Current Events > Study: politicians responsible for pay collapse among bottom 90%

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https://wapo.st/2EBTtIP

Political decisions by elected officials are largely responsible for a collapse in pay for the bottom 90 percent of the labor market since 1979, according to a new analysis of wage stagnation by the Economic Policy Institute, a left-leaning think tank.

While many economists pin much of the blame for wage stagnation on impersonal market forces, such as free trade and technological change, EPIs Josh Bivens and Heidi Shierholz contend that specific policy decisions including efforts to weaken unions, the decay of the minimum wage and monetary policy that prioritizes low inflation over full employment are responsible for tilting the balance of power away from workers and toward their employers.

By their calculations, that shift in power cost the bottom 90 percent of wage earners $1.53 trillion in income in 2015 alone, or $10,800 for every American household.

As Bivens and Shierholz tell it, a relatively recent thread of economic research into monopsony power which they define as the leverage enjoyed by employers to set their workers pay has helped economists explain some of the wage stagnation observed in the United States over the past 40 years. You can think of monopsony power as the flip side of monopoly power: If monopoly power lets companies charge higher prices to consumers, monopsony power lets them pay lower wages to workers. Either way, it spells trouble for people who buy things and work for a living.

Research into monopsony power finds that many job markets are dominated by a relatively small number of employers. If you are, say, a coal miner, there may be just one or two coal mines within 100 miles of your home. If the mine youre working at is treating you unfairly, you dont have many options for finding a new job particularly if you already left the other mine for similar reasons. In the absence of any serious competition for the most talented workers, employers have a huge amount of leeway in setting workers' salaries, and they often set them at levels below what traditional economic theories would expect.

If rising monopsony power that is, the increasing dominance of a small number of large firms were fully to blame for recent wage stagnation, Bivens and Shierholz argue, youd expect to see wages stagnating across the board. If a coal mine has the leeway to skimp on pay for its low-skill workers, in other words, its probably skimping on pay for high-skill workers, as well.

But thats not what appears to be happening, Bivens and Shierholz say. Instead, much of the wage stagnation observed since the 1970s has occurred at the low end of the wage spectrum. Think of all the charts youve seen showing how income has exploded at the top of the wage distribution while staying flat everywhere else. Superstar managers and highly skilled employees have made out very well over the past few decades, while wages for rank-and-file, low-skill workers have hardly budged.

Bivens and Shierholz say that poor wage growth is less a function of increasing employer power and more a product of deliberate efforts to undermine worker power. Policymakers, for instance, have been reluctant to raise minimum wages, which would directly benefit workers at the bottom of the income distribution. Theyve taken steps to make it harder for workers to secure bargaining power, eroding union membership in the process. And Bivens and Shierholz maintain that the Federal Reserve has contributed to the problem by prioritizing low inflation over high employment.

Many of these policies were put in place with good intentions to boost productivity and the health of the economy as a whole. But the data show that productivity has actually slowed since the 1970s.

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And there's proudy with the context-less hot take. Happened quicker than I thought.
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Many of these policies were put in place with good intentions

A_Good_Boy posted...

And there's proudy with the context-less hot take. Happened quicker than I thought.

Lol. He deleted it.
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Omnislasher posted...

Many of these policies were put in place with good intentions

TBF. I'm sure there were good intentions with the policies from the 70s. Sometimes we won't know if something will work until we try it.

The problem is that we can see it isn't working but don't try to undo it.
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Tmaster148 posted...

Omnislasher posted...

Many of these policies were put in place with good intentions

TBF. I'm sure there were good intentions with the policies from the 70s. Sometimes we won't know if something will work until we try it.

The problem is that we can see it isn't working but don't try to undo it.

this is pure class warfare and nothing else.

Tmaster148 posted...

A_Good_Boy posted...

And there's proudy with the context-less hot take. Happened quicker than I thought.

Lol. He deleted it.

Even he was embarrassed by his own idiotic hot take.
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