5 ms·

American companies are suppressing wages for many workers

142 points by ColinFCodeChef 9y ago

Spooky23 9y ago
All of the major unions have been broken, with the public sector unions coming up next re: the Janus case. Even though there was always a limited number of union workers, their collective bargaining set the standard. That’s not really a factor these days.
- randomdata 9y ago
  Interestingly, unionization in Canada is still as strong as the strongest years in the US. Despite that, wages are every bit as stagnant as the US and, looking at income data, there is a lot of mirroring between the two countries. The substantial decline of unionization in the US is one thing, but what is Canada doing wrong?
  - geodel 9y ago
    This is world wide phenomenon applied to all irrespective of where they lie on political/social spectrum. I think reasons are 2 fold: 1) Far too many humans on earth to have better bargain power in exchange of labor. 2) No workable formula where enormous wealth generated in this world to be more equally distributed.
  - emodendroket 9y ago
    Isn't Canada just as affected by off-shoring of work to countries with weaker labor standards and lower wages?
    - randomdata 9y ago
      I would say yes, but I am not clear how that relates to the original claim. Are you trying to suggest that this problem is beyond the capabilities of unions?
      - emodendroket 9y ago
        The globalization of markets presents a real problem for unions which have more of a national or regional focus. I'm not going to say it's beyond the capability of unions to address somehow, but I do think it has reduced their leverage substantially.
  - nullymcnull 9y ago
    I am curious as to where you are getting the idea that "unionization in Canada is still as strong as the strongest years in the US". That's pretty much the opposite of my personal experience and observations, and it's not the consensus I've been hearing (which is that organized labour has been at an absolute nadir in the past few decades, as much in decline as in the US). Unions have shrunk, membership are down, political clout is down, and a newly unionized company is a rare bird indeed. Perhaps the high rate of unionization in the public sector skews the stats here, because in the private sector, things are pretty much a mirror of the US situation. From what I can tell, all of the same factors that are driving down wages in the US - increased consolidation, far more 'temp' positions brokered by temp agencies - apply to Canada as well, and have had the same effect.
    - randomdata 9y ago
      > I am curious as to where you are getting the idea that "unionization in Canada is still as strong as the strongest years in the US" Based on the share of the workforce that is represented by unions. Canada is currently at ~30%, the US peaked at ~30% and is at less than 10% today. > Unions have shrunk, membership are down, political clout is down, and a newly unionized company is a rare bird indeed. Unionization is indeed down, but what I said is that it is still about as strong as the strongest years in the US. Canada had even stronger unions through the 80s, when it peaked at just shy of 40%. Interestingly, much of the same wage issues we face today were still present at that time. Wages have been stagnant since at least the 70s, according to the Canadian government (and American data echos this).
      - eesmith 9y ago
        When you say "represented by unions", do you mean the unionization rate or the coverage rate? In terms of unionization rate, in 2016 Canada was at 28.4% [1]. By comparison, the US peak was 34.8% in 1954 [2] . (It is now 10.7% [3], which is slightly higher than 10%, not less than.) While the "~" can justify a rounding to the nearest 10% instead of 5%, that ended up hiding a difference of 6.5%, or 1/5th of the total unionized population. From what I can tell, the current rate of around 28% corresponds to the US unionization rate in about 1970 [3], and not its peak in 1954. The US peak of 34.8% is closer to the Canadian peak of 37.9% in 1984 than it is to 30%, and corresponds to the Canadian unionization rate in 1991 [1]. The coverage rate for both countries is of course higher. For 2017 in Canada it was 30.4% [5] and in US is was 11.9% [3]. [1] "http://www.statcan.gc.ca/daily-quotidien/170908/cg-a003-eng.htm http://www.statcan.gc.ca/daily-quotidien/170908/cg-a003-eng.... [2] "At their peak in 1954, 34.8% of all U.S. wage and salary workers belonged to unions" - http://www.pewresearch.org/fact-tank/2014/02/20/for-american-unions-membership-trails-far-behind-public-support/ http://www.pewresearch.org/fact-tank/2014/02/20/for-american... . [3] http://unionstats.gsu.edu/All-Wage-and-Salary-Workers.htm http://unionstats.gsu.edu/All-Wage-and-Salary-Workers.htm . The BLS gives the same unionization numbers for 2017 (but no coverage numbers) at https://www.bls.gov/news.release/union2.nr0.htm https://www.bls.gov/news.release/union2.nr0.htm . [4] http://www.statcan.gc.ca/daily-quotidien/170908/cg-a003-eng.htm http://www.statcan.gc.ca/daily-quotidien/170908/cg-a003-eng.... [5] https://www.statista.com/statistics/442980/canada-union-coverage-rate-by-province/ https://www.statista.com/statistics/442980/canada-union-cove...
- mrkstu 9y ago
  The problem with public sector unions are that they are a reverse monopsony. They collude with politicians to elect those who are willing to ignore economic reality and pay unsustainable wages/pensions/benefits[0]. Looking at places like Connecticut/Illinois/New Jersey it is causing starvation of public services to meet pension obligations despite already high taxation. They are caught in a trap since if they raise taxes further (and/or decrease services) they will lose those most capable of moving- who also happen to pay the most taxes. This is already starting to play out[1]. Private sector unions are tasting the fruits of their corruption via the mafia and general unwillingness to integrate with long term industry needs, ala the German model. Its incredibly unfortunate, since a modern, ethical and foresightful private union would serve the greater good of the country better than just about anything else I can think of. 0: https://www.forbes.com/sites/adammillsap/2016/06/01/public-pensions-are-states-biggest-problem/ https://www.forbes.com/sites/adammillsap/2016/06/01/public-p... 1: http://www.courant.com/opinion/editorials/hc-ed-tax-migration-0102-20180102-story.html http://www.courant.com/opinion/editorials/hc-ed-tax-migratio...
tabeth 9y ago
And why wouldn't they? It's time to bring back mechanisms, legal or otherwise, to prevent this from happening again. Usually the collective workforce of a company has significant leverage over a company, but with the advent of globalization, the "gig economy", and technological unemployment in some ways this leverage is harder to capitalize on, or even worse, nonexistent. I don't know if there's any empirical proof for this, but like competition between companies, I think "competition" or tension between employees and employers for a given organization is also good for capitalism.
- baq 9y ago
  yeah that's what unions are really about - to think about the employees for the employees good, where HR thinks about them for the good of the company. implementations of that idea are of varying quality which unfortunately gives them a bad rep.
  - 0xcde4c3db 9y ago
