This is an interesting read not just for the topicality of it given the recent cases of labour unrest in some parts of India but also a nostalgia driving analogy with the context of the iconic 80s movie – Aliens. The article refers to a new book The Wage Standard: What’s Wrong in the Labor Market and How to Fix It, by economist Arindrajit Dube, that talks about the prevalence of monopsonies in today’s economy. “A monopsony is like the inverse of a monopoly. Whereas a monopoly means one seller, a monopsony means one buyer. It’s a concept relevant to the labor market because employers buy our labor.”
Plenty has been written about how capital has gained at the expense of labour as a factor of production over the past few decades which in turn is driving income and wealth inequalities. As firms use capital (industrial automation in manufacturing and AI in services) to replace labour, workers – both blue and white collar are left with few employment options, thereby increasing the bargaining power of employers (capital).
The author illustrates this using an extreme example of the space crew in the movie Aliens “Ripley (played by Sigourney Weaver) and the rest of her crew on the USCSS Nostromo spaceship are essentially space truckers, hauling mineral ore across the galaxy for the company. The distance is so far they have to go into cryogenic sleep for the journey. But, on their way home to Earth, the company reroutes them. The ship’s computer awakens the crew after picking up a mysterious signal on the moon of a distant planet, and the company puts in motion a plot to get them to go to it.
The workers complain. One says he wants to go home, and they deserve a bonus if they have to do work beyond what they signed up for. But another crewmember — who is secretly an android doing the company’s bidding — tells them that their contract’s fine print says any signal like this must be investigated, or else their contract is void and they have to forfeit their salaries. The company has all the leverage. With no bargaining power, the workers comply without getting extra pay for overtime work.”
The author then turns to Dube’s book: “…when Dube and other economists talk about “monopsony power,” they’re talking more generally about employers that face weak competition in hiring and retaining workers, which gives them some ability to underpay or mistreat them. The idea is that companies don’t necessarily have to be the only employer in town in order to exercise significant power over workers.
…The story of exploding income inequality in the United States, in Dube’s telling, is inextricably linked to a concerted assault on the counterweights to monopsony power since the early 1980s. Think like the erosion of the federal minimum wage, the decline of unions, and a vibe shift in corporate boardrooms away from concerns about fairness.
But Dube also has a surprisingly optimistic take on the direction our society has been moving. He argues that, at least until recently, we’ve been seeing the resurrection of institutions, policies, and vibes that could help restore greater equality in the labor market.”
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