Corporate power keeps wages 20% down: White House

With the inflation rate at a 4-decade high, a US government report shows that corporate America has used its power in the labor market to keep wages 20% lower than they should be, the White House said on Monday. The report was prepared by the Treasury Department with help from the Justice Department, Labor Department and Federal Trade Commission. 

They found that companies had the upper hand in setting wages because they generally knew more about the labor market than the workers do. Further, workers may not be able to move or afford an extended job search in order to find better-paying jobs. The report says, "These conditions can enable firms to exert market power, and consequently offer lower wages and worse working conditions, even in labor markets that are not highly concentrated."

Janet Yellen, US Treasury Secretary told a White House forum highlighting the report that the workers are often at a disadvantage due to the required non-compete or non-disclosure agreements, collusion between employers to keep wages low; or a lack of transparency that keeps workers unaware of prevailing wage rates. She says, "Ultimately these conditions cumulatively yield an uneven market where employers have more leverage than workers."

Source: Reuters