    > implementations of that idea are of varying quality which unfortunately gives them a bad rep. Also giving them a bad rep: propaganda efforts by big employers. Back when I worked for them, Walmart showed new hires a training video that could be summed up as "just say no to card checks; union organizers are trying to trick you into giving up your rights, and you don't need a union anyway because we value our associates so much".
    - Brockenstein 9y ago
      Arguably, unions were so successful that people started asking "what do we need them for anymore?" It's shortsightedness that companies were/are all to happy to exploit.
    - RightMillennial 9y ago
      Some of the reputation is deserved though. When I worked at UPS you were forced to join the Teamsters union and pay union dues. I don't have a problem with the unions in general, but I'm against forced membership.
nukeop 9y ago
There was similar wage suppression (or should I say, wage theft scheme) in Silicon Valley until very recently. That's why the wages skyrocketed. If the scheme could be broken up in one industry, it can happen again in others.
- lotsofpulp 9y ago
  You also need demand for that type of labor, which can't be arbitraged by being performed in a different locale.
- ThirdFoundation 9y ago
  I wonder if the current high wages in Silicon Valley are a function of job competition in other cities (tech jobs in Austin, Denver, NYC, etc) plus a highly mobile workforce. Tech workers tend to skew younger and are also able to work remotely in many cases. I bring all this up, because I'm not sure it will be quite as applicable in other industries. It seems that many workers aren't willing to move for work and don't have the competitive salaries in other cities required to bring up the salary. I'm sure it's possible that the scheme could be broken up through other methods, but I'm having trouble seeing an avenue there.
  - hiram112 9y ago
    The SV wages I'm seeing seem to be concentrated in a few really wealthy companies who basically enjoy monopoly status in their domains. It doesn't seem like smaller startups pay that well - though maybe that is fair due to the chance to hit it big. What I will tell you is that software engineers in the rest of the country, especially in industries that have been decimated by offshoring and H1Bs (banking, insurance, and large companies in general) do not pay that well after about age 35 or so once you hit your ceiling (anywhere from $90K in the Midwest to $150k in high COL East Coast) no matter how talented you are. I made way better money than most of my peers at 25 - they were still in grad school and paying off loans. By 30, I was still making more, but they were quickly catching up. I'm imagining by 40, I won't be much ahead of anyone with a professional degree or even those who went into government and now have seniority, pensions, etc. What I've seen so far with offshoring, H1Bs in my 20s was the first big warning sign for me. Then as I got into my 30's and started seeing how management treats older works, I'm beginning to realize that age discrimination in tech is for real - second warning sign. And finally, if this whole war on white / asian males picks up steam in other companies, I'm probably going to attempt to pivot out of the industry completely. There is not much of a bright future.
expertentipp 9y ago
Post-contractual non-compete without any compensation. It’s starting to be a thing even in EU. 5-10 years ago I could sign an employment contract blindfolded, now it’s a freaking minefield where in couple of years I can end up without a job, unemployable, and owning multiple monthly salaries to the employer. We have too many bored lawyers.
- mindvirus 9y ago
  For non competes, I wish the law was that companies could bench you, but they'd have to pay you 200% of your best comp of the past 5 years. I think it'd solve a ton of problems.
  - JumpCrisscross 9y ago
    > I wish the law was that companies could bench you, but they'd have to pay you 200% of your best comp of the past 5 years Legally-mandated golden parachutes?
    - athenot 9y ago
      More like you are doing a favor to them, and that should be compensated accordingly. The actual amount should reflect how much the company values this. But the ban shouldn't be anything less than what you could earn elsewhere. So there should be an obligation to match the payout to the highest job offer you are able to get. Also, companies are still free to strive to keep their knowledgeable workers happy, with an attractive total comp and good work environment.
    - emodendroket 9y ago
      As currently constituted non-competes allow your former employer to take the spoon out of your mouth, so to speak. The proposed change would simply say that they have to provide you with an alternate means of supporting yourself if they will prevent you from working. It's one thing for knowledge work (even there I'd like to see it go away), but there's zero justification for preventing a guy who gets fired from Jimmy John's from trying to work at Subway or Quizno's.
ataturk 9y ago
Inflation is the ultimate wage suppression.
CompelTechnic 9y ago
One thing I wonder- to what extent has the digitization of the job search process contributed to reduced wages? I can imagine several mechanisms that would cause this to reduce wage growth: 1. Widely available data on wages tends to introduce a lagging effect on wage inflation, because workers tend to look at data that is a least a couple of years old (imagine what pool of data is currently being used on glassdoor.com to create the salary estimate of that junior developer job you just looked at) 2. Recruiters have large amounts of data on current wages, and can negotiate from a greater position of power. 3. Recruiters have a larger pool of candidates to draw from and force to compete against eachother.
- swiley 9y ago
  More like "widely available outdated data." Better (real time) access to data would help the situation, but the wording there makes it sound like you mean to say the opposite. The affect of bad data on the labor market almost looks like the affect of fake news in politics doesn't it?
jacknews 9y ago
In addition it seems to me that labor is not a free market, simply because there is no choice to not offer your labor, since you'd starve. In large parts of the world anyway, and globalization has brought them into the 'free' market.
- justaman 9y ago
  I think the labor market is free. If you choose not to offer your labor then you're not actually in the labor market are you? Perhaps rather the market has become overly populated with workers and there isn't much choice in which opportunities you pursue.
  - jdavis703 9y ago
    In some US states you have to pay child support, even if you're unemployed. If you don't pay you go to jail. And while you're in jail the costs keep coming. If that's a free market, then I'm not sure what freedom is.
- tdb7893 9y ago
  Food always seemed a pretty free market to me, even though it's necessary. I was taught that free market is more about competition and access to information while necessity of the product mainly affected price inelasticity but that was econ 101 so idk if it's entirely accurate.
  - lotsofpulp 9y ago
