the strength
that they have.
It is one of the reasons why we had bipartisan support on
this Committee for those bills. Mr. Chair, I'm deeply
disappointed that those bills haven't been called up for a
vote. It seems a bit odd to be here talking about positive
impacts of legislation the Subcommittee has passed when the
Full House has had the opportunity in prior weeks to take up
these bills and they haven't, and I have to wonder why that has
happened.
So, Mr. Chair, I seek unanimous consent to enter into the
record a piece from the New York Times entitled, ``Tech Giants,
Fearful of Proposals to Curb Them, Blitz Washington With
Lobbying.''
So, that could be a reason, the power of lobbyists in this
town to make things tougher for workers. I guess there could be
other reasons too.
Mr. Chair, I would seek to enter into the record a piece
from Yahoo News entitled, ``Tim Cook Reportedly Called Pelosi
to `Deliver a Warning' About Congress' Antitrust Bills.''
So, maybe it's the lobbyists, maybe it's the power of these
very powerful CEOs making personal calls, but it could even be
something more sinister.
Mr. Chair, I seek unanimous consent to enter into the
record a Fortune.com piece entitled, ``Speaker Nancy Pelosi's
Husband Cashed in on Big Tech Just As Congress Was Set to
Pounce.''
Mr. Cicilline. Without objection.
[The information follows:]
MR. GAETZ FOR THE RECORD
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Mr. Gaetz. In that article, there is discussion of the
spouse of the Speaker of the House making a $6 million call on
stocks that netted $5.3 million while we're not moving these
bills. So, I thought that was a little odd. I thought that was
weird. We move bipartisan legislation out of this Subcommittee,
and just as we're considering it and it might be bad for big
tech, the Speaker's spouse goes and buys all this big tech
stock.
Then lo and behold, here we are with the bills not called
up. It just makes you wonder, did somebody know something? Is
somebody acting on information? It could have been the power of
the lobbyists and all the money that they donate to Members of
Congress on both sides. It could've been people like Tim Cook
calling.
Here's what we know, these bills aren't coming to the
floor. If they were coming to the floor, they would have been
on the floor in prior weeks. So, now we sit here with this
great work likely extinguished in its tracks for one of these
unfortunate reasons.
Mr. Chair, I know we have got Chair Nadler's MORE Act
coming up soon. One thing we learned in the marijuana movement
is sometimes you've got to lose votes on the floor. Sometimes
you've got put up the votes, you've got to lose, and then year
after year you make a little progress, you get further down the
road.
Even if these tech bills can't pass, I would encourage you
to talk to the Speaker and put them up for a vote. I know she
said she won't put up votes that don't pass, but if it could at
least give us a measuring tool to be able to come back and work
to persuade our other Members.
I thank the Chair for his indulgence for going over time
and I yield back.
Mr. Cicilline. Yeah. I want to reassure the gentleman that
I am working very closely with the Ranking Member of the
Subcommittee to be sure that our colleagues who have not had
the benefit of the 16-month study that we conducted where we
learned a lot about this marketplace, understood what these
complicated bills do.
We want to be sure that our colleagues are fully briefed
up, and we are committed to making certain these bills come to
the floor, not just for a vote but for a vote that prevails
because of the hard work that's been done. We are grateful for
your ongoing and strong support.
This is an important priority for me, I know for all the
Democrats in our caucus, and certainly for the Chair of the
Full Judiciary Committee and working very closely with Mr. Buck
to be sure we get to that point. Thank you again for your
support of our investigation and the legislation.
With that, I now go to the gentleman from New York, Mr.
Jones, for five minutes.
Mr. Jones. Thank you, Mr. Chair, and to the Chair of the
Full Committee, Nadler, for holding this important hearing.
Thanks as well to our Witnesses and especially to Ms.
Payton and Mr. Gross for your courageous testimony.
It's about time that we confronted the power the biggest
corporations wield over workers, monopsony power. Just as
monopoly power enables corporations to dictate the prices and
quality of the things that we buy and the services that we rely
on, so monopsony power enables corporations to set our wages
and our working conditions dominating the job market.
Today's testimony makes one thing clear, that restoring
competition in the labor market is essential to restoring
economic and democratic power to the American people, to making
sure that everyone gets their fair share of pay and say.
As to Commissioner Wilson's concerns about the FTC's
process, let me just say this, the Subcommittee only received
the commissioner's testimony around 8:00 p.m. last night even
though this hearing was postponed by a week. So, it's somewhat
surprising to hear complaints about the process at the FTC at a
hearing on protecting the economic liberty of American workers.
We have frontline workers who have taken time off to testify
about their experiences today, and that is what we should be
focusing on in this hearing.
Professor Posner, as you have testified, mergers are a
central cause of corporations' tremendous power over workers.
Ms. Payton has experienced that firsthand. Yet, the DOJ and the
FTC have never challenged a merger to protect workers, not even
once. How should we strengthen merger review to empower workers
and prevent corporate power from consolidating even further?
Mr. Posner. The example of UPMC, which Ms. Payton provided,
is truly an amazing story. As she mentioned, the current
hospital is the result of dozens and dozens of mergers. The
single company controls 40 hospitals, more than 40 hospitals in
the Pittsburgh area and thousands of clinics. It's a true
monopolist and a monopsonist. How all those mergers could've
gone through when we nominally have a merger review process is
a mystery to me.
So, to answer your question, I think the answer is actually
straightforward. The Justice Department and the FTC currently
have what are called merger guidelines where they provide
certain rules or guidelines that regulate when mergers are
permitted and when they're forbidden. The guidelines are
probably too weak at the moment even with respect to product
markets, but they say nothing about labor markets.
So, if Congress were to direct the FTC and the DOJ to add a
section on labor market or Congress could just legislate this
directly, and what it could do is it could provide certain
thresholds when certain mergers occur that have major labor
market effects and this connection be quantified to be very
precise.
A merger will be presumptively blocked and would be only
permitted if the merging companies can prove to the
satisfaction of a court that as a result of the merger
efficiencies would be produced that would result in higher
wages and better working conditions than if the merger did not
take place.
There is a lot of experience on the product market side
with this type of analysis. I think it would be fairly simple
for regulators to use this type of analysis for the labor
market effects of mergers.
Mr. Jones. Thank you so much.
Dr. Callaci, in your written testimony you said that we
should set out clear, bright line rules that make it easier to
block harmful mergers. Would you please elaborate?
Mr. Callaci. Sure. So, actually this is a great follow-up
to Dr. Posner's point. A lot of those sort of fact-intensive
demonstrations of efficiency allow both parties to hire
economic consultants, to hire law firms. Judges are not
specialists in economics, so those sorts of processes allow the
consultants can muddy the waters, make it very difficult for
judges to reach a clear decision.
So, I would say it would be better to have very clear rules
and clear guidelines that apply to these situations rather than
relying on--allowing defendants to make the case for the
deficiencies that tend not to really arise. So, the product
market, to me, actually shows how the labor market should not
follow the product market case.
Mr. Jones. Thank you, Doctor.
Mr. Chair, I yield back.
Mr. Cicilline. The gentleman yields back.
I now recognize the gentleman from California, Mr. Issa,
for five minutes.
Mr. Issa. Thank you, Mr. Chair. I'd now ask unanimous
consent that two articles be placed in the record, one that's
entitled, ``California's Occupational Licensing Laws Shouldn't
Kick People When They're Down''; the second one is from the
Mercatus Institute, and it says, ``California Occupational
Licensing: Barriers to Opportunity in the Golden State.''
