Miscellaneous material to start your week.
- Suresh Naidu, Eric Posner and Glen Weyl
highlight how the economy as a whole suffers when employers exercise too much control over wages and working conditions:
In a competitive labor market, employers must vie for
workers; they try to lure workers from other firms by offering them more
generous compensation. As employers bid for workers, wages and benefits
rise. An employer gains by hiring a worker whenever the worker’s wage
is less than the revenue the worker will generate for the employer; for
this reason, the process of competition among employers for workers
ought to result in workers receiving a substantial portion of the output
they contribute to.
And as the economy grows over time — which has
historically been the case in the United States — this dynamic should
naturally lead to a steady increase in compensation for workers.
It turns out, however, that labor markets are often
uncompetitive: Employers have the power to hold down wages by a host of
methods and for numerous reasons. And new academic studies suggest the
markets have been growing ever more uncompetitive over time.
...
It is sometimes mistakenly thought that wage suppression,
even as it hurts workers, at least benefits consumers, who pay lower
prices for goods and services (since the cost of production is lower for
companies). In fact, that’s not the case: Employer market power,
sometimes called “monopsony,” harms economic growth and raises prices.
(Monopsony is the concept of monopoly, or dominance of a market for a
given good, applied to the “buy side” — namely, the inputs that firms
purchase, including labor and materials.)
Monopsony harms growth and raises prices because it works
much like monopoly: by reducing production. To increase its profits,
the monopolist raises prices and thus lowers production (because fewer
consumers are willing to pay these inflated prices).
Similarly, to raise its profits, a monopsonist
lowers wages below the value of the workers to the employer. Because not
all workers are willing to work at these depressed wages, monopsony
leads some workers to quit.
Firms bear the loss in workers (and resulting lowered
sales) in exchange for the higher profits made off the workers who do
not quit. The resulting group of workers looking for jobs are what Marx
called the “reserve army of the unemployed.”
Employer labor market power thus reduces employment,
raises prices, and depresses the economy.
Those sound a lot like the
harms that conservative economists have long attributed to excessive
taxation. And that’s no coincidence. Wage suppression is just like a
tax: a tax on the labor of workers.
- Chris Dillow
examines the persistent pay gap between men and women, along with a few of the factors which perpetuate it. And Kate Farhall
argues that family violence leave needs to be paid for many people to be able to escape abuse.
- Jeff Sprass
writes that the growing movement of teachers' strikes may be the start of stronger "alt-labor" organizing in response to a political environment designed to suppress collective action. And Syed Hussan
offers some activists' suggestions as to how organized labour should participate in Ontario's provincial election.
- Finally, Tim Harper
points out that millennial voters will be playing a far larger role than ever before in that election (and others to come). And Neil MacDonald
comments on the effectiveness of school shooting survivors in organizing to respond to right-wing suppression.