Capitalisn't The Real Cause Of Wage Stagnation - ft. Arin Dube
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Apr 2, 2026 Arin Dube, economics professor and author of The Wage Standard, studies wages, monopsony, and labor-market frictions. He explains how invisible frictions give firms power over pay. Conversations cover why productivity stopped boosting wages after the 1970s, how minimum wages affect employment, the role of non-competes and outsourcing, and policy tools like unions and sectoral wage standards.
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Monopsony Is About Frictions Not Single Employers
- Monopsony describes frictions that give employers wage-setting power rather than literally one employer buying all labor.
- Search costs, mobility barriers, and job heterogeneity (e.g., commute value) let employers cut wages without losing all workers.
Search Frictions Amplify Employer Power
- Monopsony power arises strongly from search frictions and heterogeneous job valuations, not just employer concentration.
- Even small wage cuts only lose marginal workers because commute, supervisor fit, and other nonwage factors differ across workers.
Slack Labor Markets Hurt Low Wage Workers Most
- Monopsony effects are strongest at the bottom of the wage distribution because slack labor markets disproportionately weaken competition for low-wage workers.
- Post-1980 higher unemployment and slack labor meant employers kept wages down until pandemic-era tightness reversed this via quits.
