Why American Workers Aren’t Getting A Raise: An Economic Detective Story | Mauldin Economics

Why American Workers Aren’t Getting A Raise: An Economic Detective Story | Mauldin Economics



...Something is profoundly broken with capitalism if corporate profit margins do not revert to the historical mean.



...The role of high industrial concentration on inequality is now becoming clear from dozens recent academic studies.



...a collapse in the number of publicly listed companies and a shift in power towards big companies. (think of Democrat regulations to make markets safer that cost companies lots of money!)...There is a strong and direct correlation between how few players there are in an industry and how high corporate profits are. 



...Market power has been rising in many industries. Americans have the illusion of choice, but in industry after industry, a few players dominate the entire market:

• Two corporations control 90% of the beer Americans drink.

• When it comes to high-speed internet access, almost all markets are local monopolies; over 75 percent of households have no choice with only one provider.

• Four airlines completely dominate airline traffic, often enjoying local monopolies or duopolies in their regional hubs. Five banks control about half of the nation’s banking assets.

• Many states have health insurance markets where the top two insurers have 80-90% market share. For example, in Alabama one company has 84% market share and in Hawaii one has 65% market share.

• Four players control the entire US beef market.

• After two mergers this year, three companies will control 70 percent of the world’s pesticide market and 80 percent of the US corn-seed market.

The list of industries with dominant players is endless.

...according to a study by Credit Suisse, “between 1996 and 2016, the number of publicly-listed stocks in the U.S. fell by roughly 50%—from more than 7,300 to fewer than 3,600—while rising by about 50% in other developed nations.”(i) It is not lower growth or the global Financial Crisis that caused fewer IPOs. This is distinctly an American phenomenon.

...

Many workers are dealing with a monopsonist

In a monopoly, there is only one seller, while in a monopsony, there is only one buyer....most labor markets are very concentrated and that it has a strong negative impact on posted wages for job openings.(v) They showed that going from a very competitive to a highly concentrated job market is associated with a 15-25% decline in wages.