Friday, Aug. 13, 2021
When only a few firms dominate hiring in a labor market, are workers typically worse off?
People's ability to negotiate for better wages depends, in part, on competition for workers among firms. Workers are put in a weak negotiation position and wages are lower than would otherwise be the case when there are a small number of companies in a particular location. Firms with outsized labor market power may also coerce employees to sign non-compete agreements, which tend to limit entrepreneurship, information flow and worker mobility. Companies’ negotiating strength vis-à-vis workers is lower in cities and varies both regionally in the U.S. as well as by occupation. However, more than half of all U.S. labor markets tend to be ones where companies are highly concentrated, giving companies strong bargaining power.
This fact brief is responsive to conversations such as this one.
Sources
- American Economic Liberties Project Confronting America’s Concentration Crisis: A Ledger of Harms and Framework for Advancing Economic Liberty for All
- EconoFact Could Increasing Market Power Among Firms be Hurting Workers’ Wages?
- The Hamilton Project A Proposal for Protecting Low-Income Workers from Monopsony and Collusion
About fact briefs
Fact briefs are bite-sized, well-sourced explanations that offer clear "yes" or "no" answers to questions, confusions, and unsupported claims circulating online. They rely on publicly available data and documents, often from the original source. Fact briefs are written and published by Gigafact contributor publications.
See all fact briefs
EconoFact is a non-partisan publication designed to bring key facts and incisive analysis to the national debate on economic and social policies. Launched in January 2017, it is written by leading academic economists from across the country who belong to the EconoFact Network. It is published by the Edward R. Murrow Center for a Digital World at The Fletcher School at Tufts University.
Learn MoreLatest Fact Briefs
Would stopping government overspending ‘end’ post-COVID inflation?
Monday, Feb. 3, 2025
Has the Pentagon failed its 7th audit in a row?
Friday, Dec. 20, 2024
Does most US aid to Ukraine go to US companies and workers?
Friday, Dec. 6, 2024