By Andrea Shalal

WASHINGTON (Reuters] – Boosting antidiscrimination, antitrust and wage increases could help to boost U.S. growth. This is the conclusion of a recent report by Joe Biden’s economic advisors.

Council of Economic Advisers’ annual Economic Report argues in favor of restoring public sector partnership for long-term growth. They also advocate policies that reduce the excessive market power of businesses and employers, which can limit economic equality.

“The government has a role to play in reducing inequality,” Cecilia Rouse, who chairs the council, told Reuters, stressing that ending lingering disparities in the U.S. labor market and racial wealth gaps would “absolutely” boost U.S. growth and competitiveness after years of weak progress.

“The real point is that these imperfections in the market have real economic costs in terms of our GDP growth,” she said, citing research https://www.brookings.edu/bpea-articles/the-economic-gains-from-equity by San Francisco Federal Reserve President Mary Daly, which concluded that systemic disparities cost the U.S. economy nearly $23 trillion over the 30-year period from 1990-2019, and providing more equitable access to labor markets would add $790 billion to the U.S. economy annually.

Biden expressed his appreciation for the report and pledged to work to achieve “more equitable growth” as well as to expand the U.S.’s productive capacity.

This report examines the effects of non-competitive labor market, employer market power, monopolies on maintaining wage inequality, unfair hiring practices, which ultimately reduce economic growth.

The report stated that “ignoring these structural forces is costly” and cited inefficient labor market outcomes and misallocated talent as well as suppressed innovation. It also referred to lower incentives to invest in human capital and decreased incentive for it.

It was noted that close to 20% of U.S. employees were subject to noncompete agreements, which limited their ability for an employee join or create a new firm. The report also stated that employers market power had kept wages below the level they would in a completely competitive market by 15%.

According to the report, government action could reduce these market forces. It would include increased labor protection, antidiscrimination laws enforcement, greater unionization which may lead to higher wages. The federal minimum wage should be raised from $7.25/hour, as it is now.

The report also highlighted the positive impact of affordable childcare, early childhood education and paid family and medical leaves – all included in Biden’s $1.7 trillion Build Back Better spending plan that failed to make it through Congress last year.