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News from EPI Sprint–T-Mobile merger would escalate market power in the industry, worsen wireless retail workers’ wages: Antitrust enforcers and courts must take workers’ wages and working conditions, in addition to consumer prices, into account when examining mergers

In a new paper, Roosevelt Institute Research Associate Adil Abdela and Research Director and Fellow Marshall Steinbaum examine the impact of the proposed merger between Sprint and T-Mobile—which would cut the number of national players in the U.S. wireless industry from four to three—on the labor market for wireless retail workers.

Abdela and Steinbaum use four recent empirical estimates of the effect of labor market concentration on earnings to predict how increased concentration in the labor market for retail wireless industry workers as a consequence of this merger will affect their earnings. They find that, if the Sprint–T-Mobile merger is approved, average weekly earnings for retail wireless workers would decline by between 1 and 3 percent in most affected labor markets, with earnings falling by as much as 7 percent in the most-affected labor markets. For the 50 most-affected labor markets, those percent changes correspond to a decline in annual earnings of between $520 and $3276 on average.

“Historically, antitrust enforcers have only considered the impact of potential mergers on consumers and product markets,” said Steinbaum. “But increased market power also jeopardizes workers’ wages and labor markets. Regulators must take this into account as a matter of routine when reviewing mergers.”

In this paper, Abdela and Steinbaum provide a framework for how regulators can incorporate labor markets into merger review, which includes developing principles for defining labor markets and assessing competition therein, as well as collecting data from merging parties and their competitors on employee characteristics and restrictions placed on workers, such as noncompetes and mandatory arbitration clauses and class-action waivers.

“Given their stated interest in enforcing the antitrust laws in labor markets as well as product markets, it’s time for the antitrust agencies to put their money where their mouth is and get serious about ensuring that they’re protecting all stakeholders in our economy, not just consumers,” said Steinbaum.

Abdela and Steinbaum point out that antitrust enforcement, and merger review especially, are insufficient policy responses to the problem of monopsony. They point to unionization, which provides workers with countervailing power to corporations, as another important way to mitigate the ill effects of employer concentration on wages, and argue that antitrust must be considered alongside policies such as increasing the minimum wage, ensuring macroeconomic full employment, increasing progressive taxation, improving labor standards and their enforcement, and mitigating shareholder power over companies at the expense of other stakeholders.