We show empirically for France that labor market concentration decreases wages heterogeneously, with the lowest earners being the most vulnerable, and increases local wage inequality within occupations. If concentration allows employers to improve worker selection, both inequality and efficiency gains could materialize. However, based on a simple formalization, we interpret the findings that employer concentration increases within-firm inequality and decreases between-firm inequality as evidence against such a sorting mechanism. We also find evidence that employer concentration does not increase positive assortative matching. The results therefore suggest that concentration increases inequality through the relatively reduced bargaining position of the lowest earners.