How Thriving Firms Threaten the Future of Work
May 1, 2021
A sharply argued thesis that one effect of all-powerful corporations is the suppression of wages for working people across the board. Productivity has risen markedly since 1980, writes Barcelona-based economist Eeckhout, "yet what most workers get in exchange for producing that output has not kept up." Indeed, wages have fallen, especially for "unskilled workers" and those without a college education. Even skilled professionals are losing ground. Meanwhile, corporations such as Amazon and Google have become near monopolies. The labor share of the economy, as Eeckhout puts it formally--though this book requires no background in economics to understand--was about 65% in 1980 and is below 58% today. "A decline of seven percentage points--or 10 percent--may seem tiny," he adds, "but that includes the earnings of...top earners, and not just the low-paid workers." Given the inequalities in today's winner-take-all economy, workers understandably feel that they have no stake in the game and no vested interest in seeing that the system is maintained, giving rise to political unrest. In a novel, intriguing argument, Eeckhout holds that Amazon and other monopolies could well afford to lower their costs, which would mean more volume, yet they keep their prices high in order to curb demand and keep labor costs down while maintaining market power. The author notes that whereas the two largest retailers before the Depression, Sears and A&P, had a market share of just 3%, Walmart and Amazon today "account for 15 percent of retail sales." Yet antitrust regulators, as well as politicians of all stripes, are silent. Eeckhout proposes that existing antitrust laws be brought to bear to force higher wages as well as to pry data from the hands of corporations and back into the purview of the consumers who generate it. A provocative case, and one that those who feel undervalued in the present economy will surely appreciate.
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Starred review from June 1, 2021
A Brookings report from late December 2020 noted that Amazon and Walmart saw record profits during the COVID-19 pandemic, yet have done little to compensate their frontline workers. The new book from Eeckhout (social and behavioral science, Pompeu Fabra Univ., Barcelona) shows us why this shouldn't be a surprise. Looking at the past 40 years of labor, he traces the growing distance between the economic potential created by new technology, and the stagnant wages for most workers. Eeckhout writes that the modern economic landscape resembles the early 20th-century second industrial revolution, but makes the wealth accumulation of the robber barons seem quaint in comparison to our modern tech entrepreneurs. His book is an exploration of the use of market power to push worker productivity to an all-time high without commensurate compensation. It mixes case studies and the author's research to prove that the present economy is stacked against all workers, even those with advanced degrees, and that world governments haven't done enough to regulate these near-monopolies. Readers of Binyamin Appelbaum's The Economists' Hour or Daniel Markovits's The Meritocracy Trap will find a familiar story told through labor's lens. VERDICT An important study on why workers feel both more productive and less secure in their work and lives.--John Rodzvilla, Emerson Coll., Boston
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