Category: Economics, Business, & Work

While most labor market indicators point to an economy near full employment, a notable exception is the sluggish rise of wages. However, this slow wage growth likely reflects recent cyclical and secular shifts in the composition rather than a weak labor market. In particular, while higher-wage baby boomers have been retiring, lower-wage workers sidelined during the recession have been taking new full-time jobs. Together these two changes have held down measures of wage growth.

As long as employers can keep their wage bills low by replacing or expanding staff with lower-paid workers, labor cost pressures for higher price inflation could remain muted for some time.

Source: Economic Research | What’s Up with Wage Growth?, by Mary C. Daly, Bart Hobijn, and Benjamin Pyle

Contrary to popular belief, entrepreneurs typically make terrible innovators. Left to its own devices, the private sector is far more likely to impede technological progress than to advance it. That’s because real innovation is very expensive to produce: it involves pouring extravagant sums of money into research projects that may fail, or at the very least may never yield a commercially viable product. In other words, it requires a lot of risk – something that, mythmaking aside, capitalist firms have little appetite for.

Source: America has become so anti-innovation – it’s economic suicide | Technology | The Guardian

in the long run, the fragmentation of regulation likely implies the morphing of global companies themselves into new governance and operating structures. One possible model is to have the company organized as affiliated networks of independently operating, locally registered, privately held partnership structures to avoid anti-foreign backlash. We are entering an important phase where the choices of regulators will determine the geography of business and innovation more than the presence of technology and talent. The policy choices we make over the next few years will change not just the structure of future global businesses but also the competitiveness of entire nations.

Source: The world’s megacompanies are about to become true stateless superpowers—in all their power and complexity — Quartz by Parag Khanna and Sangeet Paul Choudary

Source: Want to rescue rural America? Bust monopolies. – The Washington Post by Lillian Salerno

Globalization and technology aren’t the only factors crushing the heartland. Monopolies are, too.

one major force behind the steep economic decline is something that, until very recently, has received virtually no attention: the unprecedented level of corporate monopoly power that has been concentrated throughout the American economy.

Let’s look at just one indicator — new business formation. From 2010 to 2014, 60 percent of counties nationwide saw more businesses close than open, compared with just 17 percent during the four years following the 1990s slowdown. During the 1990s recovery, smaller communities — counties with less than half a million people — generated 71 percent of all net new businesses, with counties under 100,000 people accounting for a full third. During the 2010 to 2014 recovery, however, the figure for counties with fewer than half a million people was 19 percent. For counties with less than 100,000 people, it was zero.

Two decades ago, in the seed industry alone, 600 independent companies existed. Today there are six giants, several of which are pursuing high-profile mergers that will result in even more radical concentration.

The question is whether we will recognize the error of our ways and put taking on monopolies high on the economic agenda — for rural and small-town America, and for everyone who wants to ensure our country can once again be the land of opportunity.

Source: Want to rescue rural America? Bust monopolies. – The Washington Post by Lillian Salerno

Source: The concept of labor-market “fissure” explains a lot of what’s wrong with the economy — Quartz by Allison Schrager

The dream of working your way up from the mail room to the corner office is no longer viable if everyone in the mail room is a contractor.

[Labor-market “fissure” is] what happens when more workers are contractors instead of employees.

Research by economists Larry Katz and Alan Krueger has explored the trends in alternative work arrangements like these (pdf). They estimate that non-standard employment (gig work, temp work, contractors) accounted for a around 10% of American workers between 1995 and 2005, but grew to some 16% of American employment in 2015. Much of the increase is attributable to “workers provided by contract firms.”

Short-term pressure to cut costs, such as during the global financial crisis, is not associated with greater workplace fissure, Krueger and Katz have found (pdf). This is a secular, not a cyclical, trend in the labor market.

Source: The concept of labor-market “fissure” explains a lot of what’s wrong with the economy — Quartz by Allison Schrager