New Report from the Roosevelt Institute: Rampant Market Power of Corporations Responsible for Rigging the Economy Against American Workers and Consumers, Harming Communities
March 29, 2018
By Alexander Tucciarone
The report builds on new economic research and adds to a growing progressive consensus, which highlights the role of market power in structuring today’s high-profit, low-wage, low-investment economy that serves those at the top at the expense of all others.
New York, NY — Earlier this week, the Roosevelt Institute released its latest report, Powerless: How Lax Antitrust and Concentrated Market Power Rig the Economy Against American Workers, Consumers, and Communities. The report defines “market power” as an economic actor’s ability to skew market outcomes in their own interest rather than creating any shared value. The authors outline the rise of market power, its proliferation throughout the economy, and its impact on prices, wages, innovation, and other economic outcomes.
The report builds on new economic research and adds to a growing progressive consensus, which highlights the role of market power in structuring today’s high-profit, low-wage, low-investment economy that serves those at the top at the expense of all others. After exploring the ideological forces and historic changes that led to its rise, the report discusses the ways market power impacts economic daily life, including lower wages for workers, less investment and innovation, and the unraveling of communities. It concludes by examining potential policy remedies that would confront market power, in turn creating a more dynamic, innovative, and broadly prosperous economy.
“With this report, we want to make two facts abundantly clear,” said Marshall Steinbaum, Research Director at the Roosevelt Institute and the report’s co-author. “First off, the ‘invisible hand’ will not save us. Second, the economy’s market power problem, and the misguided Chicago School antitrust mindset that got us here, make it clear that legislation is necessary. The people’s representatives need to step in since the judges have gotten the policy so wrong. When they do, Congress should go after the root of the problem: market power. Policymakers need to start seeing market power as the defining throughline behind all of our economic challenges and respond as such.”
“From checked bag fees at the airport, to meager paychecks, to the disappearance of local businesses, Americans have decades’ worth of evidence that the economy is not working in their favor,” explained Eric Harris Bernstein, Program Manager at the Roosevelt Institute and the report’s co-author. “Now economic research and analyses are catching up to that reality, exposing foundational flaws in how our markets function. This report synthesizes the emerging evidence and illustrates how broad economic trends, such as rising profits and stagnant wages, increased prices, and other hardships for workers, consumers, and citizens, are caused by market power.”
Specific companies mentioned in the report include:
- Walmart—the world’s largest company by revenue—whose business model deliberately uses its pricing power to undercut locally owned businesses and pay workers at its brick and mortar locations and throughout its supply chain poverty wages
- Verizon, the telecommunications giant, which relies almost entirely on a contractor employment model, thereby depriving its workers of benefits and financial stability
- Purdue Pharma, the drug manufacturer, which has used its vast reach to mass-market painkilling medications, thereby facilitating the historic and ongoing opioid crisis
- United Airlines, which is so dominant in so many airline markets that it can abuse consumers with abusive practices like exorbitant fees for checked luggage
In conjunction with the report, the Roosevelt Institute also released a set of issue briefs that examine the nature and consequences of market power through specific lenses:
- A general overview of the paper and the market power challenges we face today
- An issue brief on how market power exacerbates racial inequalities in the economy, focusing on the ways powerful companies prey on marginalized communities and also smother entrepreneurship and small business creation, two mechanisms that have historically provided communities of color entrance to the middle class
- An issue brief on how market power harms workers and contributes to the trend of stagnant wages, specifically by reducing the leverage of working people to demand higher pay and making it easier for employers to avoid labor protections and exploit workers
- An issue brief on the ways market power hurts small businesses and entrepreneurs, particularly by making it easier for powerful corporations to create barriers to entry into the marketplace entirely and squeeze smaller companies so they are forced close down
For years, the Roosevelt Institute has been a leading voice on the ways that weak antitrust enforcement and growing market power imperil the economy. In recent months, a report by Powerless co-author Marshall Steinbaum has been featured on the subject of market power in outlets, including The New York Times, The Washington Post, and The Nation. In June 2016, the Institute released Untamed: How to Check Corporate, Financial, and Monopoly Power, which also outlined a policy agenda on how to confront market power and use regulations to bring about a more productive, competitive economy.
About the Roosevelt Institute
Until the rules work for every American, they’re not working. The Roosevelt Institute asks: what does a better society look like? Armed with a bold vision for the future, we push the economic and social debate forward. We believe that those at the top hold too much power and wealth, and that our economy will be stronger when that changes. Ultimately, we want our work to move the country toward a new economic and political system: one built by many for the good of all.
It takes all of us to rewrite the rules. From emerging leaders to Nobel laureate economists, we’ve built a network of thousands. At Roosevelt, we make influencers more thoughtful and thinkers more influential. We also celebrate –and are inspired by– those whose work embodies the values of both Franklin and Eleanor Roosevelt and carries their vision forward today.