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Why is pay lagging? Maybe too many mergers in the heartland

A recent working paper by the economists José Azar, Ioana Marinescu and Marshall I. Steinbaum examined job listings on CareerBuilder.com from 2010 through 2013 and found that tens of millions of Americans lived in areas where a relatively small number of employers posted most of the listings. They showed that wages fell when fewer employers in a geographic area listed most of the jobs in an occupation. The phenomenon appears to hit workers hardest outside major cities — areas where voters’ economic frustrations helped carry Donald J. Trump to the White House in 2016. Mr. Trump won Mr. Gies’s county by nearly 40 points.“There is definitely a strong rural urban pattern that I can see,” Mr. Steinbaum said. “Rural areas are likely to have a higher level of concentration — and, for any given unit of concentration, a larger effect” on wages.Other economists, like Simcha Barkai of the London Business School, have reached similar conclusions. In a working paper released in 2016, Mr. Barkai found that over the past 30 years, workers’ cut of companies’ revenue had fallen most in industries where concentration had increased the most, though he said in an interview that he was not yet convinced this was the cause of weak wage growth.Few workers epitomize the trend as much as agricultural-equipment mechanics, who faced the most concentrated group of prospective employers out of the roughly two dozen occupations that Mr. Azar, Ms. Marinescu and Mr. Steinbaum examined on CareerBuilder. On average, a single employer accounted for an overwhelming majority of job listings for farm-equipment mechanics in a so-called commuting zone in any given quarter.

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The New York Times
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