Mr. Cicilline. Without objection..
[The information follows:]
MR. ISSA FOR THE RECORD
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Mr. Issa. Thank you, Mr. Chair. Mr. Chair, I want to thank
you for your opening remarks that also touched on the need to
reign in the inevitable growth by government of regulating and
wanting a license for everything.
My home State has managed to reduce the number of
entrepreneurs, reduce the number of people who get to work for
themselves, and increase the number of people waiting to work
for anybody based on licensing.
At a time of COVID they managed to have a situation in
which you could go to school, you could get the education, but
you couldn't get your license because people who were being
paid full pay by the State were not granting testing for more
than a year. This does create an opportunity for a bipartisan
effort to define when and how particularly private entities can
require licensing. I look forward to working with you on that.
I'd like to now shift to Commissioner Wilson. Commissioner,
you, in your opening remarks, did talk about, and in your
written statement, about the North Carolina State Board Dental
Examiners where dentists conspired to exclude--or to include
teeth whitening under their purview to the detriment of people
being able to do something that you and I could go to the
drugstore and buy the same materials but would not be able to
have it done for us. Could you expand on that case and why it
begs for the kind of reform that I think we're talking about
here today?
Ms. Wilson. Thank you for the question. So, that case is
one notable case in which incumbents, the dentists on the
dental board--I believe six of the eight people on the dental
board were dentists--erected barriers to entry to keep
competitors out of the market.
We also at the Federal Trade Commission brought a similar
case against South Carolina dentists who actually interfered
with the delivery of preventative dental services to
economically disadvantaged children in public schools.
The hygienists had been going to public schools and
providing teeth cleaning for economically disadvantaged
children, and the dentists decided that they were going to
enter a regulation that said that hygienists could not practice
without having basically a dentist looking over their shoulder,
and the Federal Trade Commission challenged that as well.
So, you are absolutely right to focus on these issues.
Absolutely, States have an interest in protecting the health
and safety of their constituents, but sometimes incumbents
actually use those regimes to insulate themselves from
competition as opposed to protecting consumers, and that's
where the FTC gets involved.
Mr. Issa. Well, I appreciate that. Commissioner Wilson, you
may not be prepared to opine on this, but in California where
AB5 became law it dramatically reduced competition because it
eliminated the ability for massive classes of individuals to
form their own sole proprietorships or small companies. Isn't
that another example, at least in principle, where competition
is reduced anytime government limits the ability of people to
essentially start companies?
Ms. Wilson. So, you are right, sir, that I am not familiar
with that legislation. Traditionally the Federal Trade
Commission has been very interested in economic liberty type
issues ensuring that people, who are interested in practicing a
trade or moving across State lines or practicing to the full
extent of services for which they're licensed, have the
opportunity to do that so that they can have the dignity of
earning a living wage. Anything that inhibits that, unless it
is directly tied to protecting health and safety, would be and
should be suspect.
Mr. Issa. Well, and finally, many of the comments made here
today are about moving--that the Federal Trade Commission and
other Federal organizations move the bias from the government
proving that competition is somehow hurt to the individual
company proving that it is enhanced, whether in labor or in
other competition. Do you think that is a dangerous trend or
direction?
Ms. Wilson. I do. That does not comport with our innocent-
until-proven-guilty approach to law in this country.
Mr. Issa. Thank you. I yield back.
Mr. Cicilline. I thank the gentleman. I look forward to
working with you on the licensure issue also hope that the
example of California that bans noncompetes in its entirety
might also inform our work together.
Now, I'll yield to the gentleman from Maryland, who has
been a leader on the impact of excessive licensure on American
workers, Mr. Raskin, for five minutes.
Mr. Raskin. Mr. Chair, thank you so much. Thanks for
calling this important hearing.
I'm concerned about the rampant misclassification of
employed workers as independent contractors to evade and
undermine worker protections, especially in the so-called gig
economy. Even though section 6 of the Clayton Act shields the,
quote,
labor of a human being from general antitrust scrutiny,
courts have narrowly construed the exemption so that it doesn't
include independent workers, ranging from independent doctors
and lawyers to for-hire drivers.
Mr. Callaci, can you explain how the rampant
misclassification of employees as independent contractors
exposes working people to attack under the antitrust laws?
Mr. Callaci. Sure. So, basically, yes, section 6 of the
Clayton Act and the Norris-La Guardia Act and the National
Labor Relations Act all attempted to exempt workers from
antitrust prosecutions for coming together to collectively
bargain.
So, of course, there is an incentive for companies to
misclassify their employees as independent contractors, so
those workers don't have access to those rights, and they can,
in fact, be prosecuted for collusion.
So, if we were able to get the labor law side get those
workers classified properly as the employees that they are and
on the antitrust side stop going after these small players,
church organists, independent contractors, that would remove
the incentive to misclassify.
Mr. Raskin. Over the last few years, antitrust enforcers
over both Democratic and Republican leadership have committed
to policing anticompetitive conduct in labor markets. How can
the antitrust agencies bolster enforcement in labor markets
under current law?
Mr. Callaci. So, we can revise the merger guidelines to
more explicitly take into account effects on workers.
Mr. Raskin. Earlier this year, Judge Diane Woods testified
that Congress intended the antitrust laws to apply to the
harmful effects of concentrated economic power and not just
short-term reductions in consumer welfare or economic output.
How has the shift in recent decades away from this legislative
purpose of the antitrust laws towards the goal of just narrowly
promoting consumer welfare harmed workers and small businesses
in the political economy generally?
Mr. Callaci. Yeah, so it makes it more difficult to get at
anticompetitive conduct, unfair methods of competition, unfair
conduct that harms workers. So, you can get at harms to workers
indirectly if the monopsony power results in a decline in
output, but that is not always the case, right.
There are times when--particularly there's an excellent
recent paper by Hemphill and Rose showing that there are cases
where monopsony power may not result in a decrease in output
but rather a redistribution from employers to employees.
So, we need to be able to take those into account, and the
current application of the antitrust laws does not allow us to
do that because we're so wedded to this idea of either--we call
it either consumer welfare or output maximization. It does not
allow us to address these harms to workers.
Mr. Raskin. Well, then how are you recommending that
Congress amend the antitrust laws to reassert the primacy of
protecting against abuses of concentrated economic power
including in the labor markets themselves?
Mr. Callaci. Gotcha. Sorry for not getting so directly to
your point the first time. So, one way to do that is to not
allow offsets, right. So, if workers' wages decline, if their
injury rates decline or--as a likely result of a merger or
because of employer collusion, that could be the--I lost my
train of thought. Hold on. Yeah, so not allowing that to be
offset against gains to consumers or to another party, counter
party in the market.
Mr. Raskin. You've noted that the narrow lens for antitrust
policy over the last few decades has loosened restraints on
franchising to the detriment of workers. How could changes to
the antitrust laws address the harmful consequences of this
franchising model on small businesses and on employees?
Mr. Callaci. Sure. So, that gets to Representative Issa's
point about entrepreneurship. So, what antitrust has allowed
since basically the 1970s is allowed large corporations to
control and really dominate nonemployee independent contractors
and small businesses through contract.
So, rather than having a chain of McDonald's, each
restaurant is owned by a so-called independent contractor who
has no control over their business practices. That means that
they can't raise the prices. That means they can't control--
choose their own suppliers. So, they have no room to raise
wages.