    Shopping for groceries might be close to a free market, but the production of food certainly isn't. Also, a big problem with the "free market" is inability and/or disincentive to price externalities, such as environmental damage. Although, it still seems to be a better system than others, we need to work on that front.
    - nine_k 9y ago
      Do you mean large subsidies to US farmers? Wholesale food markets dominated by few huge buyers, Walmart-style?
gaius 9y ago
a flagrant monopsonistic tactic that brought down the wrath of the Justice Department. Wrath? It was barely a slap on the wrist or a mild scolding.
- zentiggr 9y ago
  Describing it as wrath is in proportion to the overwhelming lack of action against corporate issues these days... so yes, slap on the wrist on an objective scale, but 'hey, look, they DID something!'
kauffj 9y ago
The claim that sandwich-making is monopsonic seems dubious. Statista has the largest employer at 12.7% market share and "Other" at 55%: https://www.statista.com/statistics/307965/market-share-of-fast-food-restaurant-corporations-in-the-us/ https://www.statista.com/statistics/307965/market-share-of-f... Research Gate has similar figures, though I believe this one is international: https://www.researchgate.net/figure/Market-Share-of-major-players-in-the-fast-food-industry_fig1_260796941 https://www.researchgate.net/figure/Market-Share-of-major-pl...
- karmajunkie 9y ago
  The claim is not that it is intrinsically monopsonistic but becomes so through the use of non-compete clauses.
JustSomeNobody 9y ago
How utterly pathetic that a company like Jimmy Johns, whose employees probably make single digit per hour salaries, would do this[0]! This is just one more way the rich crap on the poor. [0] I realize the article said they stopped, but I still can't help but be very upset about it.
michaelbuckbee 9y ago
The linked article mentions outsourcing, but it was this other _fantastic_ article [1] on the structural issues of the current wage economy that really helped me understand just how different things are: "Thirty years ago, she says, you could walk into any hotel in America and everyone in the building, from the cleaners to the security guards to the bartenders, was a direct hire, each worker on the same pay scale and enjoying the same benefits as everyone else. Today, they’re almost all indirect hires, employees of random, anonymous contracting companies: Laundry Inc., Rent-A-Guard Inc., Watery Margarita Inc. In 2015, the Government Accountability Office estimated that 40 percent of American workers were employed under some sort of “contingent” arrangement like this—from barbers to midwives to nuclear waste inspectors to symphony cellists. Since the downturn, the industry that has added the most jobs is not tech or retail or nursing. It is “temporary help services”—all the small, no-brand contractors who recruit workers and rent them out to bigger companies. The effect of all this “domestic outsourcing”—and, let’s be honest, its actual purpose—is that workers get a lot less out of their jobs than they used to. One of Batt’s papers found that employees lose up to 40 percent of their salary when they’re “re-classified” as contractors. In 2013, the city of Memphis reportedly cut wages from $15 an hour to $10 after it fired its school bus drivers and forced them to reapply through a staffing agency. Some Walmart “lumpers,” the warehouse workers who carry boxes from trucks to shelves, have to show up every morning but only get paid if there’s enough work for them that day. “This is what’s really driving wage inequality,” says David Weil, the former head of the Wage and Hour Division of the Department of Labor and the author of The Fissured Workplace. “By shifting tasks to contractors, companies pay a price for a service rather than wages for work. That means they don’t have to think about training, career advancement or benefit provision.”" 1 - http://highline.huffingtonpost.com/articles/en/poor-millennials/ http://highline.huffingtonpost.com/articles/en/poor-millenni...
- OscarCunningham 9y ago
  What is it, in particular, about contracting that allows businesses to pay the same people less? What can they do with the contracting that they couldn't do without it? I think this: >“By shifting tasks to contractors, companies pay a price for a service rather than wages for work. That means they don’t have to think about training, career advancement or benefit provision.” was an attempt at explanation. But I don't see how it leads to lower wages.
wfo 9y ago
Interesting the authors cite unionization as an effective protection against this in the past but do not recommend it as a remedy for the future. The problem with simply passing laws as they suggest is that those laws once in place will be opposed by everyone with power simultaneously and forever, with no powerful organized collective force to defend them it is just a matter of time until corporate power grinds them into dust. Unions give actual power to workers (and are great at motivating them to vote according to their interests!) instead of just passing laws out of the goodness of our heart to protect them and hoping they last through billions of dollars in corporate bribes.
- pixl97 9y ago
  The current problem with unions is labor arbitration. Unions were great when transportation was slow and expensive and communication didn't move at the speed of light. Now capital is more important than labor, and capital can be moved almost freely and at the speed of light. Labor on the other hand is stuck in it's national borders, and much of it has a huge amount of debt. Giving a union the power to shut down a production line doesn't do much good when a new line can be setup overseas in hours. Corporate power has to be fought at the state and nation level
hiram112 9y ago
Corporate America has trained the plebs well. Every time a discussion on unions or any sort of organization to "push back" against the big companies in just our own industry is met with a good 50% of HN readers dismissing the idea outright. And even talking about cutting off the supply of H1Bs - or at least the body shops that probably aren't as prolific at the top companies which are overrepresented here - is flagged and downvoted in minutes. It doesn't surprise me, given the age of the average HN reader. Once you have a family, house, and have experienced age discrimination at 40, you'll have different views, I'm guessing. Maybe even sooner for many here if the blatant discrimination of white and asian males gets more traction. I guess the thing that is so disappointing to me about this industry is that we're supposed to be smarter than the rest. But we have completely ignored the history of this country and the battles that our predecessors fought.
- wfo 9y ago
  Tech folks are incredibly smart on technical subjects. When it comes to politics, power dynamics, seeing through propaganda, empathy, we are not trained in or likely to be interested in any of these "softer" but very important issues at all and it shows. Why do you suspect there are so many Libertarians in tech? It is the quintessential political philosophy of a smart successful person who does not understand these issues.
- internetman55 9y ago
  I think software developers are dumber than average cause their skills are in such demand that they don't bother learning how to generate/use leverage like professionals in other niches do
- ManlyBread 9y ago
