Creative capitalism: Collusion to reduce employee pay

The New York Times writes:

A New Legal Tactic to Protect Workers’ Pay

The Justice Department is using antitrust law to charge employers with colluding to hold down wages. The move adds to a barrage of civil challenges.

Antitrust suits have long been part of the federal government’s arsenal to keep corporations from colluding or combining in ways that raise prices and hurt the consumer. Now the government is deploying the same weapon in another cause: protecting workers’ pay.

In a first, the Justice Department has brought a series of criminal cases against employers for colluding to suppress wages. The push started in December 2020, under the Trump administration, with an indictment accusing a staffing agency in the Dallas-Fort Worth area of agreeing with rivals to suppress the pay of physical therapists. The department has now filed six criminal cases under the pillar of antitrust law, the Sherman Act, including prosecutions of employers of home health aides, nurses and aerospace engineers.

“Labor market collusion dots the entirety of the U.S. economy,” said Doha Mekki, principal deputy assistant attorney general in the department’s antitrust division. “We’ve seen it in sectors across the board.”

“The expansion of Sherman Act criminal violations changes the ballgame when it comes to how companies engage with their workers,” noted an analysis by lawyers at White & Case, including J. Mark Gidley, chair of the firm’s global antitrust and competition practice. “Executives and managers could face jail time for proven horizontal wage-fixing conspiracies.” In addition to fines for corporations or individuals, the Sherman Act provides for prison terms of up to 10 years.  

And yet the Justice Department’s push builds on a rationale for criminal antitrust enforcement articulated since the Obama administration. “Colluding to fix wages is no different than colluding to suppress the prices of auto parts or homes sold at auction,” said Renata Hesse, acting assistant attorney general for antitrust, in November 2016. “Naked wage-fixing or no-poach agreements eliminate competition in the same irredeemable way as per se unlawful price-fixing and customer-allocation agreements do.” 

It will be interesting to see what the courts do with this. Pro-corporate judges will probably frown on expansion of the Sherman Act and protect the corporations ability to conspire to keep wages low. That would be in accord the the generally pro-business stance that conservative Republican judges tend to take. It is not clear how neoliberal Democratic judges will react to this, maybe about like the Republicans.

Predictably, Corporate America is alarmed. A U.S. Chamber of Commerce official commented: “In their minds, everything is an antitrust issue. But it is a limited one.” That indicates there is at least some basis in the law for concern by the business community. This will probably eventually wind up in the Supreme Court with the Republicans siding with the companies.