Decreased competition to blame for flat wages: Both Monopoly and Monopsony contribute to the problem

We are finally getting some good research on why wages have not grow in the US for 45 Years.  The answer is decreased competition and corporate over-consolidation.  When companies have monopoly and monopsony power they raise prices and lower the cost of inputs. Labor is a key input.

Monopoly is a market with a limited number of sellers. Monopolists charge higher prices because they face little selling competition. Monopsony is a limited number of buyers. The pay lower buying prices because of limited buying competition.

Once again, it's corporate concentration, greed and power. Yes, we were just as surprised as you.  Corporations are using monopoly and monopsony power to drive up prices and pay low wage to increase their profits. Who knew?

Bloomberg has a good write up of the issue. The Bloomberg article refers to a paper, from Simcha Barkai at the London School of Business. He examines the declining returns to labor, also known as the labor share of income in the economy.  The paper also finds a declining return of income for capital as well.  So where does this "missing" money go? To profits.  Corporate profits are again at record levels.

The author suggests the reason for surging profits is decreased competition and monopolization. A link to the paper can be found here at "Declining Labor and Capital."

Slate has similar article and link to a NBER paper which finds that employers are using monopsony powers to hold down wages. Monopsony is the condition of a market with too few buyers.

EEOC quietly cancels gender pay data collection in August 2017

On August 29, 2017, the Equal Employment Opportunity Commission, quietly canceled the planned data collection from US business for pay by gender. You can read the announcement here:

EEOC cancels pay data collection

The EEOC was planning to collect data on pay and hours worked in addition to the current mandate of employees by race, sex, ethnicity and job category. The additional data to be collect was pay by salary bands. The information is a relatively simple addition to the current data.  Many HR departments already perform the same analysis internally.

The data would have provided a view of how widely women are paid less than men.

The move to cancel the Obama era regulation was widely expected. Industry groups lobbied heavily against the proposal during review phase calling it burdensome.

Proponents, including this blog, argued the data was needed to measure the gender pay gap.

Some HR consultants already started preparing for the change last year. A quick look at a presentation by HR consulting company: Gerstco shows the power of collecting the data.

The company has a great presentation on the change which can be viewed here.

The data would have allowed HR professionals to create reports and graphics such as the one of page 28 of the presentation which shows which job categories have pay equity and which do not. Green categories have gender pay equality while the red do not. Absolutely brilliant.

Mo'nique calls for Boycott of Netflix over Gender and Racial Pay Differences

The comedian, Mo'Nique, (Real name Monique Hicks)  posted a video on Instagram accusing Netflix of gender bias and racial bias. She claimed she was paid $500,000 for her show while Amy Schumer was paid $11 million.

While we believe the bias is true, it's true, this type of accusation is very hard to prove. Also an entertainers appeal is linked to biases in the larger world not just the entertainment industry.

Obviously Chris Rock, Dave Chappelle and Amy Schumer are bigger than Mo'Nique. But how much bigger ?? And how about Wynda Sykes ?  What is a fair amount these artists should be paid?

https://www.instagram.com/p/BeIg0TUFgJ0/

You would want to regress the artist Pay, Sex, Race and Age against studio earnings or some measure of popularity. You might want to check over time and at different career points.  Definitely worth a quality economic research paper for someone.

Black Unemployment Rate Drops to Historic Low: 6.8%

The Black unemployment rate dropped to a record low of 6.8% as reported in December 2017.  The rate was the lowest recorded by the Bureau of Labor Statistics. The Black Unemployment data series goes back to 1972.  The previous low was 7.0% in April 2000.  The high was recorded in 1983 when the rate hit 21.2%.  The Black unemployment rate has averaged 12.0%. over the 47 years the data series has been collected,  

Also of interest is the Black / White unemployment ratio. It also dropped to one of it's lowest reported values: 1.66 or 166%.  Historically, the ratio between Black and White Employment rates has been about 2 to 1. Some economists believe the ratio is a proxy for discrimination in the labor market against Black people.

That's the good news.  The bad news is that the Black Labor Force participation rate is a 62.1% or only 62 percent of Black workers participate in the civilian labor market.  The rest are choosing not to work:  They are retired, disabled, incarcerated or working outside the formal economy.