  I am always amazed how many excuses and how many arguments are there when big businesses profit at the cost of the average Joe, but God forbid when a mere employee tries to do the same. I see no reason to be "ethical" anymore when it comes to employment because I know that it will be one sided - in this case I will act purely in my own interest, just like the businesses do. There's zero reason to play the game where the other side gets to change rules at will and forces you to get along with it.
emodendroket 9y ago
> For a long time, economists believed that labor-market monopsony rarely existed, at least outside old-fashioned company towns where a single factory employs most of the residents. But in recent decades, several compelling studies have revealed that monopsony is omnipresent. Professionals like doctors and nurses, workers in factories and meat processing plants, and sandwich makers and other low-skill workers earn far less — thousands of dollars less — than they would if employers did not dominate labor markets. This is the most shocking part of the article for me. How could economists for years have denied something so plainly obvious?
- pixl97 9y ago
  > How could economists for years have denied something so plainly obvious? And this is why we are surprised every time the economy crashes, yet again.
shady-lady 9y ago
Suppressing wages & over-working employees. For salaried jobs in all companies, the only requirement for unpaid overtime should be responding to emergencies. So for engineering, this would mean always 40hr week unless dealing with out of hours production downtime. There is way too much abuse happening(frequently implicitly).
charmander_IRL 9y ago
Why are low skill non-competes bad? You can just lateral into another low skill job in an unrelated industry. It’s not as if you have a huge amount of human capital sunk into sandwich prep.
- kakarot 9y ago
  It's often not that easy, and what if people don't want to change industries every time they lose their job? If something like that became standard, it would be used as a tool to further divide our socioeconomic classes. Social pressures from friends, family, children, as well as economic pressures will force people into signing these non-compete contracts. The issue is that, as a member of a overpopulated labor pool, a low-skilled worker has no bargaining power and so without bans on things like non-competes, corporations could walk all over their labor force. That is a social regression.
- JustSomeNobody 9y ago
  When you go to lunch today, show the people making and serving your food the article and ask them if they'd like to be tied to a non-compete. Ask them if it would be easy to "just lateral into another low skill job in an unrelated industry." It may be rather eye opening for you.
- karmajunkie 9y ago
  Because low-skill isn't unskilled. Employers know that even in these jobs a modicum of experience gives an applicant a decided advantage in applying for new jobs, and not having it serves as a bar for employment which means that this underpaid labor also has to beat the cost of retraining, then likely accept a below-market training wage to get work. At the same time these clauses reduce the number of potential employers for any given candidate, so any given employer has less incentive to meet a higher salary demand.
- zelon88 9y ago
  It still causes the same problem. It limits the opportunities people have available to them. Lets say 5 Guys opens up shop right next to Subway and is offering $3 more per hour than Subway. With non-compete's at Subway, those workers would be stuck and there would be no onus on Subway to improve their wages or benefits. Without the non-compete Subway workers would apply for work at 5 Guys, which would force Subway to become a more competitive employer. No matter what rung of the ladder you're on, non-compete's hurt employees and benefit employers just as they were intended to do.
kyledrake 9y ago
Non-compete clauses are a pretty weird thing and I've seen them in contracts before. Definitely read up on them. I've refused to sign contracts with them before. They're totally unenforceable in California and a few other states. https://wikipedia.org/wiki/Non-compete_clause https://wikipedia.org/wiki/Non-compete_clause
- pjonesdotca 9y ago
  Mostly unenforceable in Canada as well.
matte_black 9y ago
Like global warming, this may be a problem that we are unable to do anything about except adapt. We need to lean into the gig economy, instead of pulling away. What we need are mechanisms to ensure that there's always a constant and steady stream of gigs available for any person to work. Many of these gigs might not be full-time or part-time jobs but rather micro-jobs or micro-tasks, that some entity needs to have completed to fulfill some larger mission, which is irrelevant to the gig worker. The requirements for completing a task could range from simply "Being a human" to "Specialized skills in a specific domain". Profiles for workers could contain all sorts of information that could help them find relevant work quickly and easily, consisting of things like education and trade skills to even body metrics and IQ if necessary. And of course workers can be rated based on previous work history to help them better find future jobs without needing to keep a resume. A worker should not need to get anything more out of their job than payment for services rendered. Healthcare should be handled by the government, and vacation time is handled by whenever the worker doesn't feel like working.
- pjonesdotca 9y ago
  The major problem I see for the "gig economy" is that as a contract worker one is essentially on their own for things like health insurance and unemployment benefits. While neither are things often talked about on the HN boards, here outside the Valley those become real concerns for employees with families.
  - matte_black 9y ago
    Health insurance I agree is a problem that needs to be solved independently from employers. In fact, if we actually manage to solve healthcare at some point in the future the gig economy will only grow more as it will become more feasible to move from employer to employer. Unemployment is best handled by keeping your own savings I'd say, though that's tough for some to grasp in a nation with little financial education.
somethrowaway12 9y ago
One thing I rarely see discussed but am curious about is the impact of women entering the workforce over the period we have observed wage stagnation. If you "doubled" the supply of labour, would that suppress wage growth? Have relatively high-paying professions managed to replicate the effects suppressing wage-growth of the lower-paying jobs by accepting more women into their workforce over the past 20-30 years?
turc1656 9y ago
No-poaching agreements are very clearly illegal and should have resulted in immediate charges being levied against a metric shit-ton of people as the only way that works with all these franchises is if many people are involved. The DOJ has formally acknowledged these practices are illegal and a serious violation of existing laws: https://www.justice.gov/atr/file/903511/download https://www.justice.gov/atr/file/903511/download Well...it's been nearly 18 months since that announcement. Why haven't I seen a whole bunch of people get charged with felony antitrust violations, as per the DOJ's own statements about its intent to "proceed criminally against naked wage-fixing or no-poaching agreements"? Where are the handcuffs?

