Assignment Prompt & Instructions
Please see attachment for instructions. Readings also attached.
– ## Untitleddocument18.pdf
– ## ThereIsPowerinaUnionTheNation.pdf
– ## Amazon_MonopolyorMonopsony__TheBullBearpdfversion.pdf
– TurningtheTablesClass1.pdf
**## Untitleddocument18.pdf**
Please answer the following questions. Answers should be written in paragraph form,
with multiple sentences and incorporate course readings, videos and other materials
1. Based on the ‘Turning the Tables’ reading excerpt, how would you characterize
the legal and political environment in which collective bargaining is taking place?
2. How does the article, ‘There is Power in the Union,’ and the Department of Labor
(DOL) economist video challenge Friedman’s argument? Explain.
3. Summarize the essential elements of Milton Friedman’s argument about unions
in the video, ‘The Real-World Effects Of Unions.’ What counter
evidence/arguments are presented by the article on Amazon Monopsony?
For question #3: https://www.youtube.com/watch?v=xzYgiOC9cj4
Other readings are attached. Please ONLY use the readings that I provided. Do not use
any other resources.
[https://www.youtube.com/watch?v=xzYgiOC9cj4](https://www.youtube.com/watch?v=xzYgiOC9cj4)
**## ThereIsPowerinaUnionTheNation.pdf**
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 1 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
Toggle Menu
INEQUALITY UNIONS THE SCORE JUNE 18-25, 2018, ISSUE
By Mike Konczal
MAY 23, 2018
fb tw mail Print
There Is Power in a Union
A new study overturns economic orthodoxy and shows that
unions reduce inequality.
(Tracy Matsue Loeffelholz)
Share
2 of 3 free articles left. To continue, please provide your email address or subscribe for
unlimited access.
SUBSCRIBE LOGIN
Click here for more information.
Your email SUBMIT
[https://www.thenation.com/](https://www.thenation.com/)
[https://www.thenation.com/subject/inequality/](https://www.thenation.com/subject/inequality/)
[https://www.thenation.com/keyword/unions/](https://www.thenation.com/keyword/unions/)
[https://www.thenation.com/content/the-score/](https://www.thenation.com/content/the-score/)
[https://www.thenation.com/issue/june-18-25-2018-issue/](https://www.thenation.com/issue/june-18-25-2018-issue/)
[https://www.thenation.com/authors/mike-konczal/](https://www.thenation.com/authors/mike-konczal/)
[https://twitter.com/@rortybomb](https://twitter.com/@rortybomb)
javascript:void(0)
javascript:void(0)
javascript:void(0)
javascript:void(0)
[https://www.thenation.com/wp-content/uploads/2018/05/Score-Unions-Web_img.jpg](https://www.thenation.com/wp-content/uploads/2018/05/Score-Unions-Web_img.jpg)
javascript:void(0)
[https://subscribe.thenation.com/flex/NA/key/G0F1TB2/](https://subscribe.thenation.com/flex/NA/key/G0F1TB2/)
[https://www.thenation.com/login?return_to=https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1](https://www.thenation.com/login?return_to=https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1)
[https://www.thenation.com/meter-system-faq](https://www.thenation.com/meter-system-faq)
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 2 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
FF or a period of 40 years, something managed to keep
inequality in check in the United States. From 1940
to 1980, the richest 1 percent took home 9 percent of
the wealth generated by the economy. Today, just as
they did in the 1920s, the top 1 percent grabs about
double that share. Surprisingly, the cause of this
midcentury “Great Compression” has been largely
neglected by economists, with many of them casually
dismissing the role of unions.
One influential theory, especially among pundits, is that
the supply of skilled workers curbed the growth of
income inequality. Starting in the 1940s, the argument
goes, the increasing education of the American
workforce propelled a broad prosperity. Another recent
account, associated with the economist Thomas Piketty,
maintains that the devastation of World War II drove
down the returns on capital.
But a groundbreaking new paper, “Unions and
Inequality Over the Twentieth Century: New Evidence
From Survey Data,” written by the economists Henry
Farber, Dan Herbst, Ilyana Kuziemko, and Suresh
Naidu, proposes a different engine for that broad
prosperity: unions. The growth of union membership—
to a height of nearly 30 percent in 1955, before falling
[https://www.nytimes.com/2008/07/29/opinion/29brooks.html](https://www.nytimes.com/2008/07/29/opinion/29brooks.html)
[http://www.nber.org/papers/w24587](http://www.nber.org/papers/w24587)
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 3 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
to its current low of 10.7 percent—explains the Great
Compression every bit as much as theories about
education or any other single factor.
