09.23.2018

JACKSON HOLE, WY — Today, experts on our economy came together in Jackson Hole, Wyoming to talk about how market power keeps wages down and what the Federal Reserve can do to address it. Though Federal Reserve Chairman Jerome Powell said the reason for stagnant wages was “a puzzle.”

The panel, called “Putting the Puzzle Together: How Market Concentration Explains Slow Wage Growth and What the Fed Can Do About it” was organized by Fed Up. Panelists, including Roosevelt Institute Research Director and Fellow Marshall Steinbaum, Open Markets Institute Policy Counsel Sandeep Vaheesan, retail worker Nick Gallant, and labor studies and employment relations doctoral student Phela Townsend, discussed how an analysis of the role of market power in our economy would shift the Federal Reserve’s directive.

This year, the theme of the Federal Reserve’s economic symposium is “Changing Market Structure and Implications for Monetary Policy.” According to panelists, market consolidation means that the Fed needs to fundamentally shift the assumptions on which their monetary policy models rest.

Setting the scene for the panel, Fed Up Campaign Director Shawn Sebastian said, “The reason for stagnant wages is actually not a hard puzzle to solve. The data is right in front of us. The difficulty for the Fed is not in figuring out what the impact of increased market power is on wages -- consolidation keeps wages low by decreasing worker power. What’s hard for the Fed is giving up outdated frameworks from the 1980s that are not relevant to the economy today.”

Retail worker Nick Gallant spoke about his experience as a retail worker. He said:

“I can’t go to school because I have no control over my schedule and I need to work full time to pay rent and survive. I live on paycheck to paycheck and sometimes I don’t have enough money to buy bare necessities and I have to come up with creative ways to eat because desperate times call for desperate measures. If I left this job, I would simply be looking at another job like this. This is being a retail worker in America.”

Economic policy and labor experts added:

“When the economy grows, it doesn’t benefit everyone -- only major shareholders and CEOs,” said Marshall Steinbaum, Research Director and Fellow at the Roosevelt Institute. “Market power makes the economy grow less because companies don’t invest or hire workers. They pay out to the wealthiest stakeholders. And with fewer corporations dominating labor markets, they are able to keep wages down.”

“The economy is a construct of law and politics,” said Sandeep Vaheesan, Policy Counsel at the Open Markets Institute. “Our current predicament wasn’t inevitable -- it is the result of decades of prioritizing corporate and investor interests over those of working people. This is far from a puzzle. It’s straightforward decision making by those in power -- and these choices can be changed. In understanding the economy and making decisions on monetary and regulatory policy, the Fed needs to realize that markets just plain aren’t competitive but defined by employer power and worker weakness. They need models that reflect our economic reality.”

“This is not really new. As we look at the trajectory of what has happened in recent decades and what has happened to wages historically, we are really talking about how workers’ power has been weakened through the decline of unions and the erosion of other workers protections and rights. This has severely diminished workers’ ability to have a voice and a say over economic and other working conditions, or to find a job elsewhere with better conditions,” said Phela Townsend, doctoral student in Labor Studies and Employment Relations at the School of Management and Labor Relations at Rutgers-New Brunswick. “Unleashed corporate power, on top of weakened worker power, silences workers and keeps them from advocating for the wages that many of them need to survive.”

The panel comes the day before the Federal Reserve hosts a number of panels on the subject of market power. During the economic symposium, working people from across the country will host educational sessions and discuss how the Federal Reserve has ignored the needs of working people.

You can access a recording of the panel here.

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Media Contact: Lia Weintraub, lweintraub@populardemocracy.org