Orthodox market economics holds that when unemployment falls and the labor supply gets tighter wages go up; it also predicts that better-educated workers and more-productive workers get paid more for their work — none of this has happened.
American unemployment stands at 4% and the workforce is the best-educated, most productive in history. The Fed is about to raise interests rates to fight nonexistent inflation, which will further punish workers, who’ve gone into debt to make ends meet while their wages stagnated.
Yale historian Gabriel Winant has a pretty simple explanation for what’s happened: monopolism. Most labor markets are beyond “highly concentrated” (in the technical sense used by antitrust regulators), with few employers bidding for workers, and the employers collude to have no-poaching arrangements (for example, franchisees are not allowed to tempt one another’s employees to jump ship by offering higher wages). Even in places where employers don’t collude, they hire through staffing agencies that act as wage suppressors, offering the same low wages to all comers.