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| Topic | Corporate monopsonies are hurting wages according to Goldman-Sachs |
| Balrog0 08/17/18 12:12:40 PM #1: | https://www.ft.com/content/7f88226e-9f0b-11e8-85da-eeb7a9ce36e4 Americas biggest companies are grabbing a swelling share of revenues while workers suffer from pedestrian wage growth, teeing up an intensifying debate over whether public policy needs to respond. So-called superstar companies are becoming increasingly powerful in their sectors, allowing some to widen the mark-ups they charge on products and services. As these highly profitable businesses become more dominant, workers are capturing a smaller slice of the economic pie, some analysts say, contributing to income inequality. Democratic party politicians and progressive think-tanks have latched on to the phenomenon: Elizabeth Warren, the Massachusetts senator, has urged that antitrust authorities sharpen their teeth and claims that competition is dying in America. The notion that antitrust laws are too lax is contested, however. A presentation from the US Department of Justice and the Federal Trade Commission at the OECD in June cast doubt over some of the research on concentration in the corporate world, saying the analysis was not tracking meaningful product markets. Economists increasingly agree that some sectors are becoming more dominated by a few big corporate players. A standard measure of corporate concentration the Herfindahl-Hirschman index is up 48 per cent since 1996. There has been greater concentration in about 75 per cent of US industries in the past two decades, according to research from academics including Gustavo Grullon of Rice University. Americas internet giants have, for example, built powerful positions in their markets. Google and Facebook together controlled more than 58 per cent of total US digital advertising spending last year, according to eMarketer. Amazon is on track to capture nearly half of Americas ecommerce market this year, according to the research group, while its share of overall retail in the country, including offline sales, is 5 per cent. Healthcare has meanwhile seen a wave of acquisitions, including hospital tie-ups and the proposed merger between CVS Health and Aetna. The IMF published research in June focusing on a measure of corporate power mark-ups measuring the gap between the prices charged and production costs. Among US publicly listed companies these have risen by a sales-weighted average of 42 per cent from 1980 to 2016, in a possible sign of weaker competition. Similar trends are visible in other countries. We see evidence of rising market power and declining competition in the US, said Daniel Leigh, deputy division chief in the western hemisphere department of the IMF. This is coupled with signs that the [labour] share is going down. A group of researchers including David Autor of Massachusetts Institute of Technology and David Dorn of the University of Zurich have found that as the economic weight of a small number of highly profitable and innovative superstar companies has increased, workers slice of the pie has fallen in their industries. This may have contributed to a broader fall in labours share of income that has been particularly noticeable in the US since the beginning of the 2000s. At the same time, corporate profitability has surged to record highs. Goldman Sachs analysts say rising product and labour market concentration has imposed a drag of 0.25 percentage points on annual wage growth since the early 2000s. They also stress, however, that Americas dreary productivity growth is a bigger problem. shocking, I tell you! --- But to you who are listening I say: Love your enemies, do good to those who hate you, bless those who curse you, pray for those who mistreat you. ... Copied to Clipboard! |
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