In fact, the McDonald's franchisee told, I think it was,
the Washington Post that McDonald's told her to just pay your
workers less when she complained about these kinds of vertical
restraints.
Mr. Raskin. Gotcha. Thank you very much for your testimony.
I yield back to you, Mr. Chair.
Mr. Cicilline. The gentleman yields back.
I now recognize the gentleman from Louisiana, Mr. Johnson,
for five minutes.
Mr. Johnson of Louisiana. Thank you, Mr. Chair. Appreciate
that. Grateful to the Witnesses for sharing their insights
today.
My colleagues on the left often talk about how
consolidation and corporate concentration are bad for American
workers, but they sometimes seem to miss the point that
increasing regulations on businesses actually leads to
consolidation of industry power in these big mega companies.
Professor Kobayashi, what do you think of the proposition
that unnecessary regulatory hurdles create barriers to entry
and reduces competition?
Mr. Kobayashi. Thank you for the question, Congressman.
Certainly it is a reality that often large firms are better
able to deal with onerous regulations or regulations that are
just costly. A good example is Catherine Tucker's work on
privacy regulation. Who best is able to deal with that type of
cost and complexity? It's Google, and it makes Google stronger,
and it also makes it harder for small firms to compete.
That's not saying that Google has done anything wrong,
but--I use it all the time because I think it's the best search
engine. It does, in many cases, cause asymmetric abilities to
deal with cost and promotes larger firms over smaller ones.
Mr. Johnson of Louisiana. Often government has good
intentions, but when you have to actually apply it in
practicality it is counterproductive.
Instead of focusing our discussion today on implementing
more regulations, shouldn't we be focusing on real reforms, and
if so, what would be the primary focus? I mean, where should we
put our attention first?
Mr. Kobayashi. Well, one thing that is important in my
years being the bureau director at the FTC the problems--we
would get problems. We would see research. We would get
questions from Congress. The Chair would ask us to deal with
these issues. Even before I got to the FTC. Joe Simons, who was
the Chair when I was there, we had many conversations in the
period before we both got to the FTC about labor monopsony. He
very concerned about it.
One of the things we did to address labor monopsony in
mergers was we put specs in the Hart-Scott-Rodino questions to
sort of deal with labor monopsony issues, not just looking at
product markets but actually making the firms give us data
about commuting zones and labor wages and the like.
We also continued to do retrospectives. When I was there,
there's a State--a bunch of States have these certificate of
public advantage programs which we want to block mergers, but
they say that, no, we're going to allow the merger that you
think is anticompetitive under our COPA laws.
What we do is we study them. What one of my economists at
the time actually then went to CMS and asked for data on labor
wages just so we can actually have some idea of what the
effects were in having an evidence-based basis for antitrust
policy changes that we're going to make.
Mr. Johnson of Louisiana. Those are good ideas. I've got
just a little over a minute left. Let me just ask you quickly,
how will a top-down arbitrary regulation, such as President
Biden's vaccine mandate on businesses with a 100 or more
employees, affect the marketplace?
Mr. Kobayashi. Well, a bit out of my expertise, but my
guess is that the use of top-down mandates are often well
intentioned, but you'd want to know what the unintended
consequences might be. There are some people who would not want
to take those into account, and there are some who will have a
hard time dealing with it. I think the marketplace is--my
university has vaccine mandates, and we have to wear masks,
so--
Mr. Johnson of Louisiana. Well, what we're seeing in
practice across the country is large-scale resignations and we
have any number of industries that are really struggling right
now at the worst possible time the mandate hits, and so it's a
real problem. I'm out of time. I'll yield back.
Mr. Cicilline. The gentleman yields back.
I now recognize the gentlelady from Florida, Ms. Demings,
for five minutes.
Ms. Demings. Well, thank you so much, Mr. Chair. Thank you
to all our Witnesses for joining us today for this very, very
important hearing.
Dr. Posner, you said that there is no consideration at all
of merger's effect on labor. Let me just say, that's a powerful
statement that--that's a powerful realization and one that I
certainly believe is sad but true.
Do you believe that non-compete agreements are freely
entered into by workers, and do many workers have the
bargaining power to negotiate these agreements?
Mr. Posner. Thank you for the question. Research suggests
that certainly for lower-income, less-educated workers who are
required by their employers to enter noncompetes, those workers
do not understand what the noncompetes mean. Often, they don't
even learn about the noncompetes until they show up at work.
They're not in a realistic position to say, okay, but you have
to pay me more. I mean, that's just not how the world works,
and that's been confirmed by academic research.
For quite sophisticated people, like executives who can
hire lawyers to advise them, they appear to be informed about
these noncompetes and may very well be compensated for the
restrictions that they impose on them.
I do want to add that even when people voluntarily consent
to noncompetes and receive wage premium as a result, that can
have serious anticompetitive effects, and I'll give a quick
example. Imagine a hospital in a small town, it ties up all the
physicians and nurses with noncompetes and compensates them.
Now, a new hospital or clinic wants to enter the town and needs
workers. Well, it can't compete for those workers because
they're tied up for a year or two, and they would have to quit
and not work in their profession for a couple of years before
they could work for the new employer. So, these noncompetes,
even when voluntarily consented to, can have serious, negative
effects on competition.
Ms. Demings. Thank you so much, Professor.
Mr. Gross, you said something at the beginning of your
testimony too, and it was maybe viewed as small, but I thought
it was also powerful. As you talked about the workers, you said
fellow American workers. It was just something that was good to
hear in this political climate where we tend to like to pick
and choose winners and losers. I think our responsibility on
this Committee is to leave no American worker behind, and so I
just thank you for being here and testifying today.
You mentioned the stark difference in prevailing wages
between unionized UPS drivers and Amazon drivers. Why do you
think there is such a big difference in the wages? I know you
talked a little bit about that, but if you could just drive
that home, that point home for us, please.
Mr. Gross. Thank you, Congresswoman. I think one of the
biggest differences is that unionized workers, we are employees
of the corporation, and where Amazon is using these DSP
delivery drivers, they're not actually Amazon's employees. So,
in that essence, it allows Amazon to save money and not share
in its profits with the people that are actually making the
money for Amazon. So, that's definitely one of the ways.
Ms. Demings. How would you respond to people who would say
that consumers really like Amazon and they want two-day
delivery, and that Amazon's practices are reducing prices for
consumers, and workers who dislike it should just find a
different line of work? How would you respond to that?
Mr. Gross. Well, I don't think there's anything wrong with
consumers liking Amazon and liking two-day service. We provide
second-day air at UPS. We were the ones that were providing the
service behind the scenes for Amazon for a long time. What was
the question again?
Ms. Demings. What would you say to people who seem to want
to ignore, you know, the differences in wages, working
conditions, and all those things because they like the service
that Amazon gives?
Mr. Gross. Oh, yeah, right. Yeah.
Ms. Demings. I think it goes back to the way you do
business matters too.
Mr. Gross. Yes, the way you do business matters. I would
say, there's nothing wrong with liking Amazon, but you would
like them a lot more if they had employees that were unionized
and that were able to provide excellent service that unionized
workers are able to provide.
Ms. Demings. Thank you so much, Mr. Gross.
Mr. Gross. You're welcome.
Ms. Demings. Thank you to all our Witnesses. Mr. Chair, I
yield back.
Mr. Cicilline. The gentlelady yields back.
I now recognize the gentlelady from Minnesota, Ms.
