A recent commentary in The Washington Post regarding the labor market in the United States highlights a bias towards wealth inequality and capital rather than labor in the general business press. Paul Waldman cleverly notes “(a)s any conservative will tell you, markets are extraordinary. They’re nimble and responsive, combining thousands or millions of individual decisions into a system that hums with efficiency and fairness, and it processes its inputs and outputs.”
Waldman goes on “it was only when the price of labor threatened to go up for some businesses that Republicans declared it an emergency that demanded immediate government action.” That government action being requested by these businesses was ending of extra unemployment payments that were seen as the reason why not enough individuals were accepting low paying positions. A request that was not necessarily supported by factual evidence linking the lack of individuals seeking work with the temporarily higher levels of unemployment compensation.
These comments highlight a frequent bias in much of the reporting in the financial press. Typically there is much hand wringing over increased wages for workers as that will lead either to lower profits negatively impacting share prices or higher inflation. But those remarks suggest that the allocation of revenues between capital, labor and providers of inputs works only if labor consistently gets less. Perhaps the growth of inequality and the related growth in populistic politics over the last several years is a result of this bias towards providing rewards primarily to the capital inputs without considering the role of labor in the economy.