I have a new column:
To Overcome Rising Inequality, Workers Need More Bargaining Power: There is widespread agreement that inequality increased over the last several decades, but why that has happened is the subject of considerable debate.
- Is it because technological change reduced the number of good, middle class jobs?
- Is it the result of downward pressure on wages due to globalization?
- Can the changes be traced to the rise of “winner take all” markets?
- Or is the decline of unions the main reason for the change in the distribution of income?
- What about the fall in the inflation-adjusted minimum wage, was that a factor?
- Did immigration have anything to do with it?
- How much of an impact did the reduction in income and inheritance taxes for those at the very top have on inequality?
- Should we focus mainly on differential educational opportunities between those at the top and those at the bottom, and the networking opportunities the top schools provide?
- What role did politics play in undermining unions, altering tax rates, resisting increases in the minimum wage, and failing to support educational initiatives that benefit the disadvantaged?
Some of these are easier to rule out than others based upon the empirical evidence. For example, there’s little evidence that immigration played a significant role in generating rising inequality. And it’s probably the case that there are multiple causes of rising inequality rather than a single factor, and that some of these factors interact. The decline in unions, for example, is related to the threat of offshoring in a globalized economy as well as political factors that undermined union authority.
But there is one factor, the presence of market power in both product and labor markets, that, in my view, does not get enough attention in this debate. ...[continue]...