Marshall Steinbaum is an Assistant Professor of Economics at the University of Utah and a Senior Fellow in Higher Education Finance at Jain Family Institute. He is an empirical labor economist by training, and his research investigates the existence and implications of employer power in labor markets, with applications to antitrust, higher education, and student debt. He has written for a number of popular outlets relating to his expertise in inequality, antitrust, labor markets, the history of economic ideas and intellectual history more generally, student debt and higher education policy, as well as book reviews related to those subjects. Contact CV
In June 2021 a federal judge dismissed the FTC’s first monopolization complaint against Facebook on the grounds that it did not plead sufficient facts to establish that Facebook possesses monopoly power in online social networking. The ruling highlights two contentious aspects of antitrust jurisprudence: the legal necessity of establishing a defendant’s monopoly power as part of Sherman Act liability for unilateral conduct, and of establishing market power as part of liability for some forms of multi-lateral conduct, as well as the few mechanisms available to plaintiffs in both public and private enforcement to accomplish that, especially following Ohio v. American Express. This article makes two, related claims: that direct evidence of market power is plentiful and should be understood as such by courts, and that exactly the direct evidence of market power that courts should consider also establishes that relevant markets on each side of tech platforms are small when properly defined, whatever defendants may say.
This paper investigates the effect of local labor market shocks during the Great Recession on subsequent student debt-related outcomes for a panel of 1 million student loan borrowers between the ages 17 and 34 in 2009, following that cohort for the subsequent 10 years. We find that the Great Recession significantly increased student indebtedness, delinquency and default on student debt, and other forms of non-repayment of student loans. The Great Recession’s effect on student indebtedness amplifies throughout the length of the panel, through 2019. A one-percentage-point-larger increase in the local unemployment rate between 2007 and 2009 corresponds to a $812.20-larger change in outstanding student debt in 2019, relative to a 2009 baseline loan balance. We interpret these findings as evidence that student indebtedness and associated non-repayment is an effect of prolonged labor market slackness and credentialization.
This article combines two relatively new subjects of antitrust scholarly interest: labor market power, and corporate governance. In so doing, it speaks to a number of recent debates that have grown up both inside the scholarly antitrust literature and adjacent to it. First, the paper interprets the shift in the balance of power within corporations favoring shareholders at the expense of workers, both in economic-theoretical and historical terms. Second, it lays out the role of shareholders and the common ownership channel as a vector for anti-competitive conduct arising between firms, not just within firms, thanks to profit-maximization at the portfolio level rather than the firm level. Third, it evaluates the claim that employer market power has increased, relative to other current explanations for labor market trends. Fourth, it ties rising employer power in labor markets to the increasing significance of common ownership. And finally, it contends that antitrust is a suitable policy remedy to the dual problems of anti-competitive common ownership and increased employer power, provided it abandons the consumer welfare standard and instead elevates worker welfare to an equivalent juridical status.
This brief analyzes the increased prevalence of the non-repayment of student debt, primarily due to the increased takeup of the various Income-Driven Repayment (IDR) programs since the middle of the 2000s. It shows deteriorating repayment over time and across borrower cohorts, as well as suggestive evidence of a significant and growing repayment gap between minority and white borrowers. The implication of rising non-repayment is that the cancellation of a large (and increasing) share of outstanding student debt is inevitable.
Using data on the near-universe of US online job vacancies collected by Burning Glass Technologies in 2016, we calculate labor market concentration using the Herfindahl-Hirschman index (HHI) for each commuting zone by 6-digit SOC occupation. The average market has an HHI of 4,378, or the equivalent of 2.3 recruiting employers. 60% of labor markets are highly concentrated (above 2,500 HHI). Highly concentrated markets account for 16% of employment. Labor market concentration is negatively correlated with wages, and there is no relationship between measured concentration and an occupation’s skill level. These indicators suggest that employer concentration is a meaningful measure of emoployer power in labor markets, that there is a high degree of employer power in labor markets, but also that it varies widely across occupations and geography.
A product market is concentrated when a few firms dominate the market. Similarly, a labor market is concentrated when a few firms dominate hiring in the market. Using data from the leading employment website CareerBuilder.com, we calculate labor market concentration for over 8,000 geographic-occupational labor markets in the US. Based on the DOJ-FTC horizontal merger guidelines, the average market is highly concentrated. Going from the 25th percentile to the 75th percentile in concentration is associated with a 5% (OLS) to 17% (IV) decline in posted wages, suggesting that concentration increases labor market power.
