What specific employer practices are cited for suppressing wages?

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Specific employer practices have been cited for suppressing wages by approximately 20 percent in the US labour market.

The US Treasury Department has identified several employer practices contributing to a significant decline in American salaries, estimating a 20% reduction compared to what workers might otherwise earn. These practices are seen as undermining competition within the labour market, thereby impacting families' standards of living. Treasury Secretary Janet Yellen has stated that the consequences of these anti-competitive measures are severe enough to noticeably alter a family's financial well-being.
Classification of Employees as Contractors

One of the key business practices highlighted is the classification of employees as independent contractors. This approach can limit workers' access to benefits and protections typically afforded to employees, potentially leading to lower overall compensation and less favourable working conditions.
Use of Non-Compete Agreements

The implementation of non-compete agreements is another significant factor cited. These agreements restrict employees from working in certain industries or for competing companies after leaving their current position. Such clauses limit workers' future employment options and bargaining power, thereby suppressing their ability to negotiate for higher wages.
Overly-Burdensome Licensing Requirements

The report also points to overly-burdensome licensing requirements as a contributing factor to suppressed wages. These requirements can create barriers to entry for certain professions, reducing the pool of qualified workers and potentially allowing existing employers to offer lower compensation due to limited competition for talent.
Decline in Unionisation

Furthermore, the declining number of unionised workers is identified as a factor affecting wage levels. The share of US private sector workers belonging to a union fell to 6.1% in 2021. Historically, unions have played a role in advocating for better wages and working conditions, and their reduced presence can weaken collective bargaining power for a significant portion of the workforce.

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What specific employer practices are cited for suppressing wages?

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