
American companies are suppressing wages for many workers - Caveman_Coder
https://www.nytimes.com/2018/02/28/opinion/corporate-america-suppressing-wages.html
======
pembrook
Two words: pay bands.

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.

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.

~~~
skookumchuck
I've gotten pay significantly above HR's "pay band" and "policy", because I
refused to work for less.

Workers have power, too. They can refuse the offer. If you're an employer and
you want good people, you'll find out real quick about their power.

~~~
Daishiman
Yeah, lucky you being in a profession with an extremely high unmet demand.

Not so good for the poor chumps working in retail who've been told that unions
are bad.

~~~
skookumchuck
There's a wide variety in retail employees. They are not interchangeable.
There's plenty of opportunity to show you're worth more.

------
Barrin92
>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.

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.

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.

~~~
twblalock
I suspect many of those noncompetes would not hold up in court.

~~~
zbobet2012
Because folks without a highschool education can afford to fight a major
company in court. /s

Sorry about the sarcasm, but this kind of abuse of the contract system needs
to be stopped. You can only really invalidate an individual contract (ianal)
as I understand it. So the fight would have to happen for _every employee_.
While case law makes it cheaper, the reality is most of these folks can't
afford to higher a lawyer for a few hours, let alone a few days.

~~~
sjg007
My guess is that you could get a lawyer to take it on contingency if you were
to be sued. The real issue would be the company hiring you.. would they be
willing to take the risk.. They actually have no incentive to b/c they
probably use non-competes as well!! So it will take an intrepid employee /
applicant to make the case that they were not hired due to the non-compete. OR
an employer willing to go to bat (which may happen if it's a doctor/lawyer or
someone they feel worth going to bat for. And even then I bet people settle
which means the law never gets its mettle tested.

------
snake_plissken
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?

~~~
nopriorarrests
Pay raises lower the stock price. Buybacks raise it. CEO compensation depends
on stock price. That's all.

~~~
Pokepokalypse
. . . because stock is taxed differently than income.

This is a huge incentive behind how our system has become so broken.

~~~
1123581321
No, it's because a buyback is purchasing an asset (a share of issued stock)
and payroll is just an expense. You could argue that increased payroll
increases retention which is valuable, but that's an indirect and uncertain
way to increase the value of a company.

------
Xcelerate
> Because most people sink roots in their communities, they are reluctant to
> quit their job and move to a job that is far away.

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.

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).

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.

~~~
flukus
IME, it's very common, the default for most. Once you have kids and buy a
house you've decided to stick to the same geographic area at least until the
kids are adults. I'd guess it's even more common now that more children are
living with single parents, one parent will be deprived of easy access to the
kids if they were to relocate.

It's the biggest reason people hate gentrification as well, they can quickly
get priced out of an area they belong to.

------
caseysoftware
Hasn't the US labor participation rate been dropping for over a decade?

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.

------
wrong_variable
What is frustrating is the problem can be attacked even without introducing
any new law.

In many industries the reason employers have monopsopy power is regulations
that prevents new players from eating the fat profit margins of incumbent
players.

telecom, healthcare, real estate, legal services ......

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.

In this case particularly, introducing more laws is going to make is harder
for new players from gaining market share.

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.

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.

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.

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.

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.

~~~
shkkmo
You obviously didn't read the article and appear to be just spouting talking
points. The three laws proposed in no way impede small businesses. Prohibiting
anti-poaching , Limiting non-competes, and considering the labor market
effects of mergers will primarily impact large businesses.

In fact, all those changes reduce friction and increase competition in the
labor market. These should be precisely the kind of changes I would think you
would support?

~~~
nopriorarrests
I wonder if non-compete agreements actually matter. I mean, come on.
Lewandowski landed at Uber after Google. Does anyone cares if some dude from
burger king will join KFC? Will BKing really sue him?

~~~
smnrchrds
Probably not, but he would not dare join KFC for the fear that Burger King
decides to sue him. Even if he wins the case, he will go bankrupt navigating
the court.

And KFC would include a question on their hiring form "Are you subject to a
non-compete clause?" to cover their asses. If he answers yes, he is
immediately disqualified and KFC moves to the next candidate. After all, it's
not like he has unique knowledge for which it is worth getting sued over,
unlike Lewandowski. If he answers no and it is ever discovered he had lied, he
is immediately fired.

------
mlillie
Not sure how declining union membership is laid out, and then strengthening
union membership is not suggested.

------
randyrand
" 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.

"Because most people sink roots in their communities, they are reluctant to
quit their job and move to a job that is far away."

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.

"Unions used to offset employer monopsony power"

Ahh, okay, now im understanding the point of this article. Lets fight
monopolies with more monopolies instead of solving the underlying issues!

I agree with the points about non-competes though.

~~~
pjmorris
> Ahh, okay, now im understanding the point of this article. Lets fight
> monopolies with more monopolies instead of solving the underlying issues!

If an opposing force of similar power is not the best strategy, what do you
propose as an alternative?

~~~
Eridrus
We can enact laws to prevent the practices we as a society decide are
unacceptable.

There are people here who are fatalistic and think that politics is unwinnable
and politicians are in people's pockets, but laws can take away unions' power
too, so I don't see politics as avoidable in any case.

I think framing a union as a monopoly is odd, but they become institutions in
their own right, and theirs interests diverge from the wider group's fairly
quickly.

The UPS union seems to want to force UPS to not invest in drones or self-
driving trucks at the expense of everyone who would benefit from significantly
cheaper delivery, and this isn't exactly an isolated incident.

The construction unions in NYC have secured themselves a deal where the
government must use union labor, and unions negotiate a contract with their
employers, who have no incentives to keep costs down because they pass all
these costs on, and we get subways that are 10 times more expensive than
anywhere else in the world.

We have a similar situation with construction unions & housing in NYC leading
to increased costs and .: more expensive housing for everyone in NYC.

And the list goes on forever.

~~~
cannonedhamster
We can't even pass a federal budget, but we can make sure corporate lobbying
gets their giveaways. Laws in the United States as of late almost never
benefit the citizen, unless of course you consider corporations people.

~~~
Eridrus
Union organising won't save you if the politics are against you.

------
whb07
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.

It’s amazing to me that the solution presented by those who are anti laissez
faire are more laws to correct the past laws.

Market transactions only happen if they are mutually beneficial. Can’t force
any side as this will distort it.

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.

~~~
Caveman_Coder
> "Market transactions only happen if they are mutually beneficial. Can’t
> force any side as this will distort it."

I think the modern assumption is that things are distorted, and they are
heavily distorted in favor of business...