It may surprise some readers that economists consider
the statement “unions help workers” a revelation akin
to discovering general relativity. (Another recent
finding, “where you grow up matters,” has also shaken
the economics establishment to its core.) But
economists haven’t had the necessary data to study
unions in any depth. Detailed data on education goes
back to the 1940s, but the government only introduced
questions tracking union status in 1973. Yet the authors
of “Unions and Inequality” newly applied a Gallup data
set that allowed them to analyze workers back to the
1930s.
READ MORE
TOP ARTICLES 1/5
Harry Dodge’s ‘My Meteorite’ Is Like a Wonderful
Sculpture
javascript:void(0)
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 4 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
Before this paper, economists generally believed that
unions largely helped the most skilled and educated
workers—i.e., those who already had higher wages.
Many economists insisted that unions work by creating
insiders who benefit at the expense of outsiders—in
other words, those who get in the union receive a
premium, while those outside the union are denied
opportunities. This theory implies that, since unions
merely transfer wealth among workers, they wouldn’t
lower inequality overall and might even slow economic
growth. But the new paper pushes back on all these
notions.
It turns out that, at their peak, unions were
disproportionately made up of the least-skilled workers
and people of color. Historians continue to debate how
racially segregated unions were in this period, but this
new research finds that nonwhites became more likely
than whites to be in a union starting in the early 1940s,
and that this trend continued until the late 1970s.
(People of color also received a higher union premium.)
This rise in union membership among people of color
begins around 1941, when President Franklin Roosevelt
desegregated the defense industry with Executive
Order 8802, a move designed to stop a march on
Washington planned by civil-rights leaders. As Suresh
Naidu, one of the paper’s authors, told The Nation,
“Starting around World War II, labor unions became no
[http://www.pbs.org/fmc/timeline/eexec8802.htm](http://www.pbs.org/fmc/timeline/eexec8802.htm)
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 5 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
Mike Konczal Mike Konczal is a contributor to The Nation and a
director at the Roosevelt Institute, where he focuses on inequality,
unemployment, and new economic ideas.
more likely to be white than the labor market as a
whole. Union households would go on to become less
likely to be white up and through the civil-rights
movement.”
Most economists have also been wrong about unions
and wealth distribution. If unions were largely about
helping insiders at the expense of outsiders, they
wouldn’t bring down every indicator of economic
inequality—but that’s what happened with the Gini
coefficient, the 90-to-10 ratio, and the rest of the
jargon-heavy measures of inequality. The paper also
reveals that decreasing inequality doesn’t reduce
economic growth: The researchers couldn’t find a single
model in which the economy slowed because of a high
union share.
These results should end the simplistic tales in which
education alone challenges the dominance of the 1
percent. If we want to change whom our economy
works for, we must change who gets to exercise power.
And this paper makes it clear: There is power in a
union.
[https://www.thenation.com/authors/mike-konczal/](https://www.thenation.com/authors/mike-konczal/)
[https://twitter.com/@rortybomb](https://twitter.com/@rortybomb)
**## Amazon_MonopolyorMonopsony__TheBullBearpdfversion.pdf**
1/26/25, 4:14 PMAmazon: Monopoly or Monopsony? | The Bull & Bear
Page 1 of 3https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/
I
n October 2020, the US House Democrats’ antitrust subcommittee published a 449-page
report(https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_sta!_report_and_recommendations.pdf)
describing their view that big tech companies Apple, Facebook, Google and Amazon possess unfair market power.
Discussions of whether big tech companies wield monopoly power have been growing in intensity, exemplified by the
recent FTC lawsuit against Facebook(https://bullandbearmcgill.com/monopolies-in-a-modern-world-implications-of-the-antitrust-lawsuit-
against-facebook/).
The issue of Amazon’s market power is a more complex one. On the surface, it may appear foolish to paint Amazon as a
monopoly given that it provides consumers access to seemingly endless amounts of products at low prices from a wide
array of suppliers/third-party sellers. Behind the scenes however, signs point to Amazon wielding a di!erent type of
market power – monopsony power.