Fischbach, for five minutes.
Ms. Fischbach. Thank you, Mr. Chair.
I've got just a couple of questions for Commissioner
Wilson. Commissioner Wilson, in this Subcommittee there's been
quite a bit of talk about the proper focus for and the limits
of antitrust law. One premise of this hearing seems to be that
antitrust is responsible for and can solve many of the issues
that American workers are facing. I just wonder if you could
take just a couple of minutes to talk a little bit about what
antitrust focus has been in the past and what it is today.
Ms. Wilson. Thank you for the question. So, I would start
by saying that the analytical framework that we use is called
the consumer welfare standard. So, in our analysis, at the
forefront of our mind certainly is how consumers will be
impacted by conduct or by mergers that is not limited to an
analysis of short-term price effects. In fact, we also think
about innovation. We think about quality. We think about
choice. We think about whether barriers to entry will be
erected that will inhibit new entrants from coming in and
further lowering prices.
So, even though it's called the consumer welfare standard,
it is--and is characterized as being focused on short-term
price effects, that is actually incorrect.
First, as I've described, we do think about innovation and
quality and choice.
Second, in the Weyerhaeuser case, I think it's a great
example of how we actually do look at impacts of monopsony
power even if there is no impact on output. So, I just wanted
to respond to Dr. Callaci's statement that, in fact, he said we
can only challenge monopsony power under existing antitrust
laws if there is a decline in output, but, in fact, in the
Weyerhaeuser case that was not true.
Also, in the Horizontal Merger Guidelines, section 12
explicitly says that we can look at monopsony power even if
there is no impact on output or an effect downstream. So, to
package all this together, I would say that we look at the
impact on consumers, but we also need to remember, of course,
that consumers are employees and consumers are sometimes
shareholders. I think it is perhaps an arbitrary and artificial
approach to impose these silos.
That said, as Dr. Kobayashi mentioned, during the Trump
Administration, for three years we looked long and hard for
labor monopsony issues particularly in hospital mergers and the
impact on nurses. So, within the existing analytical framework,
without setting up special separates goals for antitrust, we
actually do consider all these issues.
What we find, in fact, is that typically when you address
the underlying anticompetitive issues of a merger you resolve
both potential harms to consumers and potential harms to labor.
In certain circumstances where that's not the case, the Federal
Trade Commission has actually gone directly after harms--
monopsony harms, including in our Griffold case that was
brought just recently where there was a merger of human-source
plasma companies.
The Federal Trade Commission challenged the merger in part
because it was going to create monopsony power for blood plasma
donors in various cities. In other words, donors of blood were
going to get lower fees because of monopsony power until the
Federal Trade Commission challenged that.
Also, in the healthcare field, the Federal Trade Commission
in a conduct case challenged an agreement between therapists
staffing service providers for home health agencies where they
agreed to set prices for therapists, in other words suppressing
wages.
So, while I think it is important for us to focus on the
economically based consumer welfare standard that we have, it
is actually a rich and robust analysis that allows us to look
at a variety of different factors including labor.
Ms. Fischbach. Thank you very much, Commissioner. I
appreciate your input.
Given that I've only got a few seconds left, I will yield
back, Mr. Chair. Thank you.
Mr. Cicilline. The gentlelady yields back. Thank you.
I now recognize the gentlewoman from Georgia, Ms. McBath,
for five minutes.
Ms. McBath. Thank you so much, Mr. Chair.
Ms. Payton, I just want to thank you so much for your work
as part of our healthcare system. As a cancer survivor, and I'm
a two-time cancer survivor, I know well that behind the many
doctors and nurses there are also dozens of technicians and
clerks and administrative assistants and sanitation staff that
are making sure that everything always runs smoothly, and
patients get the care that they need.
You are all frontline workers, so I want to thank you,
first and foremost, for your really hard work. I find your
experience really, really troubling. So, how do the wages and
working conditions that you've experienced affect morale among
you and all of your coworkers?
Ms. Payton. Working for UPMC, it's one of those with two-
edged swords. It's good because I actually have a job to go to,
but it's bad because it's like my coworkers and I, we can't
afford to feed our families when we need to, pay all our bills
when we're scared of the medical debt.
UPMC controls the labor market in Pittsburgh, and we need a
union that gives some of that power back to the workers. They
have too much power in fact, and we need the union to balance
that power. That way we'll be able to afford to live
comfortably and sustain our families.
Ms. McBath. Thank you for that.
Mr. Gross, thank you also for being here. Your employer,
UPS, is headquartered in my district, which is Georgia's 6th
Congressional District, so I'm so pleased to hear of your
positive experiences as a UPS employee and also member of your
union.
Like hospital staff Ms. Payton, you work in an industry
where accidents can cause real harm. You mentioned that your
union worked to secure rules that were beneficial to drivers
and also promote public safety. Can you expand on that, please?
Mr. Gross. Thank you, Congresswoman. I mean, UPS puts us
through an extensive training program as far as driving and our
workers inside the hub. So, I think that's one of the ways that
UPS helps keep its workers safe, unionized workers safe. I
don't think that workers that are at Amazon or other part-time
non-employees, subcontractors, they don't get the opportunity
to have that same training and safety.
Ms. McBath. So, do you think you would have been able to
get these rules that keep you and the public safer if you were
bargaining with your employer or by yourself?
Mr. Gross. I think that the collective bargaining agreement
is what levels the playing field with companies, and I think
that would definitely allow workers to have an opportunity to
have a voice and a say and to be safer on the job.
Ms. McBath. Thank you.
Ms. Payton--I'm running out of time--you testified that you
asked your employer to provide you with more PPE and that they
told you that this is what you signed up for. Did you feel like
you had any recourse whatsoever, any other actions that you
could have taken at that point?
Ms. Payton. Being that we're not a union at UPMC, it was
kind of difficult to even go further in that. We do deserve
better PPE and more information because we are putting our
lives on the line. We're putting our family's lives on the
line. If we had a union, it would just make our lives
essentially better. Like instead of feeling expendable we
should feel essential, like the essential workers that we are.
Ms. McBath. Ms. Payton, you testified--excuse me, Mr.
Gross, your testimony mentioned that Amazon no longer lets
drivers like you come into the facility, and that you and your
fellow drivers think this is about controlling the information
that Amazon employees and contractors get. Can you tell us more
about what led you to that conclusion, and what would you tell
an Amazon driver based on these experiences that you have had?
Mr. Gross. I would just say that Amazon doesn't want us
talking to those employees because they don't want them to
understand the power of our collective bargaining agreement.
They don't want them to understand the rights and the wages and
the standards that we enjoy in the industry. I don't think they
want them to know their worth in the industry. So, I would tell
them that--be open minded and learn and strive to have a
collective bargaining agreement.
Ms. McBath. I think I'm just about out of time but thank
you so much to each of you for being here today, and thank you
so much for being so candid and honest with us. I yield back
the balance of my time.
Mr. Cicilline. The gentlelady yields back.
I now recognize the gentleman from Ohio, Mr. Jordan, for
five minutes.
Mr. Jordan. Thank you, Mr. Chair.
Mr. Gross, do higher prices hurt workers? I notice in your
testimony you said you are married, four children. When The
price of eggs, bread, milk, gas, when that goes up, does that
hurt workers?
Mr. Gross. Thank you, Congressman. I'm not an economist,
but I know the higher prices hurt everyone--
Mr. Jordan. Yeah.