All of the major unions have been broken, with the public sector unions coming up next re: the Janus case. Even though there was always a limited number of union workers, their collective bargaining set the standard. That’s not really a factor these days.

randomdata 9y ago
Interestingly, unionization in Canada is still as strong as the strongest years in the US. Despite that, wages are every bit as stagnant as the US and, looking at income data, there is a lot of mirroring between the two countries. The substantial decline of unionization in the US is one thing, but what is Canada doing wrong?
- geodel 9y ago
  This is world wide phenomenon applied to all irrespective of where they lie on political/social spectrum. I think reasons are 2 fold: 1) Far too many humans on earth to have better bargain power in exchange of labor. 2) No workable formula where enormous wealth generated in this world to be more equally distributed.
- emodendroket 9y ago
  Isn't Canada just as affected by off-shoring of work to countries with weaker labor standards and lower wages?
  - randomdata 9y ago
    I would say yes, but I am not clear how that relates to the original claim. Are you trying to suggest that this problem is beyond the capabilities of unions?
    - emodendroket 9y ago
      The globalization of markets presents a real problem for unions which have more of a national or regional focus. I'm not going to say it's beyond the capability of unions to address somehow, but I do think it has reduced their leverage substantially.
- nullymcnull 9y ago
  I am curious as to where you are getting the idea that "unionization in Canada is still as strong as the strongest years in the US". That's pretty much the opposite of my personal experience and observations, and it's not the consensus I've been hearing (which is that organized labour has been at an absolute nadir in the past few decades, as much in decline as in the US). Unions have shrunk, membership are down, political clout is down, and a newly unionized company is a rare bird indeed. Perhaps the high rate of unionization in the public sector skews the stats here, because in the private sector, things are pretty much a mirror of the US situation. From what I can tell, all of the same factors that are driving down wages in the US - increased consolidation, far more 'temp' positions brokered by temp agencies - apply to Canada as well, and have had the same effect.
  - randomdata 9y ago
    > I am curious as to where you are getting the idea that "unionization in Canada is still as strong as the strongest years in the US" Based on the share of the workforce that is represented by unions. Canada is currently at ~30%, the US peaked at ~30% and is at less than 10% today. > Unions have shrunk, membership are down, political clout is down, and a newly unionized company is a rare bird indeed. Unionization is indeed down, but what I said is that it is still about as strong as the strongest years in the US. Canada had even stronger unions through the 80s, when it peaked at just shy of 40%. Interestingly, much of the same wage issues we face today were still present at that time. Wages have been stagnant since at least the 70s, according to the Canadian government (and American data echos this).
    - eesmith 9y ago
      When you say "represented by unions", do you mean the unionization rate or the coverage rate? In terms of unionization rate, in 2016 Canada was at 28.4% [1]. By comparison, the US peak was 34.8% in 1954 [2] . (It is now 10.7% [3], which is slightly higher than 10%, not less than.) While the "~" can justify a rounding to the nearest 10% instead of 5%, that ended up hiding a difference of 6.5%, or 1/5th of the total unionized population. From what I can tell, the current rate of around 28% corresponds to the US unionization rate in about 1970 [3], and not its peak in 1954. The US peak of 34.8% is closer to the Canadian peak of 37.9% in 1984 than it is to 30%, and corresponds to the Canadian unionization rate in 1991 [1]. The coverage rate for both countries is of course higher. For 2017 in Canada it was 30.4% [5] and in US is was 11.9% [3]. [1] "http://www.statcan.gc.ca/daily-quotidien/170908/cg-a003-eng.htm http://www.statcan.gc.ca/daily-quotidien/170908/cg-a003-eng.... [2] "At their peak in 1954, 34.8% of all U.S. wage and salary workers belonged to unions" - http://www.pewresearch.org/fact-tank/2014/02/20/for-american-unions-membership-trails-far-behind-public-support/ http://www.pewresearch.org/fact-tank/2014/02/20/for-american... . [3] http://unionstats.gsu.edu/All-Wage-and-Salary-Workers.htm http://unionstats.gsu.edu/All-Wage-and-Salary-Workers.htm . The BLS gives the same unionization numbers for 2017 (but no coverage numbers) at https://www.bls.gov/news.release/union2.nr0.htm https://www.bls.gov/news.release/union2.nr0.htm . [4] http://www.statcan.gc.ca/daily-quotidien/170908/cg-a003-eng.htm http://www.statcan.gc.ca/daily-quotidien/170908/cg-a003-eng.... [5] https://www.statista.com/statistics/442980/canada-union-coverage-rate-by-province/ https://www.statista.com/statistics/442980/canada-union-cove...
mrkstu 9y ago
The problem with public sector unions are that they are a reverse monopsony. They collude with politicians to elect those who are willing to ignore economic reality and pay unsustainable wages/pensions/benefits[0]. Looking at places like Connecticut/Illinois/New Jersey it is causing starvation of public services to meet pension obligations despite already high taxation. They are caught in a trap since if they raise taxes further (and/or decrease services) they will lose those most capable of moving- who also happen to pay the most taxes. This is already starting to play out[1]. Private sector unions are tasting the fruits of their corruption via the mafia and general unwillingness to integrate with long term industry needs, ala the German model. Its incredibly unfortunate, since a modern, ethical and foresightful private union would serve the greater good of the country better than just about anything else I can think of. 0: https://www.forbes.com/sites/adammillsap/2016/06/01/public-pensions-are-states-biggest-problem/ https://www.forbes.com/sites/adammillsap/2016/06/01/public-p... 1: http://www.courant.com/opinion/editorials/hc-ed-tax-migration-0102-20180102-story.html http://www.courant.com/opinion/editorials/hc-ed-tax-migratio...

