• 61°

Teachers’ strikes show that workers have newfound power

By Conor Sen

Bloomberg View

What is driving wage growth? Or rather — what has been tapping the brakes?

One theory making the rounds is that increasing concentration of employers is holding down workers’ bargaining power. My colleague Noah Smith put together a compelling explanation for this: Having fewer employers gives employees less bargaining power.

But it’s hard to disentangle increasing firm concentration with some of the other big trends holding down wage growth over the past several decades, and some of the signs of increased labor market bargaining power in 2018 are occurring in consolidated labor markets. That points to another theory: labor market psychology.

Workers once thought jobs were scarce, so they didn’t agitate for more pay. Now that perception is starting to change.

The best example of this may be the teacher unrest in West Virginia, Kentucky, Oklahoma and Arizona. Teachers are a prime example of captive labor. Teacher credentials in each state cost time and money, a sunk cost that discourages employment switching across state lines.

Two months ago, the plight of teachers in these four states — places with stagnant or falling wages over the past decade — looked like evidence for that theory of employer concentration and bargaining power. But then something changed.

West Virginia teachers decided they had had enough. They walked off the job, eventually negotiating a pay increase. Inspired by the West Virginia teachers, teachers in the other three states have sought to do the same. Arizona teachers are fighting for a whopping 20 percent pay increase after years of being underpaid.

These uprisings are being heralded as showing the importance of unions, but … the unions aren’t new. For more than a decade, teachers’ unions couldn’t overcome the fiscal and political realities of these states. The main thing that changed was the workers’ psychology — being fed up and being willing to fight for a pay raise.

Another area of the labor market where workers have wage growth momentum is the retail sector. And Walmart, the sector’s largest employer and the firm that concentrated the industry for decades until Amazon came along, has been leading the charge for a few years now. Starting in 2015, Walmart has steadily increased its minimum wage, forcing competitors to respond.

Speaking of Amazon, Bloomberg reported earlier this year that when the e-commerce giant opens a fulfillment center in a community, it leads to pay increases as that employer drains the local labor pool for similar workers. No signs of employment concentration holding down wages here.

In his piece, Smith points to research showing that government-mandated minimum wage hikes don’t have the negative impact on employment that its opponents fear. But that’s a whole other animal. Government increases tend to come when the momentum is already behind them. When unemployment is high they’re rarely proposed or adopted. It’s only when employment is good that wage laws win support. For instance, the last time the federal minimum wage was increased was in May 2007, when the unemployment rate was at 4.4 percent, its low for the cycle. Because minimum-wage increases tend not to be random, but occur during strong labor markets, it’s harder to evaluate them without accounting for the underlying economic strength at the time.

With governments increasingly looking to raise their minimum wages, large employers like Walmart setting the bar for low-end wage growth, and public teachers suddenly believing they can win significant pay increases, it’s hard to say in 2018 that firm concentration is holding down wage growth. That may have been the story in the past, but now labor markets have tightened and labor market psychology has changed — for employees and employers.

Sen , a Bloomberg View columnist, is a portfolio manager for New River Investments and has been a contributor to the Atlantic and Business Insider.

Comments

BREAKING NEWS

Multiple law enforcement agencies respond to shots fired at Halloween attraction

Nation/World

Trump picks conservative Amy Coney Barrett to fill Supreme Court seat

Coronavirus

Deadly September propels Rowan County to 100 deaths from COVID-19

BREAKING NEWS

Highway Patrol charges man in hit-and-run after finding vehicle hidden in woods

Elections

NC elections board, Republicans at odds over absentee ballot rule changes

News

Voters struggling with witness rules in early voting

News

Trump expected to announce conservative Amy Coney Barrett for Supreme Court

Coronavirus

County reports COVID-19 percent positive rate of 8%

Local

Rowan County United Way sets $1.5 million goal at drive-in kickoff event

Crime

Blotter: Adult daughters accused of beating up mother

China Grove

China Grove firefighters injured after truck overturns

Business

Salisbury VA to reopen entry, exit gates

Crime

Sheriff’s Office looking for suspect in Burlington Coat Factory theft

Elections

Requests for absentee ballots top 9,000 in Rowan

Local

Spencer approves supplemental USDA loan for Park Plaza project

Business

11 locals will make up Empire Redevelopment Task Force

Local

New finance director excited to prove himself, continue on path set by predecessor

Coronavirus

County health officials report four new COVID-19 deaths

Elections

Trump promotes health care ‘vision’ at stop in Charlotte but gaps remain

Crime

Blotter: Woman charged with stealing mom’s dog

Business

Rowan County hires Howden as new finance director

Local

Exhibit about Jim Crow-era travel on display at NC Transportation Museum

Elections

GOP elections board members resign over absentee settlement

Crime

Drive-by shooting injures 24-year-old Salisbury man