The president ran on a platform of improved workers rights and savings across the board for middle income Americans, and the administration is starting to deliver on those promises. Exhibit A: the sweeping executive order signed on Friday aimed at increasing competition in the economy, raising wages and lowering prices for consumers.
Per the White House: “For decades, corporate consolidation has been accelerating. In over 75% of U.S. industries, a smaller number of large companies now control more of the business than they did twenty years ago. This is true across healthcare, financial services, agriculture and more.
“That lack of competition drives up prices for consumers. As fewer large players have controlled more of the market, mark-ups (charges over cost) have tripled. Families are paying higher prices for necessities—things like prescription drugs, hearing aids, and internet service.”
By the numbers: According to the White House’s analysis, industry consolidation has decreased wages by as much as 17% in recent years and 10s of millions of Americans are now required to sign non-compete agreements just to get a job. And not white collar jobs either, but often positions in construction, retail and foodservice.
“In total, higher prices and lower wages caused by lack of competition are now estimated to cost the median American household $5,000 per year.”
A quick look at the details:
The order includes 72 initiatives by more than a dozen federal agencies to address some of the most pressing competitive problems across the economy, including:
- Banning or limiting non-compete agreements to make it easier to change jobs and raise wages.
- Regulating internet fees by banning excessive early termination fees and requiring clear cost disclosures by ISPs.
- Requiring airlines to disclose add-on fees upfront.
- Supporting the so-called “right to repair” so that consumers can fix the products they use by limiting manufacturers’ ability to bar self-repair or third-party repairs.
- Increasing support for generic drug development and coverage in order help reduce overall prescription drug prices.
My take:
This is a wide ranging government initiative, and like many wide ranging government initiatives we’ll have to wait and see how much of an impact it actually has in practice. But the fact that anti-competitive behavior across the economy is leading to higher prices and greater difficulties for everyday Americans isn’t in question and this is at least a first step toward addressing some of these issues. It probably won’t turn into dramatic savings immediately but could lead to some larger scale changes over the next few years.