tabeth 9y ago

And why wouldn't they? It's time to bring back mechanisms, legal or otherwise, to prevent this from happening again. Usually the collective workforce of a company has significant leverage over a company, but with the advent of globalization, the "gig economy", and technological unemployment in some ways this leverage is harder to capitalize on, or even worse, nonexistent. I don't know if there's any empirical proof for this, but like competition between companies, I think "competition" or tension between employees and employers for a given organization is also good for capitalism.

baq 9y ago
yeah that's what unions are really about - to think about the employees for the employees good, where HR thinks about them for the good of the company. implementations of that idea are of varying quality which unfortunately gives them a bad rep.
- 0xcde4c3db 9y ago
  > implementations of that idea are of varying quality which unfortunately gives them a bad rep. Also giving them a bad rep: propaganda efforts by big employers. Back when I worked for them, Walmart showed new hires a training video that could be summed up as "just say no to card checks; union organizers are trying to trick you into giving up your rights, and you don't need a union anyway because we value our associates so much".
  - Brockenstein 9y ago
    Arguably, unions were so successful that people started asking "what do we need them for anymore?" It's shortsightedness that companies were/are all to happy to exploit.
  - RightMillennial 9y ago
    Some of the reputation is deserved though. When I worked at UPS you were forced to join the Teamsters union and pay union dues. I don't have a problem with the unions in general, but I'm against forced membership.

nukeop 9y ago

There was similar wage suppression (or should I say, wage theft scheme) in Silicon Valley until very recently. That's why the wages skyrocketed. If the scheme could be broken up in one industry, it can happen again in others.

lotsofpulp 9y ago
You also need demand for that type of labor, which can't be arbitraged by being performed in a different locale.
ThirdFoundation 9y ago
I wonder if the current high wages in Silicon Valley are a function of job competition in other cities (tech jobs in Austin, Denver, NYC, etc) plus a highly mobile workforce. Tech workers tend to skew younger and are also able to work remotely in many cases. I bring all this up, because I'm not sure it will be quite as applicable in other industries. It seems that many workers aren't willing to move for work and don't have the competitive salaries in other cities required to bring up the salary. I'm sure it's possible that the scheme could be broken up through other methods, but I'm having trouble seeing an avenue there.
- hiram112 9y ago
  The SV wages I'm seeing seem to be concentrated in a few really wealthy companies who basically enjoy monopoly status in their domains. It doesn't seem like smaller startups pay that well - though maybe that is fair due to the chance to hit it big. What I will tell you is that software engineers in the rest of the country, especially in industries that have been decimated by offshoring and H1Bs (banking, insurance, and large companies in general) do not pay that well after about age 35 or so once you hit your ceiling (anywhere from $90K in the Midwest to $150k in high COL East Coast) no matter how talented you are. I made way better money than most of my peers at 25 - they were still in grad school and paying off loans. By 30, I was still making more, but they were quickly catching up. I'm imagining by 40, I won't be much ahead of anyone with a professional degree or even those who went into government and now have seniority, pensions, etc. What I've seen so far with offshoring, H1Bs in my 20s was the first big warning sign for me. Then as I got into my 30's and started seeing how management treats older works, I'm beginning to realize that age discrimination in tech is for real - second warning sign. And finally, if this whole war on white / asian males picks up steam in other companies, I'm probably going to attempt to pivot out of the industry completely. There is not much of a bright future.

expertentipp 9y ago

Post-contractual non-compete without any compensation. It’s starting to be a thing even in EU. 5-10 years ago I could sign an employment contract blindfolded, now it’s a freaking minefield where in couple of years I can end up without a job, unemployable, and owning multiple monthly salaries to the employer. We have too many bored lawyers.

mindvirus 9y ago
For non competes, I wish the law was that companies could bench you, but they'd have to pay you 200% of your best comp of the past 5 years. I think it'd solve a ton of problems.
- JumpCrisscross 9y ago
  > I wish the law was that companies could bench you, but they'd have to pay you 200% of your best comp of the past 5 years Legally-mandated golden parachutes?
  - athenot 9y ago
    More like you are doing a favor to them, and that should be compensated accordingly. The actual amount should reflect how much the company values this. But the ban shouldn't be anything less than what you could earn elsewhere. So there should be an obligation to match the payout to the highest job offer you are able to get. Also, companies are still free to strive to keep their knowledgeable workers happy, with an attractive total comp and good work environment.
  - emodendroket 9y ago
    As currently constituted non-competes allow your former employer to take the spoon out of your mouth, so to speak. The proposed change would simply say that they have to provide you with an alternate means of supporting yourself if they will prevent you from working. It's one thing for knowledge work (even there I'd like to see it go away), but there's zero justification for preventing a guy who gets fired from Jimmy John's from trying to work at Subway or Quizno's.

ataturk 9y ago

Inflation is the ultimate wage suppression.

CompelTechnic 9y ago

One thing I wonder- to what extent has the digitization of the job search process contributed to reduced wages? I can imagine several mechanisms that would cause this to reduce wage growth: 1. Widely available data on wages tends to introduce a lagging effect on wage inflation, because workers tend to look at data that is a least a couple of years old (imagine what pool of data is currently being used on glassdoor.com to create the salary estimate of that junior developer job you just looked at) 2. Recruiters have large amounts of data on current wages, and can negotiate from a greater position of power. 3. Recruiters have a larger pool of candidates to draw from and force to compete against eachother.

swiley 9y ago
More like "widely available outdated data." Better (real time) access to data would help the situation, but the wording there makes it sound like you mean to say the opposite. The affect of bad data on the labor market almost looks like the affect of fake news in politics doesn't it?

jacknews 9y ago

In addition it seems to me that labor is not a free market, simply because there is no choice to not offer your labor, since you'd starve. In large parts of the world anyway, and globalization has brought them into the 'free' market.

