Sep 4, 2018

Globally, outsized firms are wreaking havoc with workers

Illustration: Lazaro Gamio/Axios

In the U.S., Europe and beyond, big companies are squeezing workers, overpowering their ability to negotiate wages, and leaving them with at best stagnant living standards, according to new studies.

What's going on: In March, we wrote about a decades-long reduction in the traditional share of the economic pie going to workers, a shift that economists call a primary reason for growing inequality. But in new papers and speeches, economists say the problem is global, not just in the U.S., cutting across developed and emerging nations.

Economists largely blame the problem on outsized market power of big companies — among them Amazon, Apple and Google in the U.S., HSBC and Tesco in the U.K., Siemens in Germany, and Alibaba and Tencent in China.

Driving the news: Amazon today reached $1 trillion in market value — like Apple, which reached the milestone last month — reflecting the remarkable change it has wrought on employment, economics and human behavior around the world.

  • Medium-size and merely large companies have not had such impact and are not to blame for flat wages, said John Van Reenan, an economics professor at MIT.
  • He said labor associated with most U.S. companies has not seen a shift. "It’s all coming from what’s happening to the top amongst the largest firms," he told Axios.
  • In a talk last month, Van Reenan and his colleagues coined such gargantuans as "superstar companies," which he said mainly grow up in what have become "winner-take-all" sectors.

The trend began earlier outside the U.S. In Europe, the labor decline began in the mid-1970s, a decade and a half before it was noticed in the U.S., according to a recent paper from the Federal Reserve Bank of Cleveland.

Economists at the International Monetary Fund said a half-century low point in labor's share of the economic benefits was reached before the financial crash and has not recovered since, according to a July 2017 paper.

  • In an interview, Mitali Das, who led the IMF research team, said globalization has played no role in the labor decline in advanced economies. Instead, it's been caused by technological advances including automation.
  • Das said her team's results align with Van Reenan's at MIT. "For one thing, the superstars in their analysis are those that adopted technology in spades — Facebook, Google, Apple, etc."

Go deeper: Robots are shifting income from workers to owners

Go deeper

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 1 a.m. ET: 664,695 — Total deaths: 30,847 — Total recoveries: 140,156.
  2. U.S.: Leads the world in cases. Total confirmed cases as of 1 a.m. ET: 124,464 — Total deaths: 2,191 — Total recoveries: 1,095.
  3. Federal government latest: President Trump announces new travel advisories for New York, New Jersey and Connecticut, but rules out quarantine enforcement. Per the CDC, residents of those states must now "refrain from non-essential domestic travel for 14 days," with the exception of critical infrastructure industry workers.
  4. State updates: Alaska is latest state to issue a stay-at-home order — New York is trying to nearly triple its hospital capacity in less than a month and has moved its presidential primary to June 23. Some Midwestern swing voters who backed Trump's handling of the virus less than two weeks ago are balking at his call for the U.S. to be "opened up" by Easter.
  5. World updates: In Spain, over 1,400 people were confirmed dead between Thursday to Saturday.
  6. 🚀 Space updates: OneWeb filed for bankruptcy amid the novel coronavirus pandemic.
  7. Hollywood: Tom Hanks and Rita Wilson have returned to U.S. after being treated for coronavirus.
  8. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk
  9. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Coronavirus updates: Global death toll tops 30,000

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens and confirmed plus presumptive cases from the CDC

The novel coronavirus has now killed more than 30,000 people around the world — with Italy reporting over 10,000 deaths, per Johns Hopkins data.

The big picture: The number of deaths from COVID-19 in the U.S. surpassed 2,000 on Saturday. The United States leads the world in confirmed coronavirus infections — more than 124,000 by late Saturday. The number of those recovered from the virus in the U.S. passed the 1,000-mark on Saturday evening.

Go deeperArrowUpdated 3 hours ago - Health

Trump rules out quarantine in New York, New Jersey, Connecticut after pushback

President Trump on the White House grounds on Saturdya. Photo: Sarah Silbiger/Getty Images

President Trump tweeted Saturday night that he's decided not to introduce quarantine enforcement measures fo New York, New Jersey and parts of Connecticut, but a "strong" travel advisory will be issued for those states. The CDC later announced domestic travel restrictions for the states.

Why it matters: Trump said hours earlier he was considering quarantine measures to combat the rise in novel coronavirus cases. But he received pushback, notably from New York Gov. Andrew Cuomo (D), who told CNN such a measure would cause "chaos." "This would be a federal declaration of war on states," Cuomo added.

Go deeperArrowUpdated 5 hours ago - Health