Big firms, shrinking paychecks
The New York Times
Regulators tend to judge a merger’s merits on whether consumers “will fare worse,” said Bryce Covert. But there’s a “potentially more dangerous side effect” when two big companies join forces: “Workers have fewer options when they look for jobs,” which often results in lower wages. We’re witnessing a historic pace for mergers this year. So far, $1.7 trillion worth of deals have been announced worldwide, higher than the precrisis record set in 2007. In the U.S., T-Mobile and Sprint are merging, Cigna is buying Express Scripts, and oil refiner Marathon Petroleum is snapping up its rival Andeavor. All these unions mean fewer companies, reducing workers’ bargaining power. By one estimate, employment in the United States is 5 to 18 percent lower than it would be otherwise because the economy is so dominated by a few large employers, and wages are between 13 and 31 percent lower. A recent study of job vacancies concluded that most U.S. job markets “are incredibly concentrated—a customer service representative in Boise, Idaho, for example, has only a few options for where she can work.” No antitrust court has ever stopped a merger on the grounds that eliminating a company might hurt workers. Nine years into a slow recovery with stagnant wages, perhaps it’s time to take that into consideration.