One might, naively, think that the economies of scale that companies like Wal-Mart possess should redound to the benefit of workers as well as consumers. More efficiencies from economies of scale should leave a bigger pie for everyone else, which would be shared, right? Apparently not. When a business earns more by selling to large buyers, its workers wages appear not to go up but to go down. Something to watch very closely. Sharon Nunn sends us to Nathan Wilmers: Sharon Nunn: Big Businesses Push Down Prices, and Perhaps Wages: "As large firms... command increasing market share in the retail industry, they narrow the field of buyers for companies that make and move consumer products.... [Nathan] Wilmers found that since the late 1970s... a 10% increase in [corporate] earnings that depend on larger buyers is associated with a 1.2% decline in wage growth...
...The longer the relationship, the more downward pressure on wages.... Foreign competition... can’t entirely explain what’s happening in logistics and service sectors. Trucking companies in the U.S. don’t compete with trucking companies in China. “The buyer power effects persist after I control for…share of revenue from foreign sources,” Mr. Wilmers said. “But there are probably complex interactions... maybe buyers hone certain cost management techniques when building international supply chains, which, they then also use on domestic suppliers”...
#shouldread #monopoly