(https://bullandbearmcgill.com/)
M C G I L L ' S S T U D E N T – R U N N E W S M A G A Z I N E
B Y ( J U L I A N R O B I N S O N J U L I A N R O B I N S O N ) J U L I A N R O B I N S O N / J A N U A R Y 3 0 , 2 0 2 1
AMAZON: MONOPOLY OR
MONOPSONY?
i
[https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_staff_report_and_recommendations.pdf](https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_staff_report_and_recommendations.pdf)
[https://bullandbearmcgill.com/monopolies-in-a-modern-world-implications-of-the-antitrust-lawsuit-against-facebook/](https://bullandbearmcgill.com/monopolies-in-a-modern-world-implications-of-the-antitrust-lawsuit-against-facebook/)
[https://bullandbearmcgill.com/](https://bullandbearmcgill.com/)
[https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/Julian%20RobinsonJulian%20Robinson](https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/Julian%20RobinsonJulian%20Robinson)
[https://bullandbearmcgill.com/author/julian-robinson/](https://bullandbearmcgill.com/author/julian-robinson/)
1/26/25, 4:14 PMAmazon: Monopoly or Monopsony? | The Bull & Bear
Page 2 of 3https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/
A monopsony(https://www.investopedia.com/terms/m/monopsony.asp), as opposed to a monopoly, is a situation where there is
only a single buyer for a good or service. Amazon reflects this in two respects: its interactions with its third-party sellers
and its behaviour in the labour market.
Beginning with its suppliers, the House subcommittee estimated that Amazon controls around 50%
(https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_sta!_report_and_recommendations.pdf)
of the e-commerce market. Given Amazon’s massive user base, Amazon is the main and possibly only choice for many
smaller companies to sell their wares. This is a telltale sign of monopsony power since no other e-commerce company
has a grip on the market like Amazon’s. No other company has a user base like Amazon’s; therefore, Amazon can keep
prices for its suppliers’ products very low. The flip side is that by suppressing product prices in this way, Amazon has
shrunk the profit margins of some of its third-party sellers to very thin levels(https://prospect.org/economy/amazon-controls-
marketplace/).
This issue came to a head in 2014 when Amazon found itself in a dispute(https://www.fastcompany.com/90352975/why-
monopsonies-not-monopolies-are-the-tech-industrys-biggest-threat) with book publisher Hachette. Amazon argued that it should
be able to sell e-books at whatever price it wanted and when Hachette disagreed, Amazon halted sales of Hachette’s
books – a tactic enabled by Amazon’s secure hold on the market.
“ it is also true that since some third-party sellers’ profit margins are being kept so
low, that they may be unable to innovate or be forced to provide a less than ideal product
to keep costs low
”To the contrary, a case can be made that Amazon operating this way is exactly what makes it such a great service for
consumers. In response to the House subcommittee report, Amazon made the
argument(https://www.aboutamazon.com/news/policy-news-views/fringe-notions-on-antitrust-would-destroy-small-businesses-and-hurt-
consumers) that it is not abusing its market power since it gives consumers access to a wide range of products at low
prices and gives sellers access to a large consumer base. While this is true it one sense, it is also true that since some
third-party sellers’ profit margins are being kept so low, that they may be unable to innovate or be forced to provide a
less than ideal product(https://nymag.com/intelligencer/2019/05/amazon-antitrust-monopoly.html) to keep costs low.
Another way that Amazon’s monopsony power reveals itself is through Amazon’s labour market activity. Amazon has
around 798,000 employees(https://www.statista.com/statistics/234488/number-of-amazon-
employees/#:~:text=In%202019%2C%20the%20American%20multinational,dollars%20in%202019%20net%20revenues.) in the US alone.
Amazon has also come under fire from politicians and workers alike over working
conditions(https://www.theguardian.com/technology/2020/feb/05/amazon-workers-protest-unsafe-grueling-conditions-warehouse),
resistance to unionization(https://www.cnbc.com/2020/10/24/how-amazon-prevents-unions-by-surveilling-employee-activism.html) and
some workers being unable to pay their bills(https://www.bloomberg.com/news/features/2020-12-17/amazon-amzn-job-pay-rate-
leaves-some-warehouse-employees-homeless). In a more competitive market, it may not be possible for a firm to act this way
but the reality is that in many, especially smaller communities, Amazon is the main or only employer of warehouse
workers.
Surprise came for many, when Amazon decided to raise its minimum wage(https://www.cnbc.com/2018/10/02/amazon-raises-
minimum-wage-to-15-for-all-us-employees.html) for US employees to $15 and vowed to use its lobbying power to push for an
increase in the federal minimum wage. It would be naïve to assume that this was an act of altruism, since in many ways
it was a clever business decision and an example of Amazon using its monopsony position.
