The notion that workers are free to quit their jobs and thus not subject to being exploited by their employer is wrong and undercuts workplace protections in employment law.
Economic Policy Institute hosted a discussion on how excessive unemployment, employer power—“monopsony” (monopolies in the labor market)—and financial and work–life considerations indicate that quitting is not easy, especially for non-college-educated workers, Black and Hispanic workers, and women. Therefore, current employment and labor law, based on the inaccurate “freedom of contract” framework, which regards employment transactions as sacrosanct, is misguided. In the session, noted scholars from EPI, Columbia University, the University of Massachusetts, and RAND review the facts about workers’ actual conditions that inhibit quitting, review evidence that quitting does not prevent exploitation, and highlight the prevalent excessive unemployment that tilts the power imbalance towards employers. Key points were:
- The economy rarely reaches full employment (and Black workers never experience full employment). This excessive unemployment limits workers’ ability to quit and change jobs while making it easier for employers to find replacements. The result is diminished wage growth for low- and middle-wage workers reflecting greater employer power in the labor market.
- The consensus of the emerging literature on monopsony is that employer power is pervasive, especially over non-college-educated workers, women, and minorities.
- Financial and work-life considerations limit workers’ ability to quit jobs: transportation/commuting time barriers, the need for child care, work schedules that are hard to plan around, discrimination, immigration status, the need to maintain health care coverage, and a lack of savings to weather potential unemployment.
The speakers included the authors of three seminal reports on the topic, two of which were recently published and a third that is forthcoming. These papers will also be published in the Journal of Law and Political Economy in October 2022. The reports include:
- The legal ‘freedom of contract’ framework is flawed because it ignores the persistent absence of full employment, Lawrence Mishel, Economic Policy Institute.
- Worker mobility in practice: Is quitting a right, or a luxury? Kathryn Anne Edwards, Rand Corporation.
- FORTHCOMING: If you don’t like your job, can you always quit?: Pervasive monopsony power and freedom in the labor market. Suresh Naidu, Columbia University and Michael Carr, University of Massachusetts-Boston.
- Kathryn Edwards, Economist; Professor, Pardee RAND Graduate School, RAND Corporation
- Lawrence Mishel, Distinguished Fellow, Economic Policy Institute
- Suresh Naidu, Professor in Economics and International and Public Affairs, Columbia University
- Michael Carr, Associate Professor of Economics, University of Massachusetts-Boston
- Moderator: Celine McNicholas, Director of Policy and Government Affairs | General Counsel Economic Policy Institute
When: Wednesday, June 22, 2022, 4:00 – 5:15 p.m. ET, 1:00 – 2:15 p.m. PT