Uncompahgre

Uncompahgre

Monday, March 12, 2018

My Intellectual History of Monopsony

In honor of the release of the second paper I've cowritten with Jose Azar and Iona Marinescu [writeup here], and the growing academic and political interest in labor market monopsony, I recently did a tweetstorm on how I got interested in antitrust, and specifically labor market monopsony as a potential violation of the antitrust laws. This post is meant to store all the links from that tweetstorm, and the basic narrative, in one place.

1. A blog post I did about the search-and-matching labor market models in which I was trained in graduate school--which are valuable mostly because they at least leave room for the possibility that the labor market is monopsonized, unlike most mathematical representations of the labor market.

2. My 2016 paper with Mike Konczal about declining labor market mobility, business dynamism, and entrepreneurship--which we propose is a demand-side phenomenon reflecting market power on the part of employers, thanks in part to the shareholder revolution in corporate governance.

3. My articles with Bernard Weisberger about the intellectual history of progressive economics.
4. A 2016 article I wrote in the American Prospect about an antitrust suit against Uber for fixing wages and prices among its drivers--my first public writing on antitrust. Following an adverse ruling by the 2nd Circuit Court of Appeals, the district court recently sent the case to arbitration, likely ending it. In addition to the regulatory black hole into which Uber drivers have fallen, the perversion of the arbitration process has deprived them of any and all recourse to enforce the law against their non-employer employer. The whole saga makes it quite clear that when it comes to worker protections, we're back to the early 1890s--including because the federal government cares more about enforcing the Sherman Act against Uber drivers bargaining collectively than it does about enforcing it against the actual monopolist involved: Uber.

5. My second foray on antitrust and first on the website ProMarket: an entry in the debate about whether antitrust has a role to play in the "inequality debate," building on the Uber piece. The crucial issue is the "consumer welfare standard."

6. Later in 2016, the Council of Economic Advisors released a paper on monopsony, and I wrote a response to it on ProMarket. At the FTC Microeconomics conference in the fall of 2016, a panelk discussion addressed the matter but glossed over employer power to dwell on the non--issue of occupational licensing.

7. In the spring of 2017, I appeared on a congressional panel on antitrust and the labor market. Here are my prepared remarks.

8. I wrote yet *another* ProMarket article on how to enforce antitrust laws in the labor market, and spoke on the same theme at a Roosevelt Institute public event in September 2017.

9. In December 2017, my first paper on Labor Market Concentration with Ioana and Jose was released. Here's a blog post discussing the paper on Roosevelt's website. That paper received a good deal of coverage in the popular press: in the New York Times, Slate, the Economist, Bloomberg View, the Nation, and elsewhere. It was also cited in several other papers about antitrust enforcement in the labor market, as well as an op/ed by Alan Krueger and Eric Posner. Since we released ours, Benmelech, Bergman, and Kim released their paper documenting labor market concentration in manufacturing over a much longer time horizon.

In short, it's heartening to see so much interest in monopsony, including in Congress, in the press, among academics, and the general zeitgeist. It's a big problem. And recognizing that implicates even larger issues about how the economy works that tend to make it quite difficult to adhere to conventional economic wisdom, at least as it's existed for the last several decades.


9 comments:

  1. Experience suggests that talk of "markets" is a way of whitesplaining inherited race/class privilege as "market forces," and since economics conventionally functions as a mask for social power relations, it's hardly surprising that most economists perform elaborate verbal and mathematical calisthenics to justify a grossly unjust socioeconomic system.
    The same kinds of intellectual gymnasts got used to justify child labor in the 1870s, using 12-year-old girls to haul coal out of coal mines in England in the 1820s because 12-year-old children were cheaper to replace than horses when they died from overwork, etc.
    The crucial questions in economics today seem to involve not monopsony or monopoly power, but rather what we're going to replace capitalism with when the rich people and their enablers get lined up against a bullet-pocked wall after having been convicted by the people's tribunal.
    But maybe I'm overreacting. Perhaps 200+ million Americans will enjoy living in cardboard boxes roasting sparrows on curtain rods while working part-time temp gigs that pay far below the minimum wage.

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  2. Bernie Sanders union restoration plan “ … would allow employees to form a union by a majority sign-up … require companies to negotiate with a new union within 10 days [of request] … mandate that workers in every state pay some dues … expand the law’s definition of ‘employer’ … .” (I worry why it specifies "new union" -- any word on old, long ignored unions?)
    https://www.washingtonpost.com/news/wonk/wp/2018/05/09/bernie-sanders-has-a-new-plan-to-raise-wages-save-the-unions/?utm_term=.6e048bc92181

    Today’s toothless, 80-year-old NLRA is the most flouted law since federal prohibition -- while being the law that the average person's ability/inability to make their weight felt economically and politically most rises or falls with. Bernie’s bill makes an honest effort to shore up the long un-shoreupable.

    Milton Friedman said in essence that either 100% unions or 0% unions works out best for most labor –- not any percentage in between -- because unionized workers automatically scoop a proportionately larger share of the wage divide. A hole in Uncle Miltie's vision was that any percentage of unions automatically captures a proportionately greater share of the wage/profit divide with (monopsony) ownership -- and for some reason he wasn't okay with that.
    https://www.youtube.com/watch?v=Tefm8wxCQdg

    We are down to almost 0% unions: only 6% now surviving in private (non-gov) employment. Are American workers uniquely anti-union? Ask the 40% (there's a way). No; US unions have been subjected to a decades long onslaught of (illegal) union busting.

    Bernie’s repair bill might turn out to be Bernie’s Band-Aids on such a toxic battlefield (think McDonald's). Imitation is the sincerest form of flattery. We can take our direction from Wisconsin governor Scott Walker –- and his Republican free-to-decert (sorry, Miltie) flatterers.

    Scott forces his unionized employees to recertify every year (private employees more protected from same by the First Amendment and federal preemption) –- affirmation by majority of all members required, not merely of those who vote (Scott wants to make really, really sure his union members are united).

    One of Scott’s admirers, the Republican Party of Iowa, fancied the same deal for their public employees in 2017: 93% voted pro union (under same not-to-vote is a "no" vote). “Of the 33,252 eligible voters statewide, 28,448 voted to retain their unions and only 624 cast ballots in opposition.”
    http://qctimes.com/news/local/government-and-politics/update-percent-of-iowa-unions-vote-to-recertify/article_6f021d3e-7303-59ad-9da9-1e4ae4b18d08.html

    I wonder how union certification votes would play out across the land if our incoming blue Congress (2019) requires union cert/recert/decert-ification elections (not just decert) at every private workplace (one, three or five year cycles; local plurality rules).

    Why Not Hold Union Representation Elections on a Regular Schedule?
    Andrew Strom — November 1st, 2017
    "Republicans in Congress have already proposed a bill that would require a new election in each [private employer] unionized bargaining unit whenever, through turnover, expansion, or merger, a unit experiences at least 50 percent turnover. While no union would be happy about expending limited resources on regular retention elections, I think it would be hard to turn down a trade that would allow the 93% of workers who are unrepresented to have a chance to opt for unionization on a regular schedule."
    https://onlabor.org/why-not-hold-union-representation-elections-on-a-regular-schedule/

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  3. Idaho is Blue, and a non-union State, and that’s freedom!! Unlike indentured slavery that unions impose. Unions are fine for depressed states that have need to protect workers. Over time, though, that nurturing turns into Cancer in your back, like a nagging mother.

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