“ Beneath the surface of Amazon’s easy-to-use and convenient online store, lies
potentially harmful treatment of its third-party sellers and its workers
”First, the pay raise may have been an attempt to stall growing e!orts for unionization. Additionally, Amazon is
positioned better to absorb increased labour costs than its competitors. Amazon is then able to drive other warehouse-
based companies’ profits down, while maintaining its own profits through its massive share of the e-commerce market
and its other successful business activities. The fact that Amazon was able to introduce a pay rise like this implies
monopsony power in itself, since such an option is likely too costly for smaller firms. While a pay raise may improve
[https://www.investopedia.com/terms/m/monopsony.asp](https://www.investopedia.com/terms/m/monopsony.asp)
[https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_staff_report_and_recommendations.pdf](https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_staff_report_and_recommendations.pdf)
[https://prospect.org/economy/amazon-controls-marketplace/](https://prospect.org/economy/amazon-controls-marketplace/)
[https://www.fastcompany.com/90352975/why-monopsonies-not-monopolies-are-the-tech-industrys-biggest-threat](https://www.fastcompany.com/90352975/why-monopsonies-not-monopolies-are-the-tech-industrys-biggest-threat)
[https://www.aboutamazon.com/news/policy-news-views/fringe-notions-on-antitrust-would-destroy-small-businesses-and-hurt-consumers](https://www.aboutamazon.com/news/policy-news-views/fringe-notions-on-antitrust-would-destroy-small-businesses-and-hurt-consumers)
[https://nymag.com/intelligencer/2019/05/amazon-antitrust-monopoly.html](https://nymag.com/intelligencer/2019/05/amazon-antitrust-monopoly.html)
[https://www.statista.com/statistics/234488/number-of-amazon-employees/#:~:text=In%202019%2C%20the%20American%20multinational,dollars%20in%202019%20net%20revenues.](https://www.statista.com/statistics/234488/number-of-amazon-employees/#:~:text=In%202019%2C%20the%20American%20multinational,dollars%20in%202019%20net%20revenues.)
[https://www.theguardian.com/technology/2020/feb/05/amazon-workers-protest-unsafe-grueling-conditions-warehouse](https://www.theguardian.com/technology/2020/feb/05/amazon-workers-protest-unsafe-grueling-conditions-warehouse)
[https://www.cnbc.com/2020/10/24/how-amazon-prevents-unions-by-surveilling-employee-activism.html](https://www.cnbc.com/2020/10/24/how-amazon-prevents-unions-by-surveilling-employee-activism.html)
[https://www.bloomberg.com/news/features/2020-12-17/amazon-amzn-job-pay-rate-leaves-some-warehouse-employees-homeless](https://www.bloomberg.com/news/features/2020-12-17/amazon-amzn-job-pay-rate-leaves-some-warehouse-employees-homeless)
[https://www.cnbc.com/2018/10/02/amazon-raises-minimum-wage-to-15-for-all-us-employees.html](https://www.cnbc.com/2018/10/02/amazon-raises-minimum-wage-to-15-for-all-us-employees.html)
1/26/25, 4:14 PMAmazon: Monopoly or Monopsony? | The Bull & Bear
Page 3 of 3https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/
workers’ standard of living for now, in the long-run monopsony power is known to lead to downward pressure on
wages(https://www.economist.com/united-states/2018/10/04/amazons-15-minimum-wage-is-welcome), and in Amazon’s case poor
working conditions also.
Like Facebook, Amazon is an example of a big tech company with massive market power, although in a di!erent sense.
Beneath the surface of Amazon’s easy-to-use and convenient online store, lies potentially harmful treatment of its third-
party sellers and its workers. This stems from Amazon’s monopsony power, a less heard-of term than monopoly, but an
equally important one. With a new, Biden administration o"ce in the US, it may prove more di"cult for tech giants like
Amazon to keep a hold on their market power(https://www.cnbc.com/2021/01/23/what-the-biden-administration-means-for-
amazon.html) and the debate over how best to regulate tech firms like this is bound to continue. Monopsony as well as
monopoly power should be kept in mind as these issues continue to play out.
