President Joe Biden’s new plan to promote competition across industries and in the labor market can deliver long-run gains for the U.S. economy by boosting productivity and wages, economists say.
The president announced an executive order on Friday that directs federal agencies to ban or limit non-compete agreements — which make it harder for workers to switch jobs in search of higher pay — along with a raft of proposals aimed at barring unfair competition between large and small businesses.
While there’s a focus on the technology, agriculture, transportation and drug industries, some of the measures will apply across the economy. The aim is to counter a trend that’s seen market share in many industries become concentrated in a small number of businesses, widening gaps in income and wealth, the administration says.
“If it’s successful, that’s going to create more competition, improve mobility in the labor market, and in the longer run we could see maybe some upside risk to our forecasts for wage growth and productivity,” said Ryan Sweet, head of monetary policy research at Moody’s Analytics.
More Concentrated
In recent decades, economists say many U.S. industries have seen growing concentration and waning competition
Source: Council of Economic Advisers, 2016
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Waning competition and the dominance of large firms has been a hot topic for economists in recent years. A series of studies have found that in most U.S. industries there is more concentration now than there was a few decades ago.
Many researchers have argued that this is one reason why wage increases have been slow: with markets for goods or services divided up among a smaller number of competitors, workers in those industries end up with less bargaining power.
‘Flawed Belief’
Reducing the trend toward corporate consolidation will promote competition and provide benefits for workers, consumers, farmers and small businesses, the White House said in a statement outlining the executive order. The measure also aims to step up enforcement of antitrust laws.
The U.S. Chamber of Commerce, the biggest business group, called the idea that the economy has become too concentrated a “flawed belief,” and warned the administration against neglecting the importance of large firms for economic growth.
“In many industries, size and scale are important not only to compete, but also to justify massive levels of investment,” the group said in a statement Friday. “Larger businesses are also strong partners that rely on and facilitate the growth of smaller businesses.”
The move to ban non-compete agreements — contractual clauses in which workers agree that if they quit or are fired, they can’t leave to work for a competitor, at least for a time — could remove a barrier to better pay in many industries.
The clauses are meant to prevent trade secrets from being exchanged. Instead, they often end up locking workers into bad jobs and reducing their bargaining power, said Karla Walter, director of employment policy at the Center for American Progress.
Bloomberg News Department of Justice Reporter David McLaughlin shares details of President Biden’s executive order to boost competition across U.S. Industries with Carol Massar and Tim Stenovec.
What’s a ‘Competitor’?
In 2014, for example, it was revealed that sandwich chain Jimmy John’s was requiring workers to sign non-compete agreements that banned them from working at one of the sandwich chain’s competitors for a period of two years following employment there. The company’s definition of a “competitor” was wide-ranging, encompassing any business that was near a Jimmy John’s location or derived 10% of its revenue from sandwiches.
Walter said that by barring non-compete agreements — which an estimated one-third of Americans have signed — worker mobility would increase and entrepreneurs would find it easier to attract talent.
It’s “an important change that will give workers more leverage for higher wages,” said David Jaeger, a labor economist at the University of St. Andrews. “Stockholders in large corporations may feel a pinch in the short run, but the increased competition will likely spur overall growth over the longer term.”
The executive order also calls on regulators to take steps to lower drug prices, toughen merger enforcement in technology and banking, and ensure transparency in airline and shipping fees.
The breadth of the order makes its economic impact hard to gauge, said Douglas Holtz-Eakin, president of the right-leaning American Action Forum. He said the enforcement of non-compete agreements is something that often happens at the state level.
Biden’s order directs more than a dozen federal agencies to begin 72 initiatives to strengthen competition, including with new regulations.
“Will every one of the 72 fully pan out? Probably not. Will the majority of them? My guess is yes, and that’ll add up to a big difference,” Jason Furman, a White House economist during the Obama administration who’s now at Harvard University, said on Bloomberg TV Friday.
— With assistance by Ben Holland, Augusta Victoria Saraiva, Peyton Forte, and Reade Pickert
(Adds former White House economist’s comment in final paragraph.)
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
