A former FTC commissioner and a former staffer diagnose the agency’s woes and suggest measures to help restore trust between leadership and staff.
A former FTC commissioner and a former staffer diagnose the agency’s woes and suggest measures to help restore trust between leadership and staff.
A lvaro Bedoya was recently sworn in as the Federal Trade Commission’s fifth commissioner, giving Chair Lina Khan a three-Democrat majority. Khan has an ambitious agenda, which, to be clear, we think includes a lot of ideas that will make the American economy work worse, not better. Our objective here is not to criticize the merits of that agenda. Rather, we are concerned about Khan’s ability to enact that agenda and the future existence of the FTC.
Morale at the agency is extremely low, and the situation is dire. But we think there are ways Khan can repair the breakdown in trust that has occurred between her and the career civil servants that staff the commission. And she must. The role of the FTC in protecting American consumers is simply too important for lawmakers and the public to watch as its institutional capital rapidly circles down the drain.
Earlier this month, the Office of Personnel and Management released results from its yearly survey of federal employees. Normally, this is an opportunity for FTC leaders to take a victory lap. Over the course of more than a decade and until this year, the FTC ranked consistently toward the top of a list of similarly sized agencies.
This year’s results are quite different. Suddenly, the FTC’s rankings are at or near the bottom. From our perspective, the most concerning results reflect a sharp disconnect between FTC staff (mostly apolitical federal employees) and management (presidential appointees and their hand-picked senior staff). In 2020, prior to the change in administrations, 87 percent of FTC staff answered favorably when asked whether senior leaders “maintain high standards of honesty and integrity.” In 2021, after Khan and her team took over, that number dropped to 53 percent. Similarly, the number of staff who answered favorably to the question of whether “senior leaders inspire motivation and commitment” moved from 80 percent to 42 percent. These declines are substantial and concerning, and they reflect a sharp break from consistent and positive results over a long period.
Although we don’t have data, we personally know several senior career attorneys and economists who have left the agency in recent months. Indeed, one of us (Moore) is such a person. Although the normal amount of churn is certainly not zero, many of the people who have left had lengthy tenures at the agency and had attained management positions — a major motivating factor for career government employees — only recently. The exodus includes talented trial lawyers, merger lawyers, privacy specialists, and economists — personnel valuable to achieving any chairman’s objectives at the FTC no matter his or her politics. Although not a career staffer, the most recent director of the commission’s Bureau of Economics unexpectedly resigned.
Khan and the rest of her political leadership team ought to be taking these developments very seriously. The FTC does much important work, from blocking large mergers and investigating and suing companies for engaging in anticompetitive or deceptive conduct, to opposing laws and regulations that themselves restrain competition, educating consumers, and issuing reports that provide useful information to the public. We think it has done its job well and ought to continue doing it well.
At the same time, however, the FTC’s jurisdiction over antitrust and consumer-protection law overlaps with other agencies, such as the Antitrust Division at the Department of Justice and the Consumer Financial Protection Bureau. Senator Mike Lee (R., Utah) has already proposed legislation divesting the FTC of its antitrust authority. Although the current legislative winds appear to be blowing in the direction of giving the FTC more legal authority, more poor survey results — plus some high-profile losses in court — could cause those winds to shift direction. And the FTC is no stranger to efforts to shut it down.
Although Khan has expressed concern about the employee survey results, her proposed fix is to hire a management consultant. That won’t be enough.
Some of Khan’s supporters strain to wish the problem away by arguing the poor survey reflects the staff’s ideological opposition to Khan’s ambitious agenda. Or its laziness. We are skeptical of these arguments. For one, most FTC staffers live in the Washington, D.C., metropolitan area, which leans heavily Democratic. Political donation data back this up: Since 2010, over 90 percent of donations from FTC workers have gone to Democrats, with the number reaching almost 97 percent in 2020.
More to the point: FTC staffers, particularly the attorneys, want to bring cases to trial and win them. One does not advance at the FTC by arguing that the commission should shut down investigations or settle them. The path to career success, from staff attorney to management, is to bring and win cases. Although many staffers may not support all of Khan’s initiatives, they are surely aligned in the desire to bring cases and win trials against large companies.
So why is the staff dissatisfied, and why are mid-career civil servants leaving only after just a short time in their coveted management slots? We think it has something to do with the relentless barrage of public criticism Khan’s friends and mentors have levied against the FTC staff.
Khan’s former boss, Rohit Chopra, has expressed his “strong view that the FTC was a backwater and essentially a failed agency.” Another Khan mentor, Barry Lynn, said in a profile about his protégée “we’ve driven the radicals out of the temple.” Note his choice of pronoun (Lynn is the executive director of a think tank where Khan used to work). Matt Stoller, Khan’s former colleague and vociferous public advocate, has argued that the FTC’s Bureau of Economics ought to be eliminated.