[https://www.economist.com/united-states/2018/10/04/amazons-15-minimum-wage-is-welcome](https://www.economist.com/united-states/2018/10/04/amazons-15-minimum-wage-is-welcome)
[https://www.cnbc.com/2021/01/23/what-the-biden-administration-means-for-amazon.html](https://www.cnbc.com/2021/01/23/what-the-biden-administration-means-for-amazon.html)
**TurningtheTablesClass1.pdf**
This file is too large to display. [View in new window](https://www.sweetstudy.com/files/turningthetablesclass1-pdf)
**TurningtheTablesClass1.pdf**
This file is too large to display. [View in new window](https://www.sweetstudy.com/files/turningthetablesclass1-pdf)
**## Untitleddocument18.pdf**
Please answer the following questions. Answers should be written in paragraph form,
with multiple sentences and incorporate course readings, videos and other materials
1. Based on the ‘Turning the Tables’ reading excerpt, how would you characterize
the legal and political environment in which collective bargaining is taking place?
2. How does the article, ‘There is Power in the Union,’ and the Department of Labor
(DOL) economist video challenge Friedman’s argument? Explain.
3. Summarize the essential elements of Milton Friedman’s argument about unions
in the video, ‘The Real-World Effects Of Unions.’ What counter
evidence/arguments are presented by the article on Amazon Monopsony?
For question #3: https://www.youtube.com/watch?v=xzYgiOC9cj4
Other readings are attached. Please ONLY use the readings that I provided. Do not use
any other resources.
[https://www.youtube.com/watch?v=xzYgiOC9cj4](https://www.youtube.com/watch?v=xzYgiOC9cj4)
**## ThereIsPowerinaUnionTheNation.pdf**
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 1 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
Toggle Menu
INEQUALITY UNIONS THE SCORE JUNE 18-25, 2018, ISSUE
By Mike Konczal
MAY 23, 2018
fb tw mail Print
There Is Power in a Union
A new study overturns economic orthodoxy and shows that
unions reduce inequality.
(Tracy Matsue Loeffelholz)
Share
2 of 3 free articles left. To continue, please provide your email address or subscribe for
unlimited access.
SUBSCRIBE LOGIN
Click here for more information.
Your email SUBMIT
[https://www.thenation.com/](https://www.thenation.com/)
[https://www.thenation.com/subject/inequality/](https://www.thenation.com/subject/inequality/)
[https://www.thenation.com/keyword/unions/](https://www.thenation.com/keyword/unions/)
[https://www.thenation.com/content/the-score/](https://www.thenation.com/content/the-score/)
[https://www.thenation.com/issue/june-18-25-2018-issue/](https://www.thenation.com/issue/june-18-25-2018-issue/)
[https://www.thenation.com/authors/mike-konczal/](https://www.thenation.com/authors/mike-konczal/)
[https://twitter.com/@rortybomb](https://twitter.com/@rortybomb)
javascript:void(0)
javascript:void(0)
javascript:void(0)
javascript:void(0)
[https://www.thenation.com/wp-content/uploads/2018/05/Score-Unions-Web_img.jpg](https://www.thenation.com/wp-content/uploads/2018/05/Score-Unions-Web_img.jpg)
javascript:void(0)
[https://subscribe.thenation.com/flex/NA/key/G0F1TB2/](https://subscribe.thenation.com/flex/NA/key/G0F1TB2/)
[https://www.thenation.com/login?return_to=https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1](https://www.thenation.com/login?return_to=https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1)
[https://www.thenation.com/meter-system-faq](https://www.thenation.com/meter-system-faq)
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 2 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
FF or a period of 40 years, something managed to keep
inequality in check in the United States. From 1940
to 1980, the richest 1 percent took home 9 percent of
the wealth generated by the economy. Today, just as
they did in the 1920s, the top 1 percent grabs about
double that share. Surprisingly, the cause of this
midcentury “Great Compression” has been largely
neglected by economists, with many of them casually
dismissing the role of unions.
One influential theory, especially among pundits, is that
the supply of skilled workers curbed the growth of
income inequality. Starting in the 1940s, the argument
goes, the increasing education of the American
workforce propelled a broad prosperity. Another recent
account, associated with the economist Thomas Piketty,
maintains that the devastation of World War II drove
down the returns on capital.
But a groundbreaking new paper, “Unions and
Inequality Over the Twentieth Century: New Evidence
From Survey Data,” written by the economists Henry
Farber, Dan Herbst, Ilyana Kuziemko, and Suresh
Naidu, proposes a different engine for that broad
prosperity: unions. The growth of union membership—
to a height of nearly 30 percent in 1955, before falling
[https://www.nytimes.com/2008/07/29/opinion/29brooks.html](https://www.nytimes.com/2008/07/29/opinion/29brooks.html)
[http://www.nber.org/papers/w24587](http://www.nber.org/papers/w24587)
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 3 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
to its current low of 10.7 percent—explains the Great
Compression every bit as much as theories about
education or any other single factor.