justaman 9y ago
I think the labor market is free. If you choose not to offer your labor then you're not actually in the labor market are you? Perhaps rather the market has become overly populated with workers and there isn't much choice in which opportunities you pursue.
- jdavis703 9y ago
  In some US states you have to pay child support, even if you're unemployed. If you don't pay you go to jail. And while you're in jail the costs keep coming. If that's a free market, then I'm not sure what freedom is.
tdb7893 9y ago
Food always seemed a pretty free market to me, even though it's necessary. I was taught that free market is more about competition and access to information while necessity of the product mainly affected price inelasticity but that was econ 101 so idk if it's entirely accurate.
- lotsofpulp 9y ago
  Shopping for groceries might be close to a free market, but the production of food certainly isn't. Also, a big problem with the "free market" is inability and/or disincentive to price externalities, such as environmental damage. Although, it still seems to be a better system than others, we need to work on that front.
  - nine_k 9y ago
    Do you mean large subsidies to US farmers? Wholesale food markets dominated by few huge buyers, Walmart-style?

gaius 9y ago

a flagrant monopsonistic tactic that brought down the wrath of the Justice Department. Wrath? It was barely a slap on the wrist or a mild scolding.

zentiggr 9y ago
Describing it as wrath is in proportion to the overwhelming lack of action against corporate issues these days... so yes, slap on the wrist on an objective scale, but 'hey, look, they DID something!'

kauffj 9y ago

The claim that sandwich-making is monopsonic seems dubious. Statista has the largest employer at 12.7% market share and "Other" at 55%: https://www.statista.com/statistics/307965/market-share-of-fast-food-restaurant-corporations-in-the-us/ https://www.statista.com/statistics/307965/market-share-of-f... Research Gate has similar figures, though I believe this one is international: https://www.researchgate.net/figure/Market-Share-of-major-players-in-the-fast-food-industry_fig1_260796941 https://www.researchgate.net/figure/Market-Share-of-major-pl...

karmajunkie 9y ago
The claim is not that it is intrinsically monopsonistic but becomes so through the use of non-compete clauses.

JustSomeNobody 9y ago

How utterly pathetic that a company like Jimmy Johns, whose employees probably make single digit per hour salaries, would do this[0]! This is just one more way the rich crap on the poor. [0] I realize the article said they stopped, but I still can't help but be very upset about it.

michaelbuckbee 9y ago

The linked article mentions outsourcing, but it was this other _fantastic_ article [1] on the structural issues of the current wage economy that really helped me understand just how different things are: "Thirty years ago, she says, you could walk into any hotel in America and everyone in the building, from the cleaners to the security guards to the bartenders, was a direct hire, each worker on the same pay scale and enjoying the same benefits as everyone else. Today, they’re almost all indirect hires, employees of random, anonymous contracting companies: Laundry Inc., Rent-A-Guard Inc., Watery Margarita Inc. In 2015, the Government Accountability Office estimated that 40 percent of American workers were employed under some sort of “contingent” arrangement like this—from barbers to midwives to nuclear waste inspectors to symphony cellists. Since the downturn, the industry that has added the most jobs is not tech or retail or nursing. It is “temporary help services”—all the small, no-brand contractors who recruit workers and rent them out to bigger companies. The effect of all this “domestic outsourcing”—and, let’s be honest, its actual purpose—is that workers get a lot less out of their jobs than they used to. One of Batt’s papers found that employees lose up to 40 percent of their salary when they’re “re-classified” as contractors. In 2013, the city of Memphis reportedly cut wages from $15 an hour to $10 after it fired its school bus drivers and forced them to reapply through a staffing agency. Some Walmart “lumpers,” the warehouse workers who carry boxes from trucks to shelves, have to show up every morning but only get paid if there’s enough work for them that day. “This is what’s really driving wage inequality,” says David Weil, the former head of the Wage and Hour Division of the Department of Labor and the author of The Fissured Workplace. “By shifting tasks to contractors, companies pay a price for a service rather than wages for work. That means they don’t have to think about training, career advancement or benefit provision.”" 1 - http://highline.huffingtonpost.com/articles/en/poor-millennials/ http://highline.huffingtonpost.com/articles/en/poor-millenni...

OscarCunningham 9y ago
What is it, in particular, about contracting that allows businesses to pay the same people less? What can they do with the contracting that they couldn't do without it? I think this: >“By shifting tasks to contractors, companies pay a price for a service rather than wages for work. That means they don’t have to think about training, career advancement or benefit provision.” was an attempt at explanation. But I don't see how it leads to lower wages.

wfo 9y ago

Interesting the authors cite unionization as an effective protection against this in the past but do not recommend it as a remedy for the future. The problem with simply passing laws as they suggest is that those laws once in place will be opposed by everyone with power simultaneously and forever, with no powerful organized collective force to defend them it is just a matter of time until corporate power grinds them into dust. Unions give actual power to workers (and are great at motivating them to vote according to their interests!) instead of just passing laws out of the goodness of our heart to protect them and hoping they last through billions of dollars in corporate bribes.

pixl97 9y ago
The current problem with unions is labor arbitration. Unions were great when transportation was slow and expensive and communication didn't move at the speed of light. Now capital is more important than labor, and capital can be moved almost freely and at the speed of light. Labor on the other hand is stuck in it's national borders, and much of it has a huge amount of debt. Giving a union the power to shut down a production line doesn't do much good when a new line can be setup overseas in hours. Corporate power has to be fought at the state and nation level

hiram112 9y ago

Corporate America has trained the plebs well. Every time a discussion on unions or any sort of organization to "push back" against the big companies in just our own industry is met with a good 50% of HN readers dismissing the idea outright. And even talking about cutting off the supply of H1Bs - or at least the body shops that probably aren't as prolific at the top companies which are overrepresented here - is flagged and downvoted in minutes. It doesn't surprise me, given the age of the average HN reader. Once you have a family, house, and have experienced age discrimination at 40, you'll have different views, I'm guessing. Maybe even sooner for many here if the blatant discrimination of white and asian males gets more traction. I guess the thing that is so disappointing to me about this industry is that we're supposed to be smarter than the rest. But we have completely ignored the history of this country and the battles that our predecessors fought.

