Academic journal article Monthly Labor Review

"Superstar" Companies to Blame for Workers' Falling Share of Income

Academic journal article Monthly Labor Review

"Superstar" Companies to Blame for Workers' Falling Share of Income

Article excerpt

U.S. workers have been getting a smaller share of the American economic pie, and economists have been baffled by the decline in the U.S. labor's share of income. What's behind the decline? In "Concentrating on the fall of the labor share" (National Bureau of Economic Research, working paper no. 23108, January 2017), authors David Autor, David Dorn, Lawrence F. Katz, Christina Patterson, and John Van Reenen find that one factor is the rise of "superstar" companies--a few select firms with a relatively small workforce that gain larger shares of sales in a particular industry. These firms dominate their market sectors and don't need a lot of workers to generate profits.

The authors say that there are more of these superstar companies now than in the past. One reason is "competitive platforms," such as the ability to compare prices on the Internet, that make it easier for these more successful, less-labor-intensive companies to set themselves apart. Many of these so-called superstar firms have been able to dominate their sectors by using the Internet as a means to deliver products and services at lower costs than their brick-and-mortar competitors.

Using U.S. Economic Census data from nearly 700 industries in 6 major sectors (manufacturing, finance, retail trade, wholesale trade, services, and utilities and transportation), the authors find that the share of revenue controlled by the top four companies in an industry rose, on average, from 38 percent in 1982 to 43 percent in 2012 in the manufacturing sector, from 24 percent to 35 percent over the same period in finance, and from 15 percent to 30 percent in retail trade. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.