Why We Should Worry About Monopsony
By David Weil, Institute for New Economic Thinking website, 9.2.18
When a small group of companies can dominate a labor market, wages—and workers—suffer
Center stage in the meeting of the Federal Research Bank of Kansas City’s annual symposium in Jackson, Wyoming this August was a discussion of the repercussions of having a small number of companies dominating the labor markets where they hire workers–what economists call “monopsony.” That agenda item on an annual meeting that the financial, business, and economics professions watch closely marks the clear arrival of the topic into the mainstream of economic dialogue. Along with debating the overall impacts of growing market control of companies like Amazon and Google, participants discussed what role monopsony plays in explaining the absence of significant wage growth in the presence of historically low unemployment rates and how the Federal Reserve should factor its effects into...
Workers Shouldn’t Have to Sign Away Their Rights
to Class Action Lawsuits
by David Weil. Harvard Business Review, 6.5.18.
In his classic book, Exit, Voice, and Loyalty, the political scientist A.O Hirschman argued that dissatisfaction with a product, service, relationship, or other outcome can give rise to two broad options: one can walk away (exit) or try to change the outcome by engagement (voice). In the labor market, exit and voice takes the form of either quitting a job or using channels—unions, internal dispute resolution, rights granted by government—to seek changes in conditions at work.
There are many benefits if workers have the ability to exercise voice rather than being forced to exit by quitting. From the perspective of businesses ...