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Title: Wage Stagnation and Buyer Power: How Buyer-Supplier Relations Affect U.S. Workers’ Wages

Citation Type: Journal Article

Publication Year: 2018

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Abstract: Since the 1970s, market restructuring has shifted many workers into workplaces heavily reliant on sales to outside corporate buyers. These outside buyers wield substantial power over working conditions among their suppliers. During the same period, wage growth for middle-income workers stagnated. By extending organizational theories of wage-setting to incorporate interactions between organizations, I predict that wage stagnation resulted in part from production workers’ heightened exposure to buyer power. Panel data on publicly traded companies shows that dependence on large buyers lowers suppliers’ wages and accounts for 10 percent of wage stagnation in nonfinancial firms since the 1970s. These results are robust to a series of supplementary measures of buyer power; instrumental variable analysis using mergers between buyers; corrections for selection and missing data; and controls for individual worker characteristics like education and occupation. The results show how product market restructuring and new forms of economic segmentation affect workers’ wages. The spread of unequal bargaining relations between corporate buyers and their suppliers has slowed wage growth for workers.

Url: http://journals.sagepub.com/doi/pdf/10.1177/0003122418762441

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Authors: Wilmers, Nathan

Periodical (Full): American Sociological Review

Issue: 2

Volume: 83

Pages: 213-242

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure, Poverty and Welfare

Countries: United States