Tech Benefits U.S. Jobs And The Consumer Welfare Standard Protects Americans
Here’s what you need to know ahead of the House Judiciary Subcommittee hearing, Reviving Competition, Part 4: 21st Century Antitrust Reforms and the American Worker:
— The tech sector is a major provider of high-wage jobs and economic growth in the US economy
— Existing antitrust policy protects against abuse of buyers’ power
The tech sector is a major provider of high-wage jobs and economic growth in the US economy.
The tech and e-commerce industries are the top job creators in the U.S. economy, with 44% higher average pay than the rest of the private sector, explains Progressive Policy Institute’s Michael Mandel. “By our calculations, the tech-ecommerce ecosystem—including both large and small employers—has arisen to become the top job creator in the U.S. economy. Based on data from the Bureau of Labor Statistics, the industries in the tech-ecommerce ecosystem (described below) generated more than 1.2 million net new jobs from 2016 to 2020, including the pandemic.”
— Mandel continued: “Moreover, average pay in the tech-ecommerce ecosystem, even omitting the headquarter states of California and Washington, is 44% higher than average pay in the rest of the private sector, and 21% higher than average pay in manufacturing nationally. This calculation is based on looking across all roles and positions in the tech-ecommerce ecosystem, from fulfillment center and delivery workers to software developers and AI experts.”
Larger companies provide higher wages, along with consumer benefits, says Robert D. Atkinson, President of Information Technology and Innovation Foundation. “Bigger companies provide higher-wage jobs, better workplace benefits, lower prices, stronger environmental protection, and greater workplace diversity, safety, and stability, while engaging in less tax evasion.”
Despite the effects of the pandemic across the economy, wages in the tech sector have grown and are expected to continue growing, explains this Business Chief article on the Dice 2021 Tech Salary Report. “While the pandemic may have halted pay increases and slowed salary raises for many sectors, the tech and IT sector in the US witnessed growth with tech job salaries rising by 3.6% in 2020, with expected to continue to rise throughout 2021, according to the Dice 2021 Tech Salary Report.”
Jobs in e-commerce have been growing rapidly in recent years, finds Michael Mandel.
Existing antitrust policy protects against abuse of buyers’ power.
The consumer welfare standard already incorporates a broad analysis that allows regulators to assess the pros and cons of monopsony power, says Joe Kennedy in a paper for ITIF. “[T]he consumer welfare standard, properly defined, protects all counterparties from an excess of market power. It incorporates nonprice harms to consumers, such as lower quality, reduced variety, or slower innovation. It gives regulators the power to look at the effect of monopsony power on other sellers, including on workers, and allows antitrust agencies to consider the effect of an action on innovation. They also argue that antitrust policy should remain focused on market activity and be backed by a clear economic analysis of likely effects.”
The consumer welfare standard, while important for protecting consumers, is actually broader and protects buyers and sellers, explains The American Antitrust Institute. “‘[C]onsumer welfare’ does not mean that antitrust protects only consumers. It protects all buyers, including companies, from seller market power. Antitrust also protects sellers from being exploited by powerful buyers and it promotes open markets and entrepreneurial freedom. Moreover, properly conceived, consumer welfare takes into account not only effects on price and output, but also product or service quality and innovation.”
The consumer welfare standard is “well equipped,” illustrates Joe Kennedy. “[C]onventional antitrust guided by the consumer welfare standard is well equipped. This is because these companies make most of their money by charging other companies to place ads in front of their users (an activity in which they face lots of competition). And antitrust handles this aspect well because it does—or at least should—define the relevant market as the ad market, not the search or social network market. Moreover, to the extent any of these Internet companies use their market power in anticompetitive ways, such as by manipulating organic web searches to disadvantage a rival, the consumer welfare standard is more than adequate to deal with it.”