In April, before the results of the staff survey were made public, Politico published a piece critical of the “aggressive management style” of Khan’s chief of staff. A former aide to Senator Elizabeth Warren (D., Mass.) — herself a strong Khan backer — defended against the criticism by stating that the “FTC has been a mess for a generation.” Over and over again, the defense against criticisms of Khan and her hand-picked management team involved deflecting blame toward the FTC’s career staff.
It is totally natural for FTC staff to be offended by these statements. Imagine being an attorney or economist who has pulled all-nighters to take a case to trial and suspecting that your new boss does not value your work or even thinks that your job should be eliminated. But Khan’s purpose is not to insulate FTC staff from criticism — even from people who are speaking publicly on her behalf. In our view, the big problem revealed by the survey results is that the staff does not trust Khan or her management team.
We suspect that there is a mismatch between what Khan says privately to the staff, which almost certainly does not include the phrases “backwater,” “failed agency,” “mess,” “purging radicals,” or “eliminate.” Rather, when Khan expresses support for the staff, the staff might not believe her because they read what her surrogates say in public. They might think, “That’s nice, but we know your real views about us. We read about it in the New Yorker. And New York. And Politico . . . ” In other words, the staff likely treats most praise from Khan as cheap talk, which is how it appears. And hiring a management consultant may not be free, but we think the staff will probably treat it as cheap talk as well.
What should Khan do? Regaining the trust of staff will be difficult but not impossible. And it’s definitely not going to be cheap. We think sunlight is generally the best disinfectant. Congress should want to get to the bottom of the issues between FTC staff and management and conduct oversight hearings, and Khan should encourage them.
The Biden administration did Khan no favors by disguising its real intention with respect to her FTC nomination, waiting until after she was confirmed by the Senate to designate her to lead the commission. Although the president can designate any commissioner to lead the agency, the Senate quite reasonably thought Khan was slated to be an ordinary commissioner because recent practice has been for the president to identify whether a nominee will be chairman prior to the vote. Bill Kovacic, himself having served as both an ordinary commissioner and FTC chairman, described the difference between the two as “the difference between going to the moon and going to Mars. Mars is a much bigger deal.”
The major source of this difference is that an ordinary commissioner does not oversee the staff’s day-to-day activities. Conflict between the staff and an ordinary commissioner — something we are familiar with firsthand — is rather common and does not matter nearly as much. A breakdown in trust between the staff and the chairman is catastrophic.
Congressional oversight hearings would be an opportunity to correct the administration’s mistake. It would provide an opportunity for lawmakers to inquire about Khan’s approach to management — precisely the sort of thing the Senate might have asked her about had the Biden administration not pulled a bait-and-switch with her nomination. Just last week, Khan appeared before the House Committee on Appropriations to ask for a $113 million budget increase to hire 200 additional employees. Congress ought to do its due diligence before granting such a request.
And oversight hearings would provide Khan an opportunity to state in public and on the record that she does not agree with her surrogates that the FTC is a messy backwater. Doing so will no doubt feel costly to her, as it should: Her cheap talk thus far hasn’t worked precisely because it has been cheap.
Second, we think Khan should devote substantial personal time and attention to listening to staff and hearing their concerns. In our view, she needs to do this herself; having her senior leadership team do the listening is not going to solve the trust problem.
Khan has commendably increased the commission’s engagement with the public by inviting individuals to participate in the commission’s monthly open meetings (a practice she established), and by scheduling listening forums during which the public can comment on the FTC and DOJ’s approach to reviewing mergers. Khan could provide a similar opportunity to her staff. But again, it’s not going be cheap. The staff needs to hear from Khan herself that she acknowledges their concerns and has specific plans to address them.
Now that Khan has a friendly majority among a full slate of commissioners, we expect that the FTC will turn quickly to matters that the two Republicans might have opposed. We are concerned that this turn will cause Khan and her management team to ignore — at their peril — the very real and concerning problems the OPM survey has revealed. That would be a mistake. Not only does Khan need the staff to work hard to achieve her ambitious objectives for the FTC, but if these poor results continue to be reflected in the survey from 2022, then the future of the agency and all its good work may be threatened. The stakes are high.
Joshua D. Wright is a former Federal Trade Commissioner, and is University Professor and Executive Director of the Global Antitrust Institute, Scalia Law School at George Mason University. Derek W. Moore worked at the Federal Trade Commission from 2013 to 2022 in various capacities.