The US workforce is the most productive, best educated in history and unemployment is at an all-time low, but wages are stagnant

Orthodox market economics holds that when unemployment falls and the labor supply gets tighter wages go up; it also predicts that better-educated workers and more-productive workers get paid more for their work — none of this has happened.

American unemployment stands at 4% and the workforce is the best-educated, most productive in history. The Fed is about to raise interests rates to fight nonexistent inflation, which will further punish workers, who've gone into debt to make ends meet while their wages stagnated.

Yale historian Gabriel Winant has a pretty simple explanation for what's happened: monopolism. Most labor markets are beyond "highly concentrated" (in the technical sense used by antitrust regulators), with few employers bidding for workers, and the employers collude to have no-poaching arrangements (for example, franchisees are not allowed to tempt one another's employees to jump ship by offering higher wages). Even in places where employers don't collude, they hire through staffing agencies that act as wage suppressors, offering the same low wages to all comers.

With the forces of capital colluding to suppress workers' wages, it's no surprise that wildcat strikes and labor militantism are on the rise — and about time, too.

In West Virginia, the legislature had to pass a law, and the governor had to sign it, to give the teachers their raise. Oklahoma has now done the same, and passed its first tax increase in decades to fund the raise. These workers, in other words, are not just engaging in bargaining: their strikes are political in nature, and they are shaping public policy.

The political power typically enjoyed by employers is generally experienced by workers as fear: fear of harassment, favoritism and wage theft, fear of joining a union or speaking out, fear of the consequences of injury or sickness, fear of the risks of asking for a raise, and beneath these, the fundamental workplace fear – of losing your job.

The current of fear running through the workplace is one of the best ways to tell there's something more than a market transaction happening there. But fear can go both ways. In West Virginia and Oklahoma, the irreplaceable teachers terrified Republican officials. With unemployment down, more of us are becoming irreplaceable every day. There's leverage for workers there, but you have to be willing to scare your boss to use it.

How the American economy conspires to keep wages down [Gabriel Winant/The Guardian]