wfo 9y ago
Tech folks are incredibly smart on technical subjects. When it comes to politics, power dynamics, seeing through propaganda, empathy, we are not trained in or likely to be interested in any of these "softer" but very important issues at all and it shows. Why do you suspect there are so many Libertarians in tech? It is the quintessential political philosophy of a smart successful person who does not understand these issues.
internetman55 9y ago
I think software developers are dumber than average cause their skills are in such demand that they don't bother learning how to generate/use leverage like professionals in other niches do
ManlyBread 9y ago
I am always amazed how many excuses and how many arguments are there when big businesses profit at the cost of the average Joe, but God forbid when a mere employee tries to do the same. I see no reason to be "ethical" anymore when it comes to employment because I know that it will be one sided - in this case I will act purely in my own interest, just like the businesses do. There's zero reason to play the game where the other side gets to change rules at will and forces you to get along with it.

emodendroket 9y ago

> For a long time, economists believed that labor-market monopsony rarely existed, at least outside old-fashioned company towns where a single factory employs most of the residents. But in recent decades, several compelling studies have revealed that monopsony is omnipresent. Professionals like doctors and nurses, workers in factories and meat processing plants, and sandwich makers and other low-skill workers earn far less — thousands of dollars less — than they would if employers did not dominate labor markets. This is the most shocking part of the article for me. How could economists for years have denied something so plainly obvious?

pixl97 9y ago
> How could economists for years have denied something so plainly obvious? And this is why we are surprised every time the economy crashes, yet again.

shady-lady 9y ago

Suppressing wages & over-working employees. For salaried jobs in all companies, the only requirement for unpaid overtime should be responding to emergencies. So for engineering, this would mean always 40hr week unless dealing with out of hours production downtime. There is way too much abuse happening(frequently implicitly).

charmander_IRL 9y ago

Why are low skill non-competes bad? You can just lateral into another low skill job in an unrelated industry. It’s not as if you have a huge amount of human capital sunk into sandwich prep.

kakarot 9y ago
It's often not that easy, and what if people don't want to change industries every time they lose their job? If something like that became standard, it would be used as a tool to further divide our socioeconomic classes. Social pressures from friends, family, children, as well as economic pressures will force people into signing these non-compete contracts. The issue is that, as a member of a overpopulated labor pool, a low-skilled worker has no bargaining power and so without bans on things like non-competes, corporations could walk all over their labor force. That is a social regression.
JustSomeNobody 9y ago
When you go to lunch today, show the people making and serving your food the article and ask them if they'd like to be tied to a non-compete. Ask them if it would be easy to "just lateral into another low skill job in an unrelated industry." It may be rather eye opening for you.
karmajunkie 9y ago
Because low-skill isn't unskilled. Employers know that even in these jobs a modicum of experience gives an applicant a decided advantage in applying for new jobs, and not having it serves as a bar for employment which means that this underpaid labor also has to beat the cost of retraining, then likely accept a below-market training wage to get work. At the same time these clauses reduce the number of potential employers for any given candidate, so any given employer has less incentive to meet a higher salary demand.
zelon88 9y ago
It still causes the same problem. It limits the opportunities people have available to them. Lets say 5 Guys opens up shop right next to Subway and is offering $3 more per hour than Subway. With non-compete's at Subway, those workers would be stuck and there would be no onus on Subway to improve their wages or benefits. Without the non-compete Subway workers would apply for work at 5 Guys, which would force Subway to become a more competitive employer. No matter what rung of the ladder you're on, non-compete's hurt employees and benefit employers just as they were intended to do.

kyledrake 9y ago

Non-compete clauses are a pretty weird thing and I've seen them in contracts before. Definitely read up on them. I've refused to sign contracts with them before. They're totally unenforceable in California and a few other states. https://wikipedia.org/wiki/Non-compete_clause https://wikipedia.org/wiki/Non-compete_clause

pjonesdotca 9y ago
Mostly unenforceable in Canada as well.

matte_black 9y ago

Like global warming, this may be a problem that we are unable to do anything about except adapt. We need to lean into the gig economy, instead of pulling away. What we need are mechanisms to ensure that there's always a constant and steady stream of gigs available for any person to work. Many of these gigs might not be full-time or part-time jobs but rather micro-jobs or micro-tasks, that some entity needs to have completed to fulfill some larger mission, which is irrelevant to the gig worker. The requirements for completing a task could range from simply "Being a human" to "Specialized skills in a specific domain". Profiles for workers could contain all sorts of information that could help them find relevant work quickly and easily, consisting of things like education and trade skills to even body metrics and IQ if necessary. And of course workers can be rated based on previous work history to help them better find future jobs without needing to keep a resume. A worker should not need to get anything more out of their job than payment for services rendered. Healthcare should be handled by the government, and vacation time is handled by whenever the worker doesn't feel like working.

pjonesdotca 9y ago
The major problem I see for the "gig economy" is that as a contract worker one is essentially on their own for things like health insurance and unemployment benefits. While neither are things often talked about on the HN boards, here outside the Valley those become real concerns for employees with families.
- matte_black 9y ago
  Health insurance I agree is a problem that needs to be solved independently from employers. In fact, if we actually manage to solve healthcare at some point in the future the gig economy will only grow more as it will become more feasible to move from employer to employer. Unemployment is best handled by keeping your own savings I'd say, though that's tough for some to grasp in a nation with little financial education.

somethrowaway12 9y ago

One thing I rarely see discussed but am curious about is the impact of women entering the workforce over the period we have observed wage stagnation. If you "doubled" the supply of labour, would that suppress wage growth? Have relatively high-paying professions managed to replicate the effects suppressing wage-growth of the lower-paying jobs by accepting more women into their workforce over the past 20-30 years?

turc1656 9y ago

No-poaching agreements are very clearly illegal and should have resulted in immediate charges being levied against a metric shit-ton of people as the only way that works with all these franchises is if many people are involved. The DOJ has formally acknowledged these practices are illegal and a serious violation of existing laws: https://www.justice.gov/atr/file/903511/download https://www.justice.gov/atr/file/903511/download Well...it's been nearly 18 months since that announcement. Why haven't I seen a whole bunch of people get charged with felony antitrust violations, as per the DOJ's own statements about its intent to "proceed criminally against naked wage-fixing or no-poaching agreements"? Where are the handcuffs?