Editor’s note: Todd Greene is the executive director of WorkRise, an action research network based at the Urban Institute. Ioana Marinescu is an associate professor at the Pennsylvania School of Social Policy and Practice. Jake Rosenfeld is a professor of sociology at Washington University in St. Louis. Elisabeth Jacobs is a senior fellow at the Urban Institute and deputy director of WorkRise. The opinions expressed in this comment are his own.
Every day seems to bring new headlines of low wage workers banding together to form a union. A historically tight labor market has ushered in a new era of worker power, although the conditions workers are protesting are far from new. Low wages, minimal benefits, dangerous working conditions, and unpredictable schedules are the result of decades-old trends.
We must protect and strengthen the right to collective bargaining for workers to increase wages and achieve upward mobility. However, our research shows that there is another important way to empower workers: making it easier to find new, better-paying jobs.
Strong employer demand has already allowed workers to move up to better jobs, but this hot job market may not last much longer, especially with the possibility of a recession. Policymakers have the tools to empower workers to find new jobs even when market conditions have not turned in their favor. Here are some measures that the government can consider:
Antitrust laws and enforcement have focused on increasing competition in products or services such as oil, healthcare or telecommunications. But it is also important that our labor markets are relatively competitive. In a competitive labor market, employers must compete with each other for workers through wages, benefits, or working conditions. Research shows that when employment is concentrated among a small number of employers, workers are more likely to earn lower wages.
Policymakers could begin to look more closely at corporate mergers for signs of reduced competition for workers. Regulators should closely monitor mergers of large companies competing for the same workers in a specific labor market. One study found, for example, that hospital mergers resulted in lower wages for nurses and pharmacy workers.
President Biden signed an executive order last year aimed at stimulating competition throughout the economy, including labor markets. Among its directives, the order encourages the US Department of Justice and the Federal Trade Commission to step up enforcement of antitrust laws that prevent employers from sharing wage and benefit data with each other and colluding to suppress wages.
Non-compete agreements prevent employees from leaving their current employer for a competitor or starting their own business. Such agreements can be particularly harmful to low-wage workers, who are more likely to receive a pay rise through a change of employer than through internal promotion. Non-compete agreements reduce income and job mobility and widen the racial and gender wage gap. And they’re not uncommon in low-wage industries, where more than 1 in 10 low- or middle-income workers depend on someone who doesn’t compete.
Several states have banned non-compete agreements for low-wage or hourly workers, and some have banned them entirely. Bipartisan support is emerging at the federal level to limit non-compete agreements to cases where they are necessary to dissolve a corporation or sell a business. Policy makers should look more broadly at prohibiting any arrangement that impedes an individual worker’s ability to change jobs or careers.
Occupational licensing requirements have grown significantly over the decades: in 1950, about 5% of workers required a license, compared to a quarter now. The laws are designed to protect consumers, such as in healthcare or construction, where an unlicensed professional could cause serious harm to public health and safety. They also indicate to consumers that a professional meets a minimum standard of quality and skills.
However, licensing also limits worker options and geographic mobility, as requirements vary greatly from state to state. Additionally, workers often have to pay upfront costs to obtain a license and ongoing renewal costs. Because licenses act as a barrier to entry, they can reduce employment opportunities and lower wages for unlicensed workers with similar training and experience levels.
On the plus side: Because they limit the labor supply, licenses are incredibly valuable to the workers who get them. Licensed employees typically earn higher salaries than their unlicensed counterparts, and in some cases, provide guidance to employees regarding professional development and training. Licensing has also been found to reduce the racial and gender wage gap.
The solution here is not to eliminate occupational licensing altogether, but to reform the laws to make licensing more portable across state lines and to limit licensing to areas that pose legitimate risks to public health and safety.
Employers often know much more about employees than employees know about jobs or employers. When workers apply for employment, they often face a lack of information about pay, benefits, hours, or workplace culture, which has real consequences for pay and their ability to advance in their careers. According to a German study, workers who earned low wages were more likely to believe that their other jobs also paid low wages, even if this was not the case.
Having access to more information about employers and specific jobs can empower workers to apply for more jobs, or at least provide them with the information they need to decide whether to apply.
At the same time, giving employees the right to withhold information such as their salary history can give them leverage when negotiating salaries. Dozens of states and cities have enacted salary history bans, leading to average increases in wages for women and non-white workers.
Of course, unions are an important piece of the puzzle when it comes to employee empowerment, but not the only piece. Policymakers should protect a worker’s options for multiple outside job opportunities, even when the market changes, as it inevitably will.