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posted by martyb on Friday January 19 2018, @12:06PM   Printer-friendly
from the Invisible-hand dept.

Found this interesting, you may too.

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


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  • (Score: 4, Insightful) by JoeMerchant on Friday January 19 2018, @09:09PM (1 child)

    by JoeMerchant (3937) on Friday January 19 2018, @09:09PM (#624901)

    I don't think there is a popular solution to population control. If the right to reproduce, early and often, can somehow be converted to a privilege... that would work. As you say, it is often those least capable of providing for children who have the largest number of them, so we have a sort of explosive control system problem: as long as everyone is wealthy/educated, then population seems like it will be naturally controlled, but... when you have a bunch of people who are poor and/or uneducated, then you have rapid population growth - which, given limited natural resources, seems like the road to greater poverty.

    I find it, ironic?, that China continued to grow under their "one child" policy, clearly there were more exceptions than followers there, although they did at least manage to slow growth, so that's some measure of success. The disproportionate number of male children is, on the one hand fortunate for future population control, and on the other a kind of sad outcome for those extra men.

    My sense of fair says something along the lines of: everybody is born with the right to father/mother one biological child of their own. If you remain on UBI your whole life, that's it. If you work for income, pay taxes, and provide enough tax to the system to cover a lifetime's UBI for another person, that should earn the right to have another child. This is kind of upside-down on the age thing... it would take a long time to "earn" that second child, and allowing people to "borrow" would lead to a lot of defaulters. I also think that it shouldn't be extendable to as many children as you can "earn" - probably should be some kind of growing scale, like 1 UBI for the 2nd child, 2 more UBIs for the 3rd, 4 more UBIs for the 4th, and that's it... I don't see the point in letting the trust fund babies of the world have 20+ children each.

    This also only works on a global scale if we can somehow get past nationalism, international competition, etc. There's no way that one competitive country is going to voluntarily institute negative population growth while their competitors are still increasing in numbers.

    It's not an easy problem, but if it gets any further out of hand than it already is, it's going to be very painful for those living through the natural correction.

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  • (Score: 0) by Anonymous Coward on Sunday January 21 2018, @10:36PM

    by Anonymous Coward on Sunday January 21 2018, @10:36PM (#625847)

    ironic?, that China continued to grow under their "one child" policy

    Killing a parent once a baby was born wasn't part of the policy (drastic as it was).