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Corporate power keeps U.S. wages 20% lower than they should be


© Reuters. FILE PHOTO – The White House seen as President Joe Biden gives his State of the Union speech in Washington on March 1, 2022. REUTERS/Joshua Roberts

David Lawder and Diane Bartz

WASHINGTON (Reuters] – Inflation is at a record four-decades high. A U.S. government report reveals that corporations have used their power in the labour market to lower wages by 20%, according to the White House on Monday.

With the help of the Justice Department and Labor Department (FTC), the Treasury Department produced the report. It found that companies were more knowledgeable about the labor market than employees, which gave them an advantage in setting their wages.

Additionally, some workers might not be financially able to travel or spend the time searching for better jobs.

According to the report, these conditions “can enable firms exert market power, which in turn can result in lower wages and poor working conditions for workers even in highly competitive labor markets.”

Report discusses various ways firms can keep wages low, such as conspiring to avoid hiring other companies and making employees sign non-compete agreement that prohibits them from moving to higher salaries.

A paper was cited in the report. It found that 1/5 workers are currently protected by non-compete agreements, which means that they cannot work for competitors.

According to a review of academic research, the decline in wages is roughly 20% compared with the market level. According to the report, wage losses in some professions or industries like manufacturing are much higher.”

U.S. unemployment rates fell to 3.8% in February, a low level for the past two years. Hourly earnings, however, were stable due to workers returning to less-paying jobs. This was partly offset by wage rises in certain sectors, as businesses compete to hire workers.

According to economists, the conflict in Ukraine and Russia’s harsh sanctions will cause energy prices to rise for longer. This could lead to higher inflation that can be attributed to companies trying to reduce costs elsewhere.

The prices companies charge to purchase goods or services is the most important aspect of antitrust enforcement. Although antitrust enforcement officers have filed labor antitrust lawsuits in the past and the Trump Administration brought one against an agreement that prohibited rail equipment suppliers from poaching, they are still rare.

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