As we learn about Monopsonies in class, it is important to know the flaws that come along with this type of market. A monopsony is when there are many providers of a product, including labor, but only one dominant buyer. Because there is only one buyer, they have the ability to drive the prices down as they hold all the power. In the context of a labor market, workers have lost the important power of being able to bargain for a higher pay. This is why one of the biggest issues of a Monopsony is wage prices.
Monopsonies are getting a very harsh look as they continue to set low wage prices for their employees. These employers have developed the idea that if they don’t have to compete with one another for workers, they can pay less. Workers will be stuck without the outside job offers that would allow them to make claims for higher wages. The monopsony uses the labor market phenomena, wage stagnation, which is the concept of declining job-to-job mobility and the deterioration of the job ladder. This is more prevalent for young workers.
There’s anecdotal evidence of employer domination in Monopsonies. Employers have been found abusing non-compete agreements which stops workers from taking a job from a rival company. This agreement was originally created to prevent employees from walking away with proprietary information from a company, but has began to become abused to companies to help benefit in profit. There is even evidence among major tech giants such as Apple, Google, Samsung and LG where they have been found to hold down wages by agreeing to not recruit each other's employees.
So what has been done to prevent this? Well the U.S. Federal Trade Commission’s Bureau of Competition and the Justice Department’s antitrust division have the power to challenge a monopsony that they deem to be anti-competitive, which would start an investigation on said company. Although there is evidence showing that companies have abused their powers in a Monopsony, there have been no investigations against any major companies yet.
Monopsonies are getting a very harsh look as they continue to set low wage prices for their employees. These employers have developed the idea that if they don’t have to compete with one another for workers, they can pay less. Workers will be stuck without the outside job offers that would allow them to make claims for higher wages. The monopsony uses the labor market phenomena, wage stagnation, which is the concept of declining job-to-job mobility and the deterioration of the job ladder. This is more prevalent for young workers.
There’s anecdotal evidence of employer domination in Monopsonies. Employers have been found abusing non-compete agreements which stops workers from taking a job from a rival company. This agreement was originally created to prevent employees from walking away with proprietary information from a company, but has began to become abused to companies to help benefit in profit. There is even evidence among major tech giants such as Apple, Google, Samsung and LG where they have been found to hold down wages by agreeing to not recruit each other's employees.
So what has been done to prevent this? Well the U.S. Federal Trade Commission’s Bureau of Competition and the Justice Department’s antitrust division have the power to challenge a monopsony that they deem to be anti-competitive, which would start an investigation on said company. Although there is evidence showing that companies have abused their powers in a Monopsony, there have been no investigations against any major companies yet.
A very high IQ post Tyler! This helped me to understand what a monopsony is and how it relates and differs from a monopoly, because monopsonies are like monopolies except that they are the only buyer of a product, rather than the only supplier. It's interesting to see how such huge firms such as Apple and Google are participating in this to lower their wages, and the antitrust department has done nothing to stop it.
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