The Declining Worker Power Hypothesis

Download or read book The Declining Worker Power Hypothesis written by Anna M. Stansbury and published by . This book was released on 2020 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt: Rising profitability and market valuations of US businesses, sluggish wage growth and a declining labor share of income, and reduced unemployment and inflation, have defined the macroeconomic environment of the last generation. This paper offers a unified explanation for these phenomena based on reduced worker power. Using individual, industry, and state-level data, we demonstrate that measures of reduced worker power are associated with lower wage levels, higher profit shares, and reductions in measures of the NAIRU. We argue that the declining worker power hypothesis is more compelling as an explanation for observed changes than increases in firms' market power, both because it can simultaneously explain a falling labor share and a reduced NAIRU, and because it is more directly supported by the data.