America’s failing antitrust system is, in large part, to blame for today’s market power problem. Lax antitrust law and enforcement have allowed troubling trends like corporate consolidation to remain unchallenged, further embedding our skewed economy. In highly concentrated markets, individuals have limited choice and little power to pick their price, quality, or provider for the goods and services they need; workers are met with powerful employers and have little agency to shop around or bargain for competitive wages and benefits; and suppliers can’t reach the market without paying powerful intermediaries or succumbing to acquisition.
Our Essay offers an alternative to the courts’ consumer welfare standard. Ambiguous and inadequate, the consumer welfare standard identifies threats to competition only by the potential consequences for consumers and ignores adverse effects on workers, suppliers, product quality, and innovation.
Our effective competition standard would restore the primary aim of antitrust laws — namely, to promote competition wherever in the economy it has been compromised, including throughout supply chains and in the labor market. These changes are essential to protect competitive markets in the United States, as well as individuals and the economy at large, by deconcentrating private power.
Public comment opposing the DOJ and FTC’s proposed vertical merger guidelines.
The causes of diminishing worker bargaining power in the US labor market include the evolution of antitrust policy and its enforcement toward de facto legalization for vertical restraints imposed by dominant firms on subordinates, as well as robust targeting of horizontal coordination arrangements for antitrust enforcement, such as collective bargaining by workers who fall just outside antitrust’s labor exemption and the trimming of the state action antitrust exemption to disfavor state-sanctioned price-setting and entry-regulation regimes. The effect is to permit dominant firms to dictate to and control the labor of less powerful counterparties, while preventing those counterparties from organizing against dominant firms themselves. This trend can be seen most powerfully in the growth of the gig economy labor platforms, particularly in ridesharing. Claims that eroding worker bargaining power have little to do with antitrust or with employer monopsony power are thus categorically false.
This paper analyzes the effect of cancelling student debt on racial wealth inequality using the 2016 Survey of Consumer Finances. It concludes that cancelling student debt reduces racial wealth gaps as measured by both the ratio of white wealth to black wealth at a given wealth quantile, across the wealth distribution, as well as the absolute difference in wealth between quantiles of each distribution. It then discusses why cancelling student debt disproportionately increases the net wealth of black households and thereby reduces racial wealth gaps.
A growing literature on employer power in labor markets provides evidence for widespread monopsony. Much of this literature uses the elasticity of labor supply to the individual firm as a key proxy for monopsony; an elasticity that is well below infinity is a sign that employers have wage-setting power and can pay workers less than their marginal productivity. More recently, a ﬂurry of studies has shown a negative relationship between wages and labor market concentration of employers. The labor supply elasticity and labor market concentration are both measures of labor market power, but how are they empirically related?
In this paper, we estimate a proxy for the elasticity of labor supply and investigate the relationship between this proxy and labor market concentration. We use data from the popular job posting website CareerBuilder.com to estimate firm-level wage-setting power based on the elasticity of job applications in response to variation in the posted wage. In order to deal with the endogeneity of wages, we instrument for local variation in posted wages with posted wages from the same firm in other occupations and other commuting zones. The elasticity we estimate is 0.42, a fairly low value.
This working paper assesses and finds wanting the Antitrust Division’s remedy in the Sprint-TMobile wireless telecommunications merger. We conclude that it will not suffice to preserve competition in the market for wireless telecoms services, which is the very harm which the DOJ itself alleges the merger will cause.
Starting with the Chicago School’s influence in the late 1970s and 1980s, antitrust enforcement has been weakened under the assumption that market power is justified by economic efficiency. While consumers are the main focus of antitrust enforcement, the weakening of antitrust enforcement has likely also adversely impacted workers, thus contributing to increasing inequality.
In this brief, we outline elements of an antitrust reform agenda aimed at reversing the weakening of antitrust enforcement, insofar as it pertains to and has strengthened the power employers have to set wages and working conditions for their workers, without countervailing power on the part of workers, who have limited ability to leave for another job in order to increase their pay.
Federal and state antitrust enforcers are currently reviewing the proposed merger of Sprint and T-Mobile, which would cut the number of national players in the U.S. wireless industry from four to three. One aspect of the merger that has received little attention is its impact on competition in the local labor markets for retail wireless workers.
In this paper, we draw upon a nascent but fast-growing empirical economics literature on the earnings eﬀect of labor market concentration to estimate how the Sprint–TMobile merger would aﬀect earnings of workers at the U.S. stores that sell the wireless services of the merging firms and their competitors.
