Policymakers have held off onraising the minimum wage and made it harder for workers to holdbargaining power, and the Fed has opted to push for low inflationinstead of high employment. (Photo: Shutterstock)

The bottom 90 percent have suffered a “collapse in pay” that canbe laid at the door of politicians and their decisions, reports theWashington Post.

The Post is reporting on an analysis of wage stagnation by the EconomicPolicy Institute, which says that specific policy changes,including the weakening of unions, the stagnation of theminimum wage and monetary policies pushing lowinflation instead of full employment, all contributed to takingpower away from workers and pushing it toward their employers.

As a result, that power shift has cost the bottom 90 percent ofwage earners $1.53 trillion in income just in 2015—amounting to$10,800 for every American household.

Related: Why is wage growth so sluggish?

According to researchers Josh Bivens and Heidi Shierholz,somewhat recent research into monopsony—defined by them as “the leverageenjoyed by employers to set their workers' pay”—allowed economiststo explain some of the wage stagnation that's taken place over thelast four decades.

In monopsony, there are usually relatively few employers, whichgives them an outsized advantage in setting wages since workershave few alternative sources of employment. But if that were thesole source of wage stagnation, say the researchers, wages shouldbe stagnating at all levels of pay. However, most of the wagestagnation has instead been concentrated at the bottom of thescale, with those at the high end seeing salaries rocketupward.

So, say the researchers, rather than caused by rising employerpower over wages, wage stagnation is instead caused by “deliberateefforts to undermine worker power.” Policymakers have held off onraising the minimum wage and made it harder for workers to holdbargaining power (incidentally harming unions), and the Fed hasopted to push for low inflation instead of high employment.

Some of those policies were supposed to boost productivity, buthave actually had the opposite effect. And Bivens and Shierholz saythat what policymakers should do to boost wages is to strengthenunions, raise minimum wages and shoot for full employment. “Inshort, the policy movement to dis-empower workers not only led toless equal growth, but was also associated with significantlyslower growth,” they're quoted saying in the report.

Of course, not everyone agrees 100 percent; Ioana Marinescu, aneconomist with the University of Pennsylvania who has writtenextensively on the causes of wage stagnation, is cited sayingin the report that “she generally agrees with the paper's findingsbut thinks the EPI authors' emphasis on certain policy decisions isoverstated.”

Marinescu is quoted saying, “There is no reason not to go afterabuses of dominance in the labor market if we go after abuses ofdominance in the product market.” If that were done, the effect ofantitrust legislation could have the double effect of loweringconsumer prices and boosting wages.

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