Maybe corporations don’t have enough power

In a context of monopsony power, wages at the top of the spectrum would be held lower. Corporations wouldn’t then voluntarily distribute them to workers with lower wages. But if firms lacked monopoly power, they wouldn’t be able to retain the gains from that. The gains would be captured as consumer surplus by the firms’ customers. In order to be competitive in the market for their goods and services, firms would have to assert their monopsonist power just to remain competitive by transferring those gains to the consumer.

…it does match with a context where more skilled workers were captured by powerful firms and less skilled workers benefit indirectly as consumers.  Maybe labor incomes had less variance because firms back then were more powerful.

That is from Kevin Erdmann.


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