There’s a New Chicago School in town. Roll over, Aaron Director, and tell Robert Bork the news.

The most ambitious antitrust essay in recent years, and potentially the most important, comes from Chicago’s Eric Posner, along with Microsoft’s E. Glen Weyl (long associated with Chicago as well) and Columbia’s Suresh Naidu. Their central argument is that in the United States, many labor markets are not competitive. Employers have a ton of market power. They use it to suppress wages, often harming low-income workers in particular.

One result is to reduce economic growth. Because wages are artificially low, qualified workers refuse to take jobs. Instead they exit the workforce and rely on government benefits. (This problem should interest the Trump administration in light of its promising recent effort to move workers from welfare to work.) Posner and his co-authors estimate that the economic power of employers is reducing overall output and employment by a whopping 13 percent — and labor’s share of national output by 22 percent.

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