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The one word that explains why your pay is so low

Kate Bahn explains how monopsony has led to increased productivity but stagnant wages.

Top-line indicators on the health of the labor market continue to be positive, with a low unemployment rate of 4.5% for March and more jobs added to the economy every month for 78 months in a row. The Bureau of Labor Statistics, which disseminates these numbers in its monthly Employment Situation release, is running out of ways to say “little changed” on each indicator from month to month.

But not everyone is feeling the benefits of a solid labor market. The Trump campaign’s focus on jobs has brought attention to whether or not workers have been able to capture the gains of a stable and slowly growing economy. Many are feeling disempowered and left behind. Understanding the concept of monopsony means might help us understand what’s going on here.

The above excerpt was originally published in MarketWatch. Click here to view the full article.

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Authors

Kate Bahn

Economist