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Earlier today I wrote that the increasing consolidation of American businesses (Exhibit A: AT&T’s planned acquisition of Time Warner) is bad for American productivity. It could be bad for workers, too — and the White House is taking notice.
Business consolidation isn’t inherently bad for workers. Big corporations tend to pay better than smaller ones, and they tend to offer more generous benefits. But if consolidation leads to less competition between companies, that can reduce workers’ bargaining power and lead to slower wage growth. A new report from the president’s Council of Economic Advisers argues that’s exactly what is happening. The report notes that the share of national income that goes to workers (as opposed to business owners) has been falling for two decades, and points to the increasing dominance of big businesses as a key cause.
One area of particular concern: the spread of noncompete agreements, which make it harder for workers to seek better wages at another employer (an issue the CEA highlighted in an earlier report). The White House on Tuesday announced a new effort to collect better data on noncompete agreements, and it called on states to crack down on their use.