TOWARD A PROGRESSIVE LABOR ANTITRUST

For decades, antitrust enforcers ignored employer power in labor markets, adopting neoclassical assumptions that labor markets are competitive. Despite fanfare regarding recent labor antitrust enforcement, enforcers still deploy neoclassical assumptions and methods, targeting only proven deviations from a presumed competitive baseline, or infracompetitive wages and working conditions. The New Labor Antitrust deduces harms only from reduced competition that workers suffer.

This Article radically challenges that approach as contrary to law and policy. First, as a legal matter, it uncovers the Clayton and Norris–LaGuardia Acts’ labor and wage policy as rejecting competitively determined wages in favor of bargained-for wages determined through workers’ collective self-determination. It contextualizes those Acts as Progressive and institutional economists’ policy victories over neoclassical and formalist views of labor relations. Second, as a policy matter, the New Labor Antitrust’s approach contradicts mounting evidence of imperfect competition that should drive new assumptions and methods of detecting and countering employer power. Market-based metrics undercount employer power and its effects, making it needlessly challenging to establish liability. And when liability is established, it may be established for only competition-based—rather than non-competition-based—harms like reducing workers’ countervailing power and freedom of association.

The Article explains how the New Labor Antitrust inherited neoclassical doctrine and methods developed outside labor antitrust to usurp Congress’s now-forgotten labor and wage policy. It proposes reframing labor antitrust regulation to better detect and target employer power’s sources consistent with a policy favoring workers’ collective self-determination. It offers preliminary solutions, drawing from broader federal labor policy and the social scientific and philosophical literatures.

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∗ Associate Professor of Law & McHale Faculty Research Scholar, Boston College Law School; Affiliate Fellow, Thurman Arnold Project, Yale University; former Expert Advisor, Federal Trade Commission. The author is very grateful for comments and feedback from Blake Emerson, Willy Forbath, Daniel Francis, Olati Johnson, Matthew Lawrence, Jonathan Masur, Jamelia Morgan, Frank Pasquale, Sabeel Rahman, Aziz Rana, Brishen Rogers, Kathleen Thelen, Jay Varellas, Laura Weinrib, and Alex Zhang. The author also thanks participants in Boston College Law School’s Critical Approaches to Public Law Workshop; Harvard Law School’s Empirical Legal Studies Series; New York University School of Law’s Next Generation of Antitrust, Data Privacy & Data Protection Scholars Conference; the University of California Berkeley Law School’s Consumer Law & Economic Justice Workshop; the University of Texas School of Law’s Faculty Workshop; and Washington University School of Law’s Faculty Workshop. This Article reflects only the author’s views and not the views of the Federal Trade Commission or any of its Commissioners.

Introduction

“[T]he labor of a human being is not a commodity or article of commerce.”
— Clayton Act. 1 Clayton Act of 1914, Pub. L. No. 63-212, 38 Stat. 730, 731 (codified at 15 U.S.C. § 17 (2018)).

“Whereas under prevailing economic conditions, developed with the aid of governmental authority for owners of property to organize in the corporate and other forms of ownership association, the individual unorganized worker is commonly helpless to exercise actual liberty of contract and to protect his freedom of labor, and thereby to obtain acceptable terms and conditions of employment, wherefore . . . it is necessary that he have full freedom of association, self-organization, and designation of representatives of his own choosing, to negotiate the terms and conditions of his employment, and that he shall be free from the interference, restraint, or coercion of employers of labor, or their agents, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”
— Norris–LaGuardia Act. 2 Norris–LaGuardia Act, ch. 90, 47 Stat. 70, 70 (1932) (codified at 29 U.S.C. § 102 (2018)).

“We have aimed, incidentally, to bring into view the sovereignty of moral law in the economic practice of the world. If competition were supreme, it would be supremely immoral; if it existed otherwise than by sufferance, it would be a demon.”
— John Bates Clark. 3 John Bates Clark, Non-Competitive Economics, 5 New Englander 837, 845–46 (1882).