Mr. Gross. --everyone from workers--
Mr. Jordan. Union workers? Non-union workers?
Mr. Gross. Workers, consumers, and everyone.
Mr. Jordan. You've got less purchasing power, so even if
your wages go up but you've got--in real terms you've got less
purchasing power, that's going to hurt. I mean, my dad was a
union worker. He worked--I appreciate what you do. My dad
worked 30 years for General Motors International Union of
Electrical Workers. My mom cleaned houses. When the price of
goods and services goes up, it's tough on families. Isn't that
true?
Mr. Gross. I believe that it's tough on everyone, yes.
Mr. Jordan. How about higher taxes? Democrats are getting
ready to--they're going to try to pass a huge spending bill,
$3.5 trillion. They're going to have a bunch of tax increases
in there. When your taxes go up, not to mention we've got
inflation at a 40-year high, so the price of everything you
purchase as a family has gone up, now they are going to raise
your taxes. Is that going to hurt families? Is that going to
hurt workers?
Mr. Gross. Well, to that I would like to defer to one of
the economists.
Mr. Jordan. No, I'm just asking in simple terms. If you
have to give more of your hard-earned money to the government
in the form of taxes, is that going to be tough on families
especially when you couple with it the fact that we're now at a
40-year high inflation rate?
Mr. Gross. I understand what you are saying, Congressman,
but I don't feel comfortable with that because I'm not an
expert.
Mr. Jordan. How about COVID lockdowns? Did that hurt
workers when the economy was locked down, typically done by
Democrat governors, Democrat mayors? Does that hurt families?
Mr. Gross. Well, again, Congressman, I appreciate your
question, but I'm not qualified to answer that.
Mr. Jordan. I think you are very qualified as someone who
had your union and working hard for your family. How about
mandates? We have got the State of New York, the Chair's home
State, the governor announced last night that they're going to
fire healthcare workers because they won't comply with the
mandate. The same healthcare workers, by the way, who a year
ago were heroes for all the hard work they've done over the
last year. Do these kind of mandates, do you think those harm
workers, Mr. Gross?
Mr. Gross. I appreciate your confidence in me, Congressman,
but I would have to get back to you with a response on that.
Mr. Jordan. I appreciate your answers, Mr. Gross.
Ms. Wilson, let me switch subjects--excuse me, I'm sorry,
Commissioner Wilson. In your written testimony, Commissioner,
near the end, I don't think you said this in your oral
testimony, but in your written testimony you said new agency
leadership--I'm reading from I think one of the last
paragraphs. Then you give a bunch of examples--new agency
leadership unfortunately has made meaningful dialogue among
commissioners and between the Commission and its stakeholders
difficult by--and then you list a bunch of things--muzzling
staff internally and externally, stifling the flow of agency
records and information from staff to commission, and there's
lack of transparency, giving minimal notice to commissioners
and the public of sweeping policy change--you go on giving no
written explanation of sweeping policy changes--until those
changes are actually implemented by the Trade Commission,
evading meaningful dialogue at the Commission level, voting
against notice and comment of all other policy, and on and on
it goes. Tell me about this, if you would, Commissioner. What's
going on at the FTC?
Ms. Wilson. Thank you, Congressman. I appreciate the
opportunity to address this issue. I have served at the Federal
Trade Commission on three different occasions. This is my third
stint at the FTC, and what has always made the Federal Trade
Commission special and powerful is its long bipartisan
tradition of collegiality, observing norms and traditions,
carrying on a rich dialogue at the Commission but also with
stakeholders.
As I enumerated in my written submissions with extensive
footnotes to other statements that I've made, this observance
of norms and traditions that facilitates bipartisanship and a
robust and rich dialogue, not just within the Commission, but
also with all our stakeholders--my cat is coming into the
picture--has taken a huge hit under new leadership.
I'd like to note the distinction here. When Acting Chair
Slaughter was serving as the chair of the FTC, she continued to
absorb the norms and traditions that allowed for a bipartisan
discussion. It is only with the arrival of Chair Khan that
decades of tradition have been thrown out the window to the
detriment of our and consumers.
Mr. Jordan. So, this is new. We all know we function in a
body where process matters. Process impacts policy. If you
don't have the right process in place, sometimes you can lead
to serious mistakes and serious, serious problems. Should we
give the Commission more power?
Ms. Wilson. I am very concerned about giving the Agency
more power under current leadership. A system can only
withstand the force that it is designed to channel, and right
now we are seeing the limits of the force that we can
withstand.
Mr. Jordan. Thank you, Mr. Chair.
Mr. Cicilline. The time of the gentleman is expired.
Mr. Gross, just so you are not left with a misimpression,
the proposal that's before the Congress will actually cut your
taxes because you have four children, provide lower costs of
healthcare, prescription drugs, paid family leave, and a number
of other--childcare, et cetera. So long as you don't make more
than $400,000, you are getting a big, gigantic tax cut. So, I
didn't want you to leave this hearing worried about a tax
increase based on Mr. Jordan's question.
Mr. Johnson of Louisiana. Mr. Chair? That's fake news. No,
I'm just--
Mr. Cicilline. The Chair now recognizes the gentlelady from
Pennsylvania, Ms. Dean, for five minutes.
Ms. Dean. I thank Chair Cicilline and Chair Nadler for
bringing forth this hearing that centers on complex nuance
antitrust law, but it centers on the impact--I'm over here,
sorry--on everyday Americans.
Mr. Gross, I'm from neighboring Pennsylvania. My nephew,
one of my nephews was a proud Teamster for more than a decade
with Pepsi. Pennsylvania, like New Jersey, has been a leading
voice in organized labor dating back to the 18th century.
I appreciate your focus, and I won't hit you again on this
because you've spoken so well about it, but we often focus on
the financial benefits of collective bargaining, higher wages,
health insurance, pension contributions, and the like, and we
don't talk enough about safety and the hazard implications to
workers and to the rest of us on the roads or whatever it
happens to be. So, thank you for your eloquent testimony on
that.
So, if I could, I'd like to move to Dr. Callaci. You also
talked about workplace safety and workplace conditions. Can you
explain, from your work, how the lack of collective bargaining
impacts safety in the day-to-day of the average American worker
in other industries?
Mr. Callaci. Sure. So, I would imagine, I don't know, I
haven't seen the contract, but that Mr. Gross has a health and
safety Committee at his workplace with joint representation
from labor and management to talk over these issues and come to
solutions.
So, when workers don't have a lot of options for
alternative employers because of concentration and when they're
otherwise restrained and employers are restrained from
competing for their jobs by these kinds of contracts we've been
talking about, that really limits their bargaining power to be
able to gain wages. Even an individual worker, of course, can't
get those safety committees without a union. That is a really
key element that collective bargaining brings to the table.
Ms. Dean. How does that trickle down to the safety for you
and for me?
Mr. Callaci. Well, I mean, who is more affected? Who is
going to notice a safety hazard first, especially in the
healthcare sector where we have these externalities, as
economists call them, of how pathogens move around from the
workplace to the patients to throughout the community.
So, yeah, absolutely, workers are the first to notice when
there's a safety problem. They're the first harmed. So, they
really need to be empowered, and collective bargaining is the
best institution we have to empower workers to bring those
concerns to the floor and not be afraid to speak up.
Ms. Dean. Thank you, and I wanted to ask you another
question in a different area. Are women and people of color
more likely to face negative effects of labor monopsony and
why?