It may surprise some readers that economists consider
the statement “unions help workers” a revelation akin
to discovering general relativity. (Another recent
finding, “where you grow up matters,” has also shaken
the economics establishment to its core.) But
economists haven’t had the necessary data to study
unions in any depth. Detailed data on education goes
back to the 1940s, but the government only introduced
questions tracking union status in 1973. Yet the authors
of “Unions and Inequality” newly applied a Gallup data
set that allowed them to analyze workers back to the
1930s.
READ MORE
TOP ARTICLES 1/5
Harry Dodge’s ‘My Meteorite’ Is Like a Wonderful
Sculpture
javascript:void(0)
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 4 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
Before this paper, economists generally believed that
unions largely helped the most skilled and educated
workers—i.e., those who already had higher wages.
Many economists insisted that unions work by creating
insiders who benefit at the expense of outsiders—in
other words, those who get in the union receive a
premium, while those outside the union are denied
opportunities. This theory implies that, since unions
merely transfer wealth among workers, they wouldn’t
lower inequality overall and might even slow economic
growth. But the new paper pushes back on all these
notions.
It turns out that, at their peak, unions were
disproportionately made up of the least-skilled workers
and people of color. Historians continue to debate how
racially segregated unions were in this period, but this
new research finds that nonwhites became more likely
than whites to be in a union starting in the early 1940s,
and that this trend continued until the late 1970s.
(People of color also received a higher union premium.)
This rise in union membership among people of color
begins around 1941, when President Franklin Roosevelt
desegregated the defense industry with Executive
Order 8802, a move designed to stop a march on
Washington planned by civil-rights leaders. As Suresh
Naidu, one of the paper’s authors, told The Nation,
“Starting around World War II, labor unions became no
[http://www.pbs.org/fmc/timeline/eexec8802.htm](http://www.pbs.org/fmc/timeline/eexec8802.htm)
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 5 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
Mike Konczal Mike Konczal is a contributor to The Nation and a
director at the Roosevelt Institute, where he focuses on inequality,
unemployment, and new economic ideas.
more likely to be white than the labor market as a
whole. Union households would go on to become less
likely to be white up and through the civil-rights
movement.”
Most economists have also been wrong about unions
and wealth distribution. If unions were largely about
helping insiders at the expense of outsiders, they
wouldn’t bring down every indicator of economic
inequality—but that’s what happened with the Gini
coefficient, the 90-to-10 ratio, and the rest of the
jargon-heavy measures of inequality. The paper also
reveals that decreasing inequality doesn’t reduce
economic growth: The researchers couldn’t find a single
model in which the economy slowed because of a high
union share.
These results should end the simplistic tales in which
education alone challenges the dominance of the 1
percent. If we want to change whom our economy
works for, we must change who gets to exercise power.
And this paper makes it clear: There is power in a
union.
[https://www.thenation.com/authors/mike-konczal/](https://www.thenation.com/authors/mike-konczal/)
[https://twitter.com/@rortybomb](https://twitter.com/@rortybomb)
**## Amazon_MonopolyorMonopsony__TheBullBearpdfversion.pdf**
1/26/25, 4:14 PMAmazon: Monopoly or Monopsony? | The Bull & Bear
Page 1 of 3https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/
I
n October 2020, the US House Democrats’ antitrust subcommittee published a 449-page
report(https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_sta!_report_and_recommendations.pdf)
describing their view that big tech companies Apple, Facebook, Google and Amazon possess unfair market power.
Discussions of whether big tech companies wield monopoly power have been growing in intensity, exemplified by the
recent FTC lawsuit against Facebook(https://bullandbearmcgill.com/monopolies-in-a-modern-world-implications-of-the-antitrust-lawsuit-
against-facebook/).
The issue of Amazon’s market power is a more complex one. On the surface, it may appear foolish to paint Amazon as a
monopoly given that it provides consumers access to seemingly endless amounts of products at low prices from a wide
array of suppliers/third-party sellers. Behind the scenes however, signs point to Amazon wielding a di!erent type of
market power – monopsony power.
