Labor
Wages, work, and the policy choices that shape who gets paid what.
Drop in union membership since the 1950s — from ~35% to ~10% of the US workforce
Source: BLS, 2024
Labor markets are where most people encounter economics most directly — in their paychecks, their job security, and their ability to switch employers. Policy interventions in labor markets include minimum wages, union rules, non-compete agreements, gig worker classification, and occupational licensing requirements.
The central economic question in labor policy is the monopsony question: how much power do employers have over workers? In a perfectly competitive labor market, wages would reflect workers' marginal product. In practice, geographic concentration, information asymmetries, and switching costs give many employers real wage-setting power — which justifies policy intervention even from a market-efficiency standpoint.
Recent decades have seen a shift in how economists think about minimum wages. The old consensus (any wage floor causes unemployment) has been complicated by empirical work showing moderate minimum wage increases have small employment effects, especially in industries with employer market power.
- →Does raising the minimum wage reduce employment?
- →Are non-compete clauses harmful to workers?
- →Why has union membership declined, and does it matter?
- →Are gig workers employees or contractors?
- →How does occupational licensing affect wages and access?