Mr. Callaci. Yeah. So, we do see--I'm trying to remember if
I can--because I want to make sure I'm sticking to the
empirical evidence. In terms of certainly noncompetes, we have
very good evidence through a couple of papers now that non-
White and women workers are more harmfully affected by these
agreements, because basically it's workers that are more
vulnerable with lower bargaining power to begin with are more
harmed by these kinds of restraints.
We saw, also, the Krueger and Ashenfelter study on no
poaching agreements in franchising which show that those
agreements were more common with low-wage, high-turnover
workforces where the employer was--I've been talking about sort
of this notion of baseline monopsony where basically almost
every employer has some level of control and power over their
workers, but this stuff gets supercharged by these agreements
by things like noncompeting agreements.
So, it would stand to reason that if workers are more
negatively affected by--if the evidence shows that for non-
compete agreements, that monopsony would also have a more
harmful effect.
Ms. Dean. Thank you.
Ms. Payton, I was struck by your testimony, I think, as
everyone here was. What shines through is your pride in your
work, your pride in earning, working hard for an organization,
doing worthwhile work, and, of course, the pride in raising a
family. You are hampered in that, 15 years and not making even
north of $20 an hour.
I wondered, is there anything else you wanted to add to
your story that has not come out, and also, are you able to
talk to us about how your aspirations for organizing are coming
along?
Ms. Payton. I just want to add that we have been talking to
elected officials about this for a long time, and we are
hopeful that there will be action. Having a union is definitely
the way to go because UPMC has too much power, and we
definitely need the union to give some of that worker--the
power back to us workers.
Ms. Dean. That's terrific. With that, Mr. Chair, I thank
you and I yield back.
Mr. Cicilline. The gentlelady yields back.
I now recognize the distinguished gentleman from North
Carolina, Mr. Bishop.
Mr. Bishop. Thank you, Mr. Chair.
Mr. Gross, I was listening to your description about the
Amazon workers. You said that they--I wrote it down--lower
wages. They have to do weekend work. Then you say they cut
corners on safety. You said that there's a lot of pressure. Why
do folks choose, drivers choose to go to work there instead of,
say, UPS?
Mr. Gross. Well, I mean, drivers have an opportunity to go
straight into driving with Amazon. So, with UPS, it's a good
place to work. It's a solid place to work. You can raise a
family there. You can pay your bills. You can be a homeowner,
follow the American dream, you know.
That's what everybody wants. There's a process that you
have to follow. You can't just jump right up into the driver's
seat. So, a lot of people don't want to take the time to follow
the process to get to where they want to go. I think that's
really one of the main reasons.
Mr. Bishop. Okay. So, do you think they ought to be able to
make a choice like that, or should that choice just not really
be available?
Mr. Gross. I don't really think they're aware of the choice
they're making when they originally become an employee for the
DSP. I don't think they really understand.
You see Amazon as this big corporation with these boxes
with smiley faces and everyone's happy and everyone enjoys
getting stuff online and shopping. That's euphoric, but I don't
really think they understand what they're getting into.
There are certain things about our industry. It's a tough
job. It's a worthwhile job, and it's a tough job.
Mr. Bishop. No doubt about it.
Mr. Gross. One of my coworkers once coined the phrase we're
industrial athletes. So, I think it's--you need to be
compensated as such.
Mr. Bishop. Yeah. Okay, sir. Thank you.
Ms. Payton, I was struck by something that you said and
it's interesting. The place I come from, Charlotte, North
Carolina, and also is a case there that the healthcare system
is the largest employer. I think you said that about UPMC,
University of Pittsburgh Medical Center, that you work for. In
your testimony you made the point that--and, unfortunately, we
got your--all these--the testimony got passed out, I think, to
everybody late last night or at least to me. So, I didn't get
to read it all in full.
Ms. Payton, I was struck. You said that--how did you put
it--I can't remember exactly. You were talking about U.S. Steel
and that there--it's no longer as big and impactful an employer
as UPMC that you work for and that it was unionized and it
promised and paid a lot of benefits that people liked and gave
a good standard of living.
Why do you think that is that U.S. Steel's no longer around
but now the hospital system is the biggest employer rather than
a company that's making stuff?
Ms. Payton. U.S. Steel was big and impactful, but slowly
the eds and med started taking over the city of Pittsburgh. The
U.S. Steel tower now has UPMC at the top of that tower which
goes to show that UPMC is one of the biggest factors in this
city.
Mr. Bishop. Ms. Payton, I was just curious. Given a lot of
the discussion lately, Has UPMC ordered employees to take
vaccines against COVID?
Ms. Payton. No, they have not.
Mr. Bishop. Do you think the employer should have the power
to impose that decision on you and your fellow employees?
Ms. Payton. I think a worker should have a choice, but I
also do believe that everyone getting the vaccine will help
people stay safe.
Mr. Bishop. Thank you, ma'am. That's very sensible to me.
It's interesting and more broadly and to some of the
academics that are in the hearing. Seems to me that the
majority fails--the Democratic majority fails to reconcile or
even to apparently to recognize inconsistency in their own
policies.
Back in 2009, I guess it was, the Congress adopted the
Affordable Care Act, also known as Obamacare. As experts widely
recognize, it promoted consolidation among insurance companies.
It's no surprise really that then led to consolidation among
hospital systems, and that led to consolidation in the
ownership of physician practices. Now, we're talking about--but
then hospital consolidation became an enforcement priority for
FTC.
Isn't much of this--and I think maybe I'll direct this to
Professor Posner. Isn't much of this the result of inconsistent
policymaking by the Congress that would tend to promote
consolidation, at the same time punish other entities for
consolidating?
Mr. Posner. Well, I think one would have to look at it case
by case. Broadly speaking, I don't agree. Congress has a lot of
legitimate different policy goals, and in some cases certain
policies will benefit larger companies. You also need a very
strong antitrust law at the same time to prevent excessive
consolidation from occurring and from the large companies
abusing their monopoly power.
Mr. Bishop. Thank you, sir.
My time has expired, Mr. Chair.
Mr. Cicilline. The time of the gentleman has expired.
I now recognize myself for five minutes.
Before going to my questioning, I ask unanimous consent to
include in the record an article from Open Markets Institute
entitled, ``Eyes Everywhere: Amazon Worker Surveillance
Continued,'' without objection, and also a letter from the
chair of the Federal Trade Commission, Lina Khan, dated
September 28th, 2021, without objection.
[The information follows:]
MR. CICILLINE FOR THE RECORD
=======================================================================
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Cicilline. Mr. Callaci, in a letter to the
Subcommittee, which I just introduced for today's hearing, FTC
Chair Lina Khan explains that in recent decades the agency has
largely neglected monopsony concerns and harm to workers. She
underscores that this will change and that under her leadership
the agency will scrutinize mergers that lessen competition in
labor markets and restraints in worker pay and mobility may
violate the law.
How do you respond to that? Are there additional steps our
antitrust enforcement should take?
Mr. Callaci. So, yeah, I fully applaud that effort to take
a closer look at competition and to look at course of contract.
Yeah, I think in terms of--I have this in my testimony.
A couple of other additional steps we need to look at are
the effective buyer power not just directly on employees, but
actually sort of the case that Mr. Gross referenced where you
have buyer power in a supply chain, whether that's Amazon
putting the squeeze on the parcel delivery companies or those
kinds of things. We do have evidence that also affects wages,
so taking into account those down or upstream effects.
