More FTC Overreach in Labor Markets

Cite this Article
Alden Abbott, More FTC Overreach in Labor Markets, Truth on the Market (September 25, 2023),

The Federal Trade Commission (FTC) and U.S. Labor Department (DOL) signed a memorandum of understanding (MOU) this past week “to strengthen the Agencies’ partnership through greater cooperation and coordination in information sharing, investigations and enforcement activity, training, education, research, and outreach.” The accompanying Sept. 21 announcement is another example of FTC overreach, as it highlights matters that simply are not part of the agency’s mission.

FTC Chair Lina Khan stated that:

Deepening our partnership with DOL will ensure that we can work collectively to tackle illegal conduct that suppresses wages, reduces access to good benefits and working conditions, and stifles economic liberty for workers across the economy.

Of course, questions about labor wages (except as part of a carefully targeted monopsony investigation), labor benefits, and working conditions are outside the FTC’s statutory purview. (It is also ironic, if unsurprising, that Khan would refer to potentially greater government intrusion into private-sector employment agreements as aimed at defending “economic liberty.”)

The press release accompanying the MOU provides additional information on the matters the FTC plans to tackle in cooperation with the DOL:

The MOU identifies areas of mutual interest for the two agencies: collusive behavior; the use of business models designed to evade legal accountability, such as the misclassification of employees; illegal claims and disclosures about earnings and costs associated with work; the imposition of one-sided and restrictive contract provisions, such as non-compete and training repayment agreement provisions; the extent and impact of labor market concentration; and the impact of algorithmic decision-making on workers.

The classification of employees; the nature of “one-sided” labor contracts; labor-market concentration in the abstract (unrelated to a specific theory of consumer-welfare harm in a particular antitrust investigation); and the impact of algorithmic decisions on worker supervision are all far-removed from the FTC’s statutory mandate to focus on combating impediments to competition and consumer protection.

A misallocation of scarce FTC resources to legally unauthorized labor-market oversight would reduce the funding available to attack fraudulent and clearly anticompetitive acts that lie at the heart of the FTC’s jurisdiction. What’s more, by spending resources on threatening to challenge employers’ “unfair” labor contracts and practices, the FTC would chill some efficiency-seeking business behavior, even if the FTC’s chances of securing agency “wins” through complaints or rules were infinitesimally small. (See here and here, for example, for an assessment of the legal and economic-policy problems associated with the FTC’s notice of proposed rulemaking on noncompete clauses.) Finally, the FTC’s use of appropriated funds on unauthorized labor-market “frolics and detours” never contemplated by Congress would be in tension with the rule of law.

Let us hope that the two new Republican commissioners, when confirmed by the Senate, will do their best to discourage the FTC from acting well beyond the scope of its statutory authority. Preventing (or, at the very least, discouraging) labor-market follies would be a useful item to include on the new commissioners’ “good government” agenda.