A new theory for why Americans cant get a raise. nothing Labor Market Concentration
There is a paucity of potential employers in several other fields.If you were a delivery van driver searching for a new job any time between the years of 2010 and 2013, chances are, you wouldnt have found many businesses competing for your services. In Selma, Alabama, there was, on average, just one company posting help wanted ads for those drivers on the nations biggest job board. In all of Orlando, Florida, there were about nine. Nationwide the average was about two.
Thus, many employers are monopsonies or oligopsonies, the buying counterpart to monopolies and oligopolies.The degree of concentration, and the effect on wages, tended to be worse in smaller towns than major cities. Places like Alpena, Michigan, and Butte, Montana, had the least competition among employers, while New York, Chicago, and Philadelphia had the most. It also varied by occupation. Equipment mechanics, legal secretaries, telemarketers, and those delivery drivers faced some of the most highly concentrated job markets; registered nurses, corporate salesmen, and customer service representatives had some of the least. But overall, the problem looks pervasive.
This theory does not rule out other possibilities for workers getting less and less of the GDP, like suppression of labor unions and automation and financiers threatening to downgrade businesses for not paying their employees less.
This has various policy implications. Labor unions and the minimum wage can be good ways of coping with employment monopsonies and oligopsonies. It also suggests an additional concern for antitrust actions.