As tuition has risen over the last several decades in the U.S., student loan debt has ballooned. Despite growing debt loads, federal policy encourages the use of loans for financing higher education, based on the assumption that student debt supports increased post-secondary attainment–and, in turn, improved outcomes for individuals and our economy as a whole. We investigate the individual and societal effects of student loan debt by focusing on trends in student debt and labor market outcomes. Our findings include:
Ultimately, we challenge the dominant literature and conventional wisdom that drive the pursuit of higher education, concluding that student debt exacerbates income inequality and threatens the broader economy’s stability. It is crucial to understand these dynamics of student debt, labor markets, and race, as well as how they interact and intersect, in order to inform better public policy that lifts students up, rather than maintain a system that holds them back.
The American economy no longer functions to the benefit of American workers. Despite record profits and increased productivity, wages have been stagnant. In fact, despite being 75 percent more productive in 2016 than in 1973, the average worker earned just 12 percent more. An emerging body of research chronicles the extent of labor market monopsony—where employers have the discretion to set wages and working conditions on their own terms, without fearing that their workers could check their power by finding another job.
This issue briefly explains what labor market monopsony is, describes what it means for workers and the economy, and proposes ways to address it.
More than 44 million Americans are caught in a student debt trap. Collectively, they owe nearly $1.4 trillion on outstanding student loan debt. Research shows that this level of debt hurts the US economy in a variety of ways, holding back everything from small business formation to new home buying, and even marriage and reproduction. It is a problem that policymakers have attempted to mitigate with programs that offer refinanc-ing or partial debt cancellation. But what if something far more ambitious were tried? What if the population were freed from making any future payments on the current stock of outstand-ing student loan debt? Could it be done, and if so, how? What would it mean for the US economy? This report seeks to answer those very questions. The analysis proceeds in three sections: the first explores the current US context of increasing college costs and reliance on debt to finance higher education; the second section works through the balance sheet mechanics required to liberate Americans from student loan debt; and the final section simulates the economic effects of this debt cancellation using two models, Ray Fair’s US Macroeconomic Model (“the Fair model”) and Moody’s US Macroeconomic Model.
Thomas Leonard’s 2016 book Illiberal Reformers weaponizes the retrograde views of progressive labor economists into a revisionist attack on their scholarship and contemporary influence. If it is aimed at criticizing those scholars’ “scientism,” and that of economists more broadly, its effort could be far better directed at the neoclassical economists who gained decisive influence over the profession in the middle of the 20th century. In fact, by aiming at progressive economists of an earlier era, its likely motivation is as a deflection and “whataboutist” defense of the neoclassical influence–as is evidenced by the book’s popularity with expressly ideologically right-wing economics curricula.
Thomas Leonard’s 2016 book Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era argues that exclusionary views on eugenics, race, immigration, and gender taint the intellectual legacy of progressive economics and economists. This review essay reconsiders that legacy and places it in the context within which it developed. While the early generations of scholars who founded the economics profession in the United States and trained in its departments did indeed hold and express retrograde views on those subjects, those views were common to a broad swath of the intellectual elite of that era, including the progressives’ staunchest opponents inside and outside academia. Moreover, Leonard anachronistically intermingles a contemporary critique of early-twentieth-century progressive economics and the progressive movement writ large, serving to decontextualize those disputes—a flaw that is amplified by the book’s unsystematic approach to reconstructing the views and writing it attacks. Notwithstanding the history Leonard presents, economists working now nonetheless owe their progressive forebears for contributions that have become newly relevant: the “credibility revolution,” the influence of economic research on policy and program design, the prestige of economists working in and providing advice to government agencies and policy makers, and the academic freedom economists en joy in modern research-oriented universities are all a part of that legacy.
Attention in the academic and policy-making worlds has recently focused on the decline in “business dynamism”—specifically, the rate at which new businesses are formed and the rate at which they grow—especially since 2000. In this paper we reinterpret the evidence of declining entrepreneurship and rising concentration of employment in old firms and large firms—in conjunction with declining labor market mobility—as evidence of a trend decline in labor demand. This is opposed to the hypothesis that the cause of these empirical trends is increasing supply-side restrictions placed on new firm or worker entrants, a hypothesis the data rejects. The overall erosion in the job ladder and the economy’s decreasing competitiveness, rising profits, and inter-firm inequality are all evidence of a power shift in favor of the owners and managers of incumbent firms. That suggests future research should investigate potential policy-related causes of those trends in demand and market structure—such as lower marginal tax rates on high earners and a permissive environment for inter-firm mergers—that de-emphasize full employment and market competition.
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