Years ago, on a Friday about a month after I had gotten divorced, I wrote a post called “What the fuck is even happening at most companies?” This post is essentially a list of ridiculous statistics that we always see in business journalism, such as “95% of employees don’t know the strategy of where they work.” These statistics seem insane and ridiculous, but we’ve all lived it and know there’s a huge kernel of reality therein, and that makes it even scarier at some level, which probably causes us to ignore it more.
This morning I got a newsletter from Planet Money and the newsletter is about “the profit paradox,” which is, by way of a long definition:
In his own study, published in a top, peer-reviewed journal, Eeckhout and his colleagues find that the markups of companies publicly traded in the United States have tripled since 1980, and that dominant companies are much more profitable than they used to be. In 1980, the average profit rate of a publicly-traded company was only one to two percent of sales. Now, they have profit rates of between seven and eight percent of sales. It’s a mind-boggling increase.
Eeckhout says he has nothing against profits per se. But, he says, the excessive profits of so many companies are coming at the cost of the economic livelihoods of ordinary workers. In the world of omnipresent market power, workers not only have to pay higher prices for goods and services; they also, Eeckhout says, find it harder to get good-paying work. That’s because higher prices of stuff means lower demand for that stuff, which also means lower demand for workers to make or provide that stuff.
“Market power now is so widespread, from tech to textiles, that it lowers production and the demand for labor,” he writes. “Instead of creating jobs, profitability due to market power lowers wages and destroys work. That is the profit paradox.”
I think a lot of people generally know this is happening too — big dog profits up, general worker wages stagnant, which is also why the idea of “create good jobs!” is such a farce — but it’s far from the only paradox about our working lives.
The autonomy paradox
In short: employers tend to want automation, and employees tend to want autonomy. Hard to…