(https://bullandbearmcgill.com/)
M C G I L L ' S S T U D E N T – R U N N E W S M A G A Z I N E
B Y ( J U L I A N R O B I N S O N J U L I A N R O B I N S O N ) J U L I A N R O B I N S O N / J A N U A R Y 3 0 , 2 0 2 1
AMAZON: MONOPOLY OR
MONOPSONY?
i
[https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_staff_report_and_recommendations.pdf](https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_staff_report_and_recommendations.pdf)
[https://bullandbearmcgill.com/monopolies-in-a-modern-world-implications-of-the-antitrust-lawsuit-against-facebook/](https://bullandbearmcgill.com/monopolies-in-a-modern-world-implications-of-the-antitrust-lawsuit-against-facebook/)
[https://bullandbearmcgill.com/](https://bullandbearmcgill.com/)
[https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/Julian%20RobinsonJulian%20Robinson](https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/Julian%20RobinsonJulian%20Robinson)
[https://bullandbearmcgill.com/author/julian-robinson/](https://bullandbearmcgill.com/author/julian-robinson/)
1/26/25, 4:14 PMAmazon: Monopoly or Monopsony? | The Bull & Bear
Page 2 of 3https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/
A monopsony(https://www.investopedia.com/terms/m/monopsony.asp), as opposed to a monopoly, is a situation where there is
only a single buyer for a good or service. Amazon reflects this in two respects: its interactions with its third-party sellers
and its behaviour in the labour market.
Beginning with its suppliers, the House subcommittee estimated that Amazon controls around 50%
(https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_sta!_report_and_recommendations.pdf)
of the e-commerce market. Given Amazon’s massive user base, Amazon is the main and possibly only choice for many
smaller companies to sell their wares. This is a telltale sign of monopsony power since no other e-commerce company
has a grip on the market like Amazon’s. No other company has a user base like Amazon’s; therefore, Amazon can keep
prices for its suppliers’ products very low. The flip side is that by suppressing product prices in this way, Amazon has
shrunk the profit margins of some of its third-party sellers to very thin levels(https://prospect.org/economy/amazon-controls-
marketplace/).
This issue came to a head in 2014 when Amazon found itself in a dispute(https://www.fastcompany.com/90352975/why-
monopsonies-not-monopolies-are-the-tech-industrys-biggest-threat) with book publisher Hachette. Amazon argued that it should
be able to sell e-books at whatever price it wanted and when Hachette disagreed, Amazon halted sales of Hachette’s
books – a tactic enabled by Amazon’s secure hold on the market.
“ it is also true that since some third-party sellers’ profit margins are being kept so
low, that they may be unable to innovate or be forced to provide a less than ideal product
to keep costs low
”To the contrary, a case can be made that Amazon operating this way is exactly what makes it such a great service for
consumers. In response to the House subcommittee report, Amazon made the
argument(https://www.aboutamazon.com/news/policy-news-views/fringe-notions-on-antitrust-would-destroy-small-businesses-and-hurt-
consumers) that it is not abusing its market power since it gives consumers access to a wide range of products at low
prices and gives sellers access to a large consumer base. While this is true it one sense, it is also true that since some
third-party sellers’ profit margins are being kept so low, that they may be unable to innovate or be forced to provide a
less than ideal product(https://nymag.com/intelligencer/2019/05/amazon-antitrust-monopoly.html) to keep costs low.
Another way that Amazon’s monopsony power reveals itself is through Amazon’s labour market activity. Amazon has
around 798,000 employees(https://www.statista.com/statistics/234488/number-of-amazon-
employees/#:~:text=In%202019%2C%20the%20American%20multinational,dollars%20in%202019%20net%20revenues.) in the US alone.
Amazon has also come under fire from politicians and workers alike over working
conditions(https://www.theguardian.com/technology/2020/feb/05/amazon-workers-protest-unsafe-grueling-conditions-warehouse),
resistance to unionization(https://www.cnbc.com/2020/10/24/how-amazon-prevents-unions-by-surveilling-employee-activism.html) and
some workers being unable to pay their bills(https://www.bloomberg.com/news/features/2020-12-17/amazon-amzn-job-pay-rate-
leaves-some-warehouse-employees-homeless). In a more competitive market, it may not be possible for a firm to act this way
but the reality is that in many, especially smaller communities, Amazon is the main or only employer of warehouse
workers.
