The Law of Geographic Labor Market Inequality

67 Pages Posted: 31 Jan 2023 Last revised: 16 Mar 2023

See all articles by Hiba Hafiz

Hiba Hafiz

Boston College Law School

Date Written: January 30, 2023

Abstract

Policymakers and scholars have directed renewed attention to the law’s contributions to producing economic inequality, but the legal dimensions of geographic inequality have received much less scrutiny. At its core, geographic inequality is a function of how the national income gets spatially divided between capital and labor. While labor’s share of national income has declined as a general matter, the workers who have suffered most at the expense of capital are workers in rural and distressed communities. Recent empirical research on rural and distressed labor markets reveals an important structural cause: disproportionately high levels of employer market power with weak, if any, countervailing worker power to check it. While federal labor market regulation was intended to prevent this outcome nationally, it has failed these workers and the communities they support, contributing to and reinforcing geographic inequality. The failure ofour legal infrastructure erodes economic self-determination in a place-based manner. But it also generates place-specific and place- salient resentment, perceptions of democratic disempowerment, and significant political polarization between spaces of wealth generation and wealth extraction.

This Article is the first comprehensive effort to tackle the legal sources of geographic labor market inequality. It documents the convergence of unique labor market failures in rural and distressed labor markets and identifies how federal labor market regulation has contributed to and exacerbated those failures to employers’ benefit and at workers’ expense. Specifically, it describes how rural and distressed labor markets have unusually high levels of labor market concentration, market thinness, and natural monopsony, worsening market frictions—matching costs, search and mobility costs, and information asymmetries—that exist in thicker, more competitive urban labor markets. Neither federal employment policy nor labor, employment, and antitrust rules have recognized these geographically-specific realities. Instead, while appearing to operate in a place-neutral manner, the legal infrastructure they jointly create carves out and deregulates the types of labor markets, categories of workers, and employer conduct that are most prevalent in rural and distressed environments. They are thus ill-adapted to remedy market failures unique to rural and distressed spaces to ensure workers’ access to livable wages and countervailing leverage against employers. The Article reconceptualizes labor market regulation through a place-based policy lens, adapting and tailoring existing regulatory tools and proposing broader, more interventionist efforts to restructure and regulate the employment bargain outside of thick urban markets. It draws from historical examples of workforce investment and successful economic governance in markets facing similar characteristics to propose solutions that can revive rural and distressed communities by increasing worker power and generating diversified and high-quality job growth.

Keywords: Labor Law, Antitrust Law, Employment Law, Law and Inequality, Economic Policy, Employment Policy, Geography, Macroeconomic Policy, Public Economics

Suggested Citation

Hafiz, Hiba, The Law of Geographic Labor Market Inequality (January 30, 2023). University of Pennsylvania Law Review, Vol. 172, 2023/2024, Boston College Law School Legal Studies Research Paper No. 596, Available at SSRN: https://ssrn.com/abstract=4342785

Hiba Hafiz (Contact Author)

Boston College Law School ( email )

885 Centre Street
Newton, MA 02459-1163
United States

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