Power, Wages, And Inequality
On March 7, 2022, the U.S. Department of the Treasury issued a report titled, “The State of Labor Market Competition.” It is not what one might expect from the U.S. government. It is apparent that something is unusual when the first chapter is “Theories of Labor Market Power,” and the word “power” appears 15 times in the executive summary, 12 times in the introduction, and too many times to count in the body of the report. Power, after all, is generally absent from mainstream myths of how labor markets work.
The basic message of the report is that: “...The American labor market is characterized by high levels of employer power.” And:
...A careful review of credible academic studies places the decrease in wages at roughly 20% relative to the level in a fully competitive market.