Following a national trend, New York State businesses are underpaying their workers even as their profits keep increasing. According to a report by the independent Fiscal Policy Institute, profits per worker increased 61% from 2001 to 2013, while compensation only increased by 34% over the same time period.
“These data confirm once again that most workers in New York have not been sharing in the fruits of the state’s economic growth over the past decade-and-a-half," FPI's deputy director and chief economist James Parrott said in a statement accompanying the report.
Workers making $10.45 an hour saw a wage increase of 25% from 2001 to 2013—an effective 10% decrease after accounting for inflation. But New Yorkers with four-year degrees (and the crushing amount of student debt that often accompanies them) fared just 3% better than their less-educated peers, even as the percentage of the workforce with a four-year degree increased from 34% to 44%.
The report excluded the finance, insurance, and real estate sectors (FIRE), because, as the report notes, New York's FIRE sector "is well-known for the extraordinarily high profits and compensation of the largest financial firms and funds." (Kill It With Fire, indeed.)
While Parrott acknowledged that Governor Cuomo's plan to gradually raise the state's minimum wage to $15 an hour would be a helpful correcting force (between 35% and 40% of the state's workforce makes less than $15 an hour), he pointed out that wage stagnation had deep roots.
"The sizable divergence between profit and wage growth dates back to 1980s and results from many institutional and public policy changes so there is no single, ready solution," Parrott wrote in an email.
"Many things are needed, including stronger unions, better labor standards enforcement (particularly against wage theft and the misclassification of workers as independent contractors), policies like paid family leave, health care reform that reduces the health care share of GDP while ensuring quality and accessibility, effective anti-trust enforcement, reducing tax breaks at all government levels for big businesses, to name a few."
Anti-trust enforcement? "It's obvious to the naked eye that our economy consists much more of monopolies and oligopolists than it does of the atomistic, price-taking competitors economists often envision," you-know-who just wrote in the New York Review of Books.
Krugman explains that the main hypothesis for why the $15/hour minimum wage "experiments" haven't caused increased unemployment is because the industries employing these workers are monopsonists.
That is, they are the principal purchasers of low-wage labor in a particular job market. And a monopsonist facing a price floor doesn’t necessarily buy less, just as a monopolist facing a price ceiling doesn’t necessarily sell less and may sell more.
For further evidence of the domination of market power to the detriment of average people, look no further than your Time Warner Cable bill:
Most Americans seeking Internet access are more or less at the mercy of their local cable company; the result is that broadband is both slower and far more expensive in the US than in other countries.
When the $45 billion plan to merge Time Warner Cable and Comcast fell through, Governor Cuomo glumly called it a "market decision."
You can read the FPI's entire report here [PDF].