Briefing

Measuring Labor Market Power in the U.S. Manufacturing Sector

Abstract: Policymakers have recently considered several policies to mitigate a perceived increase in employers' market power. However, the lack of direct evidence on labor market power has complicated the policy debate. In this article, we show that the degree of employers' market power is substantial and widespread in the U.S. manufacturing sector. A worker in the average manufacturing plant receives only 65 cents on each dollar generated in the margin. Furthermore, we propose a novel aggregate measure for labor market power. We find that employers' market power decreased between the late 1970s and the early 2000s but has sharply increased since.

Keywords: manufacturing; labor markets;

Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Richmond Fed Economic Brief

Publication Date: 2022-01

Volume: 22

Issue: 01