Then, dealing with these coercive contracts that try to
control and dominate nonemployee independent contractors. We
have employment law, labor employment law, because we know that
workers are at a disadvantage in the bargaining with employers.
We have tons of labor laws, labor regulations, because we
recognize that. Companies being able to get that same control,
that same just have an employment relationship with an Uber
driver or with a delivery service partner without incurring
those duties and responsibilities an employer is meant to
burden, is that another area, getting at those course of
contracts that are sort of substitutes for employment.
Mr. Cicilline. Thank you.
Mr. Posner, in your testimony you explained you are not
optimistic that courts would be receptive to antitrust
enforcement to address labor market harms. Why are courts
skeptical of labor-sought antitrust claims, and how do you
propose we update the antitrust laws to address harms to labor
competition including nonpricing effects?
Mr. Posner. To emphasize, I think they're skeptical under
current law. I'm not arguing that courts don't like workers or
anything like that. If law were updated, I think that it would
be more receptive to claims by workers against employers.
So, what can be done? I think, for starters, updating the
laws that regulate mergers, because there's merger litigation
in, ways that make clear that rules restricting mergers apply
to mergers that affect labor markets.
I also think that some of the technical detail, which I
discussed in various places, but the courts have been
unreceptive to some of the no-poaching cases against franchises
because of these kinds of silly doctrines that have developed
in antitrust law about the difference between vertical and
horizontal relationships. There can certainly be technical
legislation that would correct that error.
Then, lastly, I would suggest that section 2, the provision
of antitrust law that applies to monopolies, I think that could
be improved so that certain types of antilabor practices would
be explicitly identified as anticompetitive practices including
the use of noncompetes, misclassification, perhaps unfair labor
practices.
I'm not saying that employers would never have defenses. If
courts saw this kind of codification of these ideas, they would
be much more receptive to this type of important litigation.
Mr. Cicilline. Thank you.
Mr. Posner, Commissioner Wilson and Dr. Kobayashi argue
that there's not enough evidence on the effect of noncompete
agreements on wages and workers, worker mobility to support
restrictions on these types of post-employment restrictions. It
seems clear to me that noncompete agreements hurt workers,
especially low-income workers. What is the effect of these
agreements on workers and on consumers?
Mr. Posner. Well, as I think Professor Kobayashi
acknowledged, there's been substantial evidence now that
noncompetes harm lower-income workers. The evidence is a little
more ambiguous for higher-income workers. There's a study that
looks at workers in Hawaii who are low-paid, and they were
harmed as a result of noncompetes.
I tend to agree with critics that we probably don't have
enough evidence yet to completely abolish noncompetes under all
circumstances. My more limited claim is that they should
certainly be the subject of antitrust litigation. There are,
after all, called covenants not to compete. Right? They're
areas of trade, and yet there have been a total of zero cases
in the history of this country where people tied up by
noncompetes have successfully challenged them on antitrust
grounds.
So, whatever the proper role is, we need to move rapidly in
a more restrictive direction.
Mr. Cicilline. Thank you.
Finally, Ms. Payton and Mr. Gross, I know you both took the
day off to be with us. Thank you very much for being here. We
often talk about these issues in the abstract. Your testimony
helps us recognize what the impact is of an absence of
competition in labor markets and how it affects actual people
and their lives. So, thank you for that.
If there's anything that hasn't been said that you'd like
to say in response, I'd like to give you both an opportunity to
do that. I know we're going over a little, but my Republican
friend will indulge me. I'll give him a little additional time,
too.
Mr. Gross. Thank you, Chair Cicilline. I would just like to
thank you for having us and giving us the opportunity to tell
our story. So, thank you.
Ms. Payton. Yes. I'd also like to thank you for having me.
It has been an honor to be able to share my story.
Mr. Cicilline. It's an honor to hear both of you, of
course.
I now recognize the gentleman from Wisconsin for five
minutes and 30 seconds.
Mr. Fitzgerald. Thank you, Mr. Chair.
I just wanted to revisit--I know some of this might be a
little redundant, but I just wanted to revisit labor and labor
markets related to the merger stuff.
So, Ms. Wilson, you can comment.
Mr. Kobayashi, again, feel free to chime in.
There have been reports regarding FTC sending companies
questions that are kind of far outside what you would expect
traditional inquires to be about as a result of the merger
investigations.
An example is--and I know this could be kind of dismissed
as, boy, I've never heard about that before. So, I'm trying to
raise the profile of it. The FTC staff has inquired about how
mergers would affect unionization, as well as some
environmental and social issues. This is--it's my understanding
this is a departure from typically what you may see as what we
would consider traditional questions. Some of the other
Witnesses on the panel have discussed the need to change
antitrust laws so that the effects on labor markets are
considered. It seems to make sense to me.
You both served at the FTC and understand the relationship
between the mergers and demand in the labor markets. Can either
of you discuss how current antitrust laws and enforcement
considerations already account for this issue?
Ms. Wilson, would you like to?
Ms. Wilson. Sure. So, so thank you and I'm sure that Dr.
Kobayashi will also have interesting comments here. So, to be
clear, the horizontal merger guidelines actually do say right
now that monopsony power should be investigated within the
course of merger analysis. So, as Bruce outlined, for at least
three years under Chair Simons, we did look for labor monopsony
issues in mergers. So, we included specs, specifications in the
so-called second request for information of merging parties,
that sought to analyze the impact of mergers on hiring.
What is happening now, I believe, is going further afield
and looking not at what happens for competition for labor but
for other social values. I disagree with expanding the scope of
antitrust beyond competition which is a load that it is
designed to carry. We are not equipped to evaluate the other
factors that are now being shoehorned into antitrust analysis.
Mr. Fitzgerald. Thank you.
Professor.
Mr. Kobayashi. Yeah, I want to comment maybe on some of the
comments saying that we ought to do something to maybe make
thresholds for labor market.
If you go back to the Prager and Schmitt article, which is
a very good article, I want to make two points. One, if you
look at what mergers--and they base their concentration numbers
on commuting zones. So, it's not a product market. It's a
commuting zone. You have to go into sort of the extreme
quartile. That's Herfin-
dahl's of about 6,000s with changes to about 2,000s of the
mergers that sort of generate the wage stagnation.
The other thing that you have to look at is that there are
no--they test for output effects and the effects of classical
monopsony. They don't find anything. It might be that there are
bargaining effects. It's not sort of classical monopsony where
you have independent decreases in employment, and then it's
limited to skilled workers.
If you were based it on the evidence, you would basically
put those thresholds at 6,000s which are basically a three-to-
two merger. Those mergers probably will get blocked on product
market grounds or on the standard tools that we have.
As I said and as Commissioner Wilson just reiterated that
we have adjusted our enforcement procedures including the HSR
specs where we get information to actually look at product
market and labor market issues. I don't know what else you do
if you want an evidence-based enforcement of the antitrust
laws. We try to get the evidence.
Mr. Fitzgerald. Very good.
Thank you. I would yield back.
Mr. Cicilline. The gentleman yields back.
I would like to now ask unanimous consent to introduce into
the record a letter from Greg Nowak, director of the Brewery
and Soft Drink Workers, to Amy Greenberg, Director of
Regulations and Rulings Division, Tobacco Tax Trade Bureau
without objection; a statement, for the record, from the
International Brotherhood of Teamsters, the Service Employees
International Union, and the Strategic Organizing Center,
without objection; and a statement for the record from the
Uniform Law Commission, without objection.
