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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: 2, Flamebait) by arcz on Friday January 19 2018, @06:13PM (7 children)
Didin't I already say our current economic issues were a result of stakeholder capitalism? I did. Harvard, you needed a study to notice that? Open your damn eyes.
Stakeholder capitalism is a corrupt form of capitalism as opposed to entrepenurial capitalism (the older form.)
In stakeholder capitalism:
* Coporations can own other corporations, buy them, etc.
* People own stock in coporations, and trade them like gold.
These are both BAD things. We should get rid of them. All the problems with consolidation will disappear when corporations can't buy eachother. When corporations act on behalf of the public/small number of owners and not large numbers of stakeholders we will return to a more sane market.
(Score: 3, Insightful) by Anonymous Coward on Friday January 19 2018, @06:49PM
The stock market is simply the most legit scam yet invented, but it is still a scam.
Money is an artificial construct to facilitate human interactions. We have lost sight of that basic premise and now pursue money for it's own sake, with massive amounts of human activity serving no practical purpose. Massive inefficiency driven by greed.
(Score: 4, Interesting) by JoeMerchant on Friday January 19 2018, @07:58PM (2 children)
Something I observed about "stakeholder capitalism" from the perspective of the semi-retired day trader. These people who, by skill or luck (usually a bit of both), have managed to provide all the money they need for themselves and whoever they care about, for life, do tend to stay engaged with the world while they gamble in the stock market to attempt to increase their already sufficient wealth. News, quarterly reports, etc. all are of interest to them because it helps them to make better bets when buying and selling stocks. Most won't rise to the level of attending shareholder meetings or trying to actively direct the companies they invest in (though a rare few do), but without that motivation for engagement, these people could very easily just drop out of society altogether, have groceries delivered to the house and devolve into non-social organisms, probably dramatically increasing their propensity for sociopathic actions. And, when you have bored sociopaths with above average access to resources / self sufficiency / isolation - they can do things like mail exploding letters to their perceived enemies, or plan and execute hijacking of passenger planes for kamakazi bombing of symbolic buildings.
🌻🌻 [google.com]
(Score: 2) by arcz on Sunday January 21 2018, @08:09PM (1 child)
(Score: 2) by JoeMerchant on Sunday January 21 2018, @09:22PM
Unfortunately, the structures of modern society (cheap global transportation, communication, etc.) favor large companies... just saying "small businesses are better" isn't going to change that landscape. There needs to be a workable model to keep large corporations accountable, ethical, and beneficial to society at large, not just their shareholders.
🌻🌻 [google.com]
(Score: 0) by Anonymous Coward on Saturday January 20 2018, @11:12AM (2 children)
There's no need for Capitalism (employees) at all.
It sounds like you are saying "Have a system where all of the owners are The Workers".
You can do that without Capitalism (non-worker stockholders; non-owner employees).
The mechanism is the worker-owned cooperative AKA Socialism.
Mondragon has been doing it since 1956.
They've grown from 6 worker-owners to over 100,000 worker-owners in 40 countries on 5 continents.
-- OriginalOwner_ [soylentnews.org]
(Score: 1, Offtopic) by arcz on Sunday January 21 2018, @08:12PM (1 child)
(Score: 0) by Anonymous Coward on Monday January 22 2018, @01:24AM
Here's Socialism:
The collective ownership of the means of production by The Workers.
If you want to take it a step farther, where everybody owns everything, that's Communism.
-- OriginalOwner_ [soylentnews.org]