Surprise came for many, when Amazon decided to raise its minimum wage(https://www.cnbc.com/2018/10/02/amazon-raises-
minimum-wage-to-15-for-all-us-employees.html) for US employees to $15 and vowed to use its lobbying power to push for an
increase in the federal minimum wage. It would be naïve to assume that this was an act of altruism, since in many ways
it was a clever business decision and an example of Amazon using its monopsony position.
“ Beneath the surface of Amazon’s easy-to-use and convenient online store, lies
potentially harmful treatment of its third-party sellers and its workers
”First, the pay raise may have been an attempt to stall growing e!orts for unionization. Additionally, Amazon is
positioned better to absorb increased labour costs than its competitors. Amazon is then able to drive other warehouse-
based companies’ profits down, while maintaining its own profits through its massive share of the e-commerce market
and its other successful business activities. The fact that Amazon was able to introduce a pay rise like this implies
monopsony power in itself, since such an option is likely too costly for smaller firms. While a pay raise may improve
[https://www.investopedia.com/terms/m/monopsony.asp](https://www.investopedia.com/terms/m/monopsony.asp)
[https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_staff_report_and_recommendations.pdf](https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_staff_report_and_recommendations.pdf)
[https://prospect.org/economy/amazon-controls-marketplace/](https://prospect.org/economy/amazon-controls-marketplace/)
[https://www.fastcompany.com/90352975/why-monopsonies-not-monopolies-are-the-tech-industrys-biggest-threat](https://www.fastcompany.com/90352975/why-monopsonies-not-monopolies-are-the-tech-industrys-biggest-threat)
[https://www.aboutamazon.com/news/policy-news-views/fringe-notions-on-antitrust-would-destroy-small-businesses-and-hurt-consumers](https://www.aboutamazon.com/news/policy-news-views/fringe-notions-on-antitrust-would-destroy-small-businesses-and-hurt-consumers)
[https://nymag.com/intelligencer/2019/05/amazon-antitrust-monopoly.html](https://nymag.com/intelligencer/2019/05/amazon-antitrust-monopoly.html)
[https://www.statista.com/statistics/234488/number-of-amazon-employees/#:~:text=In%202019%2C%20the%20American%20multinational,dollars%20in%202019%20net%20revenues.](https://www.statista.com/statistics/234488/number-of-amazon-employees/#:~:text=In%202019%2C%20the%20American%20multinational,dollars%20in%202019%20net%20revenues.)
[https://www.theguardian.com/technology/2020/feb/05/amazon-workers-protest-unsafe-grueling-conditions-warehouse](https://www.theguardian.com/technology/2020/feb/05/amazon-workers-protest-unsafe-grueling-conditions-warehouse)
[https://www.cnbc.com/2020/10/24/how-amazon-prevents-unions-by-surveilling-employee-activism.html](https://www.cnbc.com/2020/10/24/how-amazon-prevents-unions-by-surveilling-employee-activism.html)
[https://www.bloomberg.com/news/features/2020-12-17/amazon-amzn-job-pay-rate-leaves-some-warehouse-employees-homeless](https://www.bloomberg.com/news/features/2020-12-17/amazon-amzn-job-pay-rate-leaves-some-warehouse-employees-homeless)
[https://www.cnbc.com/2018/10/02/amazon-raises-minimum-wage-to-15-for-all-us-employees.html](https://www.cnbc.com/2018/10/02/amazon-raises-minimum-wage-to-15-for-all-us-employees.html)
1/26/25, 4:14 PMAmazon: Monopoly or Monopsony? | The Bull & Bear
Page 3 of 3https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/
workers’ standard of living for now, in the long-run monopsony power is known to lead to downward pressure on
wages(https://www.economist.com/united-states/2018/10/04/amazons-15-minimum-wage-is-welcome), and in Amazon’s case poor
working conditions also.
Like Facebook, Amazon is an example of a big tech company with massive market power, although in a di!erent sense.
Beneath the surface of Amazon’s easy-to-use and convenient online store, lies potentially harmful treatment of its third-
party sellers and its workers. This stems from Amazon’s monopsony power, a less heard-of term than monopoly, but an
equally important one. With a new, Biden administration o"ce in the US, it may prove more di"cult for tech giants like
Amazon to keep a hold on their market power(https://www.cnbc.com/2021/01/23/what-the-biden-administration-means-for-
amazon.html) and the debate over how best to regulate tech firms like this is bound to continue. Monopsony as well as
monopoly power should be kept in mind as these issues continue to play out.
[https://www.economist.com/united-states/2018/10/04/amazons-15-minimum-wage-is-welcome