[The information follows:]
MR. CICILLINE FOR THE RECORD
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Mr. Cicilline. I now recognize the gentleman from Oregon,
Mr. Bentz, for five minutes.
Mr. Bentz. Thank you, Mr. Chair.
Commissioner Wilson--and thanks to all the Witnesses.
Incredibly interesting conversation.
Commissioner Wilson, the standard--I would like to go back
to your comments about going beyond competition and trying to
apply other standards. This sounds like a kind of a step
backwards in what your FTC had been doing in the fifties and
sixties. I just was looking at an article that was commenting
on the policies in those years, and someone called it an
incoherent mess.
I think maybe that's what you were getting at when you were
talking about trying to shoehorn some of these new standards
concerning labor into whatever the standard--well, the consumer
standards.
So, could you comment on that just a little more? Because
what I'm interested in knowing is if you're asked as the FTC to
bring labor standards into this, what are you going to use as
the proper measure of success?
Ms. Wilson. You raise a fantastic question.
If we introduce additional goals into antitrust
enforcement, we are going to have a situation in which the
current system, which is predictable, administrable,
incredible, is undermined. So, if we are pursuing one goal
which is the preservation of competition, whether it be for the
sale of services or for the purchase of services including
labor, that is an assessment that can be done rigorously with
evidence, with the assistance of people like Professor
Kobayashi who can crunch the numbers and look at the data.
If we introduce additional goals, we are then in a
situation where we have to decide which goals to prioritize. In
different circumstances we may be pushed to prioritize
different goals. Antitrust loses its predictability, its
credibility, and its administrability. It becomes very subject
to politicization and to rent seeking, and I submit to you that
is not a good way to run the government.
Mr. Bentz. Just a bit of a follow-up. I was trying to--you
guys go into this in great detail and incredible complexity.
So, forgive the shallowness of this question. It seems to me
that the price concept that you would--that you do apply now,
consumer benefit standards, would be in conflict with trying to
drive up the prices by helping those who are working for these
companies get greater job benefits.
So, how would you the balance those two competing goals if,
indeed, you were charged with this challenge of bringing labor
into the conversation?
Ms. Wilson. So, you're absolutely right. That is the
problem with multiple and potentially competing goals. If the
goal of antitrust is to prevent any job loss through merger,
then we are going to have difficulty assessing that impact and
at the same time balancing the impact on consumers. So, it is
better to focus antitrust on a single goal competition which
also includes the wages that labor is being paid.
So, if there is monopsony power, if a merger is going to
involve, say, the only two hospitals in a city that will
suppress wages, then we step in. We prevent that merger which
benefits both consumers and the nurses and others who work at a
hospital.
Let me just add to what Professor Kobayashi said about
hospital mergers. He indicated that there was significant focus
on figuring out why the FTC and DOJ were losing so many
hospital mergers, and I had the privilege of serving as Chief
of Staff to Tim Muris when he launched the hospital merger
retrospective to figure out why.
The economists and the lawyers at the Federal Trade
Commission study the issue, figured out how to try cases in a
way that launched us on many, many wins. Over the last 17 years
we have had only one loss when we challenge a hospital merger.
The problem with hospital mergers is so many are below the
age threshold. So, we are very interested in identifying
hospital mergers that do not need to be notified to Federal
Trade Commission and assessing whether those are causing
anticompetitive effects including suppressing wages for nurses
and physicians and others who work for those hospitals.
Mr. Bentz. Thank you, Commissioner.
Mr. Chair, I yield back.
Mr. Cicilline. The gentleman yields back.
I now recognize the gentleman from Utah, Mr. Owens, for
five minutes.
Mr. Owens. Thank you, Mr. Chair. I thank you. I thank all
the Witnesses for joining us today.
I, like so many of my colleagues here, deeply concerned
about the Biden Administration's general approach to
regulations and economic policies and particularly the impact
that those policies are having on businesses and workers back
in my home district. I also share concerns expressed today on
both sides of the aisle regarding monopoly on organizations
like Amazon.
Mr. Gross and I have different backgrounds--his with the
union, mine as a small business owner. We probably would
respectfully disagree, agree to disagree on some of the
solutions how to get there. We both emphatically have the same
end game, that is, the protection of the small business, the
small middle class--I mean, sorry--protection of the middle
class.
Only through the free-market competition can that happen.
As we see the big tech and other monopolies across many
industries, there's absolutely no tolerance for small business
innovation, service, and the drive to reach the middle class.
I'm thankful for the leadership of the Ranking Member, Mr.
Buck, and for taking on the big tech monopolies and others that
we are addressing as we come to become aware of in 2020.
Commissioner Wilson, on page 5 of your written testimony
you mention how the American economy is struggling to recover
from the COVID-19 pandemic. You also suggested adopting a
highly interventionist competition policy at this time will
harm everyone including American workers.
What about the Biden Administration's general approach to
regulations and economic policies and particularly the impact
on those, again, workers and businesses from my own district?
Today in this hearing we're not simply talking about proposals
that would impact a particular sector or industry. We're
talking about broad policy changes that would even override
some State law.
Do you have any reaction to these concerns, especially as
they relate to labor markets?
Ms. Wilson. I completely agree with your concerns about
regulation and the cost that those impose and the chilling
effect that they have on innovation. I would note, with respect
to emerging from the economic devastation of COVID, one step
that the Federal Trade Commission has taken is throwing out the
vertical merger guidelines with essentially no notice, no
opportunity for input. It's expressed intent to take a much
stronger enforcement approach for vertical mergers.
Here's the problem. Supply chain vulnerabilities were
exposed during COVID. To shore up the supply chain, many
companies are seeking to bring the vulnerable aspects of the
supply chain in-house so that they have control. Now, we have a
situation in which there's an express intent to enforce
vertical merger law much more aggressively, and at the same
time there's no guidance.
People don't understand what the new policy is with respect
to vertical mergers, and we have been told by the majority of
the commission that there will be onerous penalties for
bringing what they perceive as any competitive deals to our
doorstep.
So, we have removed guidance from the business community
which is seeking to emerge from the COVID economic devastation
but we're going to double the penalties if they cross the line,
but they don't know where the line is. So, it's problematic.
Mr. Owens. Can you describe the role of State attorney
generals in challenging unlawful no-approach agreements and
whether they have been successful in that role?
Ms. Wilson. I think the State AGs have been very
successful. The Washington State AG has, I believe, brought
cases that have affected close to 200,000 locations across the
country, not just in Washington. This goes back to the point I
made in my written testimony, in particular, that there is a
very rich, robust set of State law and common law that governs
noncompetes and no-approach agreements. The State AGs are
active.
My understanding is that in the same State, Pennsylvania is
looking to pass a law on noncompetes. These State legislatures
are very responsive to the needs of their constituents and the
facts on the ground. They are very active.
Mr. Owens. Thank you. Thank you so much.
I yield back.
Mr. Cicilline. The Chair yields back.
This concludes our hearing. I think we've covered everyone.
Just as a reminder that Members will have five legislative
days to submit additional materials for the record.
I want to again thank our Witnesses for their really
helpful testimony that I think will allow this Committee to
move forward in a very productive way to make certain we can
really promote competition in labor markets that will benefit
American workers. Thank you again to everyone for their
testimony.
With this, the hearing is now concluded.
[Whereupon, at 12:29 p.m., the Subcommittee was adjourned.]
APPENDIX
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