What happens to the wages of American workers may not seem like a topic we want to spend time on but it is important. For example, according to some experts it was a contributing factor to the election of Donald Trump. Although the last jobs report showed some wage increase, overall that increase was very flat and shows that in the long run wages will continue to be flat. Wage stagnation is not new, it has basically been around for the last 40 years and has puzzled economists. That’s why the Hamilton Project of the Brookings Institution has now issued an e-book discussing the issues, making proposals and recommendations. One of the proposals which the authors seem to
emphasize is related to creating circumstances for workers to compensate for the collective bargaining what unions used to provide. Unions represented a group and were able to obtain more concessions than a single individual. In addition when unions were powerful, there were many employers, now the numbers of employers has shrunk. In fact a recommendation is for the government to evaluate mergers in terms of how they would affect the labor market. The problem of employers being able to dictate terms has a name, monopsony, and the book’s authors alert us that employers today tend to have a degree of monopsony. Other measures suggested meant to compensate for this problem work to give some bargaining power back to workers. Also companies often have non poaching agreements or workers are asked to sign that they will not work for the competition. All this limits workers’ bargaining power. And a recommendation is to alter those agreements and practices.
Wage stagnation is a complicated topic that often requires specialized knowledge, and yet it is one of extreme importance to the future of the US, one which can be crucial in reducing the growing economic inequality, and therefore one which can go to the core of how democracy is practiced.