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A new research paper that may help unlock the mystery of why Americans can't seem to get a decent raise. Economists have struggled over that question for years now, as wage growth has stagnated and more of the nation's income has shifted from the pockets of workers into the bank accounts of business owners. Since 1979, inflation-adjusted hourly pay is up just 3.41 percent for the middle 20 percent of Americans while labor's overall share of national income has declined sharply since the early 2000s. There are lots of possible explanations for why this is, from long-term factors like the rise of automation and decline of organized labor, to short-term ones, such as the lingering weakness in the job market left over from the great recession. But a recent study by a group of labor economists introduces an interesting theory into the mix: Workers' pay may be lagging because the U.S. is suffering from a shortage of employers.
[...] argues that, across different cities and different fields, hiring is concentrated among a relatively small number of businesses, which may have given managers the ability to keep wages lower than if there were more companies vying for talent. This is not the same as saying there are simply too many job hunters chasing too few openings—the paper, which is still in an early draft form, is designed to rule out that possibility. Instead, its authors argue that the labor market may be plagued by what economists call a monopsony problem, where a lack of competition among employers gives businesses outsize power over workers, including the ability to tamp down on pay. If the researchers are right, it could have important implications for how we think about antitrust, unions, and the minimum wage.
Monopsony is essentially monopoly's quieter, less appreciated twin sibling. A monopolist can fix prices because it's the only seller in the market. The one hospital in a sprawling rural county can charge insurers whatever it likes for emergency room services, for instance, because patients can't go elsewhere. A monopsonist, on the other hand, can pay whatever it likes for labor or supplies, because it's the only company buying or hiring. That remote hospital I just mentioned? It can probably get away with lowballing its nurses on salary, because nobody is out there trying to poach them.
[...] Harvard University labor economist Lawrence Katz told me that he suspected the findings about market concentration and wages were directionally correct but that they may be a bit "overstated," because it's simply hard to control for the health of the labor market.
"They are getting at what is an important and underexplored topic ... using a creative approach of using really rich data," he said. "I don't know if I would take perfectly seriously the exact quantitative estimates."
Still, even if the study is only gesturing in the direction of a real problem, it's a deeply worrisome one. We're living in an era of industry consolidation. That's not going away in the foreseeable future. And workers can't ask for fair pay if there aren't enough businesses out there competing to hire.
Article summarizing study:
Why Is It So Hard for Americans to Get a Decent Raise?
Actual study (limited access): http://www.nber.org/papers/w24147
FYI: Number of companies on America's stock exchanges has decreased by 50% since 1998
(Score: 1, Interesting) by Anonymous Coward on Friday January 19 2018, @04:16PM (1 child)
Yet don't many of us maintain code on a daily basis, code that's sometimes 10 or 20 years old? How many of us are actually working on cutting-edge projects? How many of us are even working on interesting projects? I feel that the vast majority of us are working on TPS reports day-in, day-out. Much of what we do are solved problems. There are commonalities, however, that we can all agree on. There are fundamental design principles that we can identify that any worthwhile information system in any given industry may have.
Truly cutting edge work would likely not fall within the scope of a professional association. Free software can also be a source of innovation that would not fall strictly within the scope of a professional association. However, a professional association could, for example, endorse various free software projects on an annual basis that the rest of us would want to consider for our TPS reports and CRUD/CRM/ERP systems.
If we are creating production software, should we really be using the latest gee-wiz dependency injection auto-wiring meta-programming paradigm? What will that gee-wiz paradigm look like in 10 years when somebody else is maintaining our code? We should value software that is written with well-understood principles while retaining flexibility that our field is still a fast-moving field. I've been a programmer for a couple decades now. For every gee-wiz paradigm that was going to solve all of my problems I've encountered, I've only found a couple new techniques that have withstood the test of time. Otherwise, everything I do has been a best practice since the 80s or early 90s.
Who wants to get stuck with an ERP nightmare that's held together with duct tape and chicken wire? That ERP nightmare was made by other IT people, perhaps even some very talented people, though certainly mediocrity and lack of care for quality against unrealistic deadlines set by salespeople show themselves.
I hope I am not suggesting following the path of "We must to do something. $xyz is something. Therefore $xyz needs to be done." I hope I am suggesting that those of us with decades of experience in IT are the experts and the exact people who must hash out the kinds of quality standards we want in our profession.
In addition to that, the other side of the coin is that currently, we allow suits and PHBs to dictate quality and even which technologies we use. Even if I wanted to use some gee-wiz autowired batteries-included paradigm on my new project, a PHB may very well veto it and dictate technical decision to me.
Our primary goal must be to make a stand and tell PHBs what our decades of experience demonstrate. You're correct that if all organizing does is create more PHBs dictating technical decisions and abusive work environments, then we have not met our goal. However, if we do not organize, we will continue being at the mercy of PHBs.
I can think of no other way to create the change that so many of us feel we need.
(Score: 3, Insightful) by meustrus on Friday January 19 2018, @05:57PM
Your argument is sound. I fully agree with you! But people like you tend to get laid off because you're getting paid more than everybody else. It's insane, but with the limited information available to non-technical upper management it makes perverse business sense to cull the most experienced engineers. Doubly so if you're a contractor.
Meanwhile, the hot shots take less paycheck and work more hours, and they want to re-invent everything because Not Invented Here.
If there isn't at least one reference or primary source, it's not +1 Informative. Maybe the underused +1 Interesting?