Photo: Flickr

In the wake of AT&T’s newly planned mega-merger with Time Warner, it’s a great time to discuss—what?—MONOPSONY, a funny word describing what happens when an employer has too much power in the marketplace. Sounds familiar...

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With impeccable timing, the White House Council on Economic Advisors just released a paper on monopsony in America— think of it as monopoly-lite, when one company doesn’t completely control a market but has enough power that it can afford to pay shitty wages without seeing its workers walk away. The cries of “too much corporate power!” emanating from hippie protesters are also emanating from White House economists, in a somewhat subdued form.

Why is the rent too damn high and wages too damn low and you haven’t had a decent raise in years and you read about everyone getting rich in Silicon Valley but where you live the only tech jobs are at the Amazon warehouse? These things are not imaginary complaints. They are part of larger economic trends. Inequality is not just the rich getting richer—it’s a decline in opportunity for workers. From the report:

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There is also growing concern about an additional cause of inequity—a general reduction in competition among firms, shifting the balance of bargaining power towards employers (Furman and Orzag 2015). Such a shift could explain not only the redistribution of revenues from worker wages to managerial earnings and profits, but also the rising disparity in pay among workers with similar skills. These trends also have broader implications for the economy as a whole: instead of promoting growth, forces that undermine competition tend to reduce efficiency, and can lead to lower output, employment, and social welfare.

Labor is too weak and employers are too strong. That’s a fact. It’s helped to cause flat wages for an entire generation, and a sharp decline in labor’s share of our national income. Companies today are quite simply able to pay workers less without suffering any business consequences. That is not due to any facts of nature; it is a political choice that we have been making for decades.

Raising the minimum wage and strengthening unions are two obvious ways to combat this dynamic. The report cites other factors as well: collusion by employers, like Silicon Valley firms agreeing not to poach one another’s engineers; the absurdly widespread use of non-compete agreements, which in many cases amount to a free power grab by companies; lack of a good public health care system, which keeps people in “job lock” to protect their insurance; and the practice of requiring occupational licenses in fields where they aren’t really necessary, which is a form of protectionism. Since the late 1990s, the biggest companies in each industry have been collecting a larger share of the revenues, and workers have become less likely to leave their shitty job for a better one, due to a decline in opportunity to do so.

Image via CEA

(Lack of affordable housing is directly related to this as well. The report cites land use regulations that limit housing construction in booming cities, thereby restricting “the ability of workers to move to areas with the best jobs for them,” as another contributor to this package of woe. Build more housing, assholes.)

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If you are not a millionaire, this is all bad for you.

Preventing corporate accumulation of market power and strengthening public health care and increasing union membership and raising the minimum wage and building affordable housing are the most effective ways to arrest this wretched MONOPSONY, a trend attacking the livelihoods of all of us, no matter what our political affiliation. It would seem rational to investigate the positions of the presidential candidates on these issues and cast your vote accordingly.