Two words: pay bands.<p>Corporate HR policies in the modern era are essentially designed to commodify and drive down the costs of labor through information assymetry, rigid pay bands, and lawsuit mitigation.<p>Since most labor no longer organizes to negotiate for themselves, obviously the “Industry standard” pay bands are going to have a strong dampening effect on any wage increases even in the case of a worker shortage. Most individuals alone don’t have the power or the information edge needed to beat an “industry standard” which has essentially been decided through collusion of the largest players in the market. See the direct email correspondence of Steve Jobs and Eric Schmidt for more info.
>In a new study for the Brookings Institution’s Hamilton Project, we report survey results in which we find that one in five workers with a high school education or less are subject to a noncompete.<p>That by itself is a remarkable statistic. The original purpose of non-compete laws was to honor the value of an invention or trade secret and stopping key inventors from directly running away with an invention and thus lowering the incentive for innovation.<p>But surely not every fifth worker with a high school degree or less in the market is a researcher or crucially involved in the generation of trade secrets. Many people are simply selling their labour, and this data point suggests that non-competes are being abused to an extreme degree simply to chain employees to a business.
I was surprised share buybacks were not mentioned. Seems like every company has been doing this over the past few years. I'm no finance guru: is there a reason buyback money couldn't be diverted into pay raises?
> Because most people sink roots in their communities, they are reluctant to quit their job and move to a job that is far away.<p>How common is this? As a child, my father changed jobs every few years, and we moved often as a result of that (until I was 10 at least). We even lived in France for three years because my dad thought it would be a good opportunity to learn about other cultures. So personally, I've never had any objection to moving for the best opportunity.<p>My wife on the other hand comes from a different background; she grew up in the same house in a rural town and thinks that moving hurts children's ability to develop friendships. She also believes that being close to family is more important than optimizing your career (although she has kindly agreed to move should a good opportunity arise).<p>Is the "stay in one spot" viewpoint becoming more common? I can see how this would lead to competitive job offers stagnating in a region if no one is willing to move into it or away from it.
Hasn't the US labor participation rate been dropping for over a decade?<p>If that is accurate, it makes sense that unemployment is down and still going down but wages aren't moving at all or as quickly. There's effectively "spare capacity" in the system in the form of people who were removed from the unemployment numbers but still wanted to work.
What is frustrating is the problem can be attacked even without introducing any new law.<p>In many industries the reason employers have monopsopy power is regulations that prevents new players from eating the fat profit margins of incumbent players.<p>telecom, healthcare, real estate, legal services ......<p>Just like coders see every problem as a software problem - lawmakers tend to think any problem can be solved with more laws ! not realizing they are also playing the economic game theory charade.<p>In this case particularly, introducing more laws is going to make is harder for new players from gaining market share.<p>I am not also just making this up, France has some of the most progressive labor laws written with the best of intentions - but lawmakers failed to see the economical ramification of their laws. It made employers reluctant to hire full time workers - creating a painfully high unemployment rate.<p>A lot of American multinationals also have most of their growth happening outside US borders, I think stronger Unions and ill thought out reform is going to result in more aggresive offshoring.<p>I know supply side economic arguments has gone out of fashion - but by allowing entrepreneurs to more easily embrace globalization the same way as larger companies exploit it will more comfortably increase income without causing massive spikes in inflation.<p>This also includes less regulation so that workers can strike without legal trouble and cause trouble for employers, by dragging the process through the court system will just mean more money for lawyers - and large companies have deep pockets anyway to fight any potential lawsuit. Think about how things like fraud are already illegal but companies seem to get away with it anyway.<p>The only power labor has to collective withdraw it - which painfully show up in the balance sheet in every board room, its the only language capital understands.
" In other words, in the labor market, effectively a small number of employers are competing for their labor"
This is not what a monopsony is. That's an oligopsony.<p>"Because most people sink roots in their communities, they are reluctant to quit their job and move to a job that is far away."<p>The effect of this is a wash because this is also a problem for employers too. The supply of good workers is smaller because few people are willing to move towns for one - which drives labor prices up.<p>"Unions used to offset employer monopsony power"<p>Ahh, okay, now im understanding the point of this article. Lets fight monopolies with more monopolies instead of solving the underlying issues!<p>I agree with the points about non-competes though.
Before the cacophony of “we need better laws! More government!” Please reflect that all the wage suppression that is commented on the article comes from laws in the first place.<p>It’s amazing to me that the solution presented by those who are anti laissez faire are more laws to correct the past laws.<p>Market transactions only happen if they are mutually beneficial. Can’t force any side as this will distort it.<p>Please look at the supreme labor laws found in Europe to find out what happens. To note, the Spanish, French, Italians face chronic young adult unemployment with roughly 1/4 people being employed.