In 1914, Congress enacted a radically novel federal labor and wage policy, and it did so through antitrust law. 4 Clayton Act of 1914, 38 Stat. 730. Hailed as “the Magna Carta of America’s workers” by Samuel Gompers, then-President of the American Federation of Labor (AFL), 5 See Samuel Gompers, Labor and the War: The Movement for Universal Peace Must Assume the Aggressive, 21 Am. Federationist 849, 860 (1914). this law exempted from antitrust enforcement workers’ organizing and refusals to deal with their employers. 6 See 15 U.S.C. § 17 (“Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor . . . organizations, instituted for the purposes of mutual help . . . .”). Congress declared the basis of that exemption that “[t]he labor of a human being is not a commodity or article of commerce.” 7 Id. The choice of the term “commodity” was no accident. Its selection drew from a rich American intellectual tradition rejecting labor’s “commodity” status in the Progressive Era. 8 See infra section I.A. Excavating this intellectual history reveals how labor advocates, policymakers, and economists converged to reject labor’s commodification based on one unifying principle: Arm’s-length, market-based wage-setting determined through competition and the forces of supply and demand was deeply socially harmful, and guaranteeing workers’ associational freedom, coordination, and collective power against employers through certain forms of strike activity was a better mechanism for achieving fair and reasonable employment terms that properly valued labor. 9 See infra section I.A. In this regulatory battle, Progressive and emerging institutional economists won a resounding victory over classical and neoclassical economists and theorists. 10 See infra section I.A.

When courts defied the Clayton Act’s labor exemption to enjoin strikes and protect employers’ union busting, including by upholding employers’ “yellow-dog contracts” conditioning employment on foregoing union affiliation, Congress again intervened to clarify its federal labor policy through antitrust law. 11 See infra section I.B. In the 1932 Norris–LaGuardia Act, Congress explicitly declared its “public policy” in labor matters, and it did so to restrain what it viewed as misguided and improper judicial overreach in regulating labor disputes and the employment bargain. 12 See Norris–LaGuardia Act of 1932, Pub. L. No. 72-65, 47 Stat. 70, 70 (codified at 29 U.S.C. § 102 (2018)) (imposing “limitations upon[] the jurisdiction and authority of the courts of the United States”). Specifically, Congress recognized the helplessness of the “individual unorganized worker . . . to obtain acceptable terms and conditions of employment” from employers who, “with the aid of governmental authority,” “organize[d] in the corporate and other forms of ownership association.” 13 Id. As a remedy to this power imbalance, and to ensure “acceptable” employment terms, Congress deemed it “necessary that [the individual worker] have full freedom of association, self-organization, and designation of representatives of his own choosing, to negotiate the terms and conditions of his employment, . . . free from the interference, restraint, or coercion of employers of labor” in designating such representatives, organizing, or engaging in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 14 Id. Consistent with that declaration, Congress dramatically restricted court jurisdiction over labor disputes, prohibiting injunctions in antitrust cases against most labor strikes, picketing, and boycotts, outlawing judicial enforcement of yellow-dog contracts, and generally prohibiting imposition of equitable remedies contrary to this stated labor policy. 15 See 29 U.S.C. §§ 101, 103 (prohibiting courts from issuing restraining orders or injunctions regarding labor disputes and declaring yellow-dog contracts unenforceable as against public policy, respectively).

Federal antitrust law’s labor policy has been entirely forgotten by enforcers in their unprecedented shift towards applying antitrust law against employers. 16 For current enforcement, see, e.g., Eric A. Posner, How Antitrust Failed Workers 5–6, 34–44 (2021) [hereinafter Posner, How Antitrust Failed Workers] (describing recent executive branch and antitrust agency attention to labor antitrust enforcement); Eric A. Posner, The New Labor Antitrust, 86 Antitrust L.J. 503, 511–16 (2024) (summarizing recent developments in labor antitrust enforcement). The “New Labor Antitrust,” for all its novelty and importance, has applied and continues to apply neoclassical industrial organizations (IO) tools to analyze employer power only through employers’ ability to deviate profitably from wages set in perfect competition, or below the marginal revenue product (MRP) of labor. 17 See infra sections II.A–.B. The only cognizable harms it recognizes are the adverse effects of the exercise of employer power on compensation that result from reduced labor market competition, or deviations from market-based wages that would have occurred under more fulsome competition absent its exercise. 18 See infra sections II.A–.B. In other words, current antitrust enforcement imposes a neoclassical wage policy favoring labor’s valuation within a supply-and-demand equilibrium of cutthroat competition that enforcement seeks to restore in direct contravention of Congress’s goals in the Clayton and Norris–LaGuardia Acts. 19 See infra section II.C. The New Labor Antitrust thus amounts to a methodological usurpation that reverse engineers a radically new regulatory policy supplanting the language and goals of Congress’s original policy established in the antitrust laws themselves. 20 See infra section II.C.

And the ramifications are significant. Proof of employer power and its harms is the central pivot on which enforcement, liability, and damages turn in antitrust actions, so the tools and benchmarks represent fundamental public policy choices. 21 See infra section II.C. In addition to commodifying labor’s value, current methods undercount employer power, make it more challenging to establish antitrust liability, and limit the achievements of antitrust policy to market-based competitive outcomes. 22 See infra section II.C. Importantly, by centering competitive wage-setting and averting competition-based harms as the driving policy goals of antitrust law, current enforcement displaces measurement of other forms of collectivist and institution-based wage-setting that Congress viewed as superior on a number of dimensions: as measures of labor’s contributions to production, but also as mechanisms that further broader social policy and enable economic self-determination. 23 See infra section II.C. Enforcers’ current approach also limits remedies for employers’ antitrust violations to creating market structures and conduct rules that encourage more labor market competition rather than working to integrate or support worker-led labor institutions to bargain for compensation. 24 See infra section II.C. Worker-led compensation-setting institutions are viewed as orthogonal to or, at best, third-party beneficiaries of more competitive wage-setting. 25 See infra section II.C.

This Article is the first to unearth antitrust law as federal labor and wage policy and to argue that its public policy goals are not limited to promoting labor market competition. Quite the contrary: It argues that antitrust’s labor and wage policy is to ensure labor has countervailing leverage against employers to enable negotiation of “acceptable terms and conditions of employment” 26 Norris–LaGuardia Act of 1932, Pub. L. No. 72-65, 47 Stat. 70, 70 (codified at 29 U.S.C. § 102 (2018)). free from employer interference, restraint, or coercion. 27 See infra Part III. By exclusively prioritizing market- and competition-based metrics and goals, current labor antitrust enforcement betrays Congress’s regulatory vision. 28 See infra Part III.

Section I.A offers an intellectual history of Progressive Era debates regarding wage theory and labor’s valuation to contextualize discussion in section I.B of the legislative histories of the Clayton and Norris–LaGuardia Acts. 29 See infra section I.A. It describes debates among economists, social scientists, and policymakers as focusing less on whether corporate employers controlled the employment bargain, justifying government intervention—there was general consensus on that as a factual and policy matter before the New Deal. 30 See infra section I.A; see also, e.g., Yuval P. Yonay, The Struggle Over the Soul of Economics: Institutionalist and Neoclassical Economists in America Between the Wars 35–40 (1998) (describing the consensus among the American Economic Association’s founders in favor of labor in questions of labor legislation and union activities); Daniel Ernst, The Yellow-Dog Contract and Liberal Reform, 1917–1932, 30 Lab. Hist. 251, 273 (1989) [hereinafter Ernst, Yellow-Dog Contract] (arguing that, by 1932, most Americans “believed . . . that ‘actual liberty of contract’ could no longer exist between an individual employee and a corporate employer”). Instead, disagreements primarily turned on whether government intervention should strengthen workers’ freedom to contract individually or collectively, through weakening or strengthening worker-led labor market institutions. 31 See infra section I.A. On one side, classical political economists and a new generation of neoclassical economists favored designing interventions to enhance labor compensation based on a conviction that properly functioning markets achieved workers’ MRP as their optimal compensation. 32 See infra section I.A. Progressive social scientists, on the other side, rejected market-based wage-setting as a goal, favoring instead institution-based wage-setting through labor organizations, collective bargaining, and commissions that facilitated just and reasonable wages. 33 See infra section I.A. The institutionalists won in Congress: Despite the many complex disagreements policymakers had about the scope and source of protected union activity, 34 See James Gray Pope, Labor’s Constitution of Freedom, 106 Yale L.J. 941, 962–77 (1997) [hereinafter Pope, Labor’s Constitution] (describing the labor movement’s resistance to laws restricting workers’ freedom of association and right to strike on Thirteenth Amendment grounds); James Gray Pope, The Thirteenth Amendment Versus the Commerce Clause: Labor and the Shaping of American Constitutional Law, 1921–1957, 102 Colum. L. Rev. 1, 12–46 (2002) [hereinafter Pope, Thirteenth Amendment] (describing congressional debates about the scope of the Thirteenth Amendment’s protection of workers’ concerted activity). there was consensus in passing the Clayton and Norris–LaGuardia Acts that collective wage-bargaining was superior public policy to market-based wage-setting through competition. 35 See infra section I.B.

Part II then provides an overview of the New Labor Antitrust’s enforcement infrastructure, inherited from decades-long neoclassical, IO-focused antitrust enforcement. It begins with a history of antitrust regulation and methodologies that led enforcers to the assumption that they must prove employer power rather than presume it (in all but the most egregious wage-fixing cases) and that they must do so exclusively through applying a marginalist analysis to ascertain infracompetitive wages compared to a perfectly competitive market. 36 See infra section II.A. Part II critiques the application of these methods as a matter of law and policy, explaining how they contravene the labor and wage policy of the Clayton and Norris–LaGuardia Acts and are inapt for tackling the scale of harms generated by employers’ exercise of buyer power over workers. 37 See infra sections II.B–.C. Specifically, it argues that the extension of prior methods and proof structures to labor markets undercounts the presence and effects of employer power and limits the nature and scope of remedies deemed appropriate for employer harms. 38 See infra section II.C.

Finally, Part III outlines new methods and enforcement goals that better cohere with the language and policy of the Clayton and Norris–LaGuardia Acts. To achieve the transformative potential of a New Labor Antitrust, it argues for adoption of progressive and pro-worker methodological innovations to match new, noncompetition-based substantive policy goals. 39 See infra Part III. Antitrust enforcement could embrace a “new materialism” in both its methods and objectives that integrates contemporary social scientific methods and a deep theoretical awareness of the structural and institutional sources of employer power—including in the law itself—that enable capital’s coercion and rent extraction from labor. 40 This “new materialist” approach draws from deeper intellectual traditions of integrating law and social science from historical materialism through the Legal Realist, Critical Legal Studies, and, most recently, the Law and Political Economy movements. Rather than modeling labor markets as perfectly competitive, enforcers should presume a model of imperfect competition, placing the burden on employers to prove the contrary in enforcement actions. Further, enforcers should not exclusively measure employer power and its harms through competition-based models but also through violations of public policy stated in the Norris–LaGuardia Act: harms to the full freedom of association, self-organization, and collective representation and negotiation of employment terms and conditions. The New Labor Antitrust should focus on strengthening worker power and workers’ bargaining leverage through fortifying labor market institutions, facilitating collective bargaining, and measuring damages based on compensation and labor conditions that would have prevailed had workers been truly free to coordinate and collectively demand improved employment terms and conditions.

The New Labor Antitrust has yet to achieve its full promise beyond the metrics and narrow goals of an economic policy that was never legislated but that has nevertheless usurped its enforcement apparatus. At its roots, antitrust’s labor and wage policy recognized both market-based and legal sources of employers’ unequal bargaining power with workers. That recognition was backed by social scientific and evidence-based findings that have not only been confirmed but are even more richly demonstrated now. 41 See infra Part III. We have the methods, enforcement strategies, and objectives necessary for tackling and preventing the harms of employer power on worker earnings, working conditions, and income inequality—we have only to operationalize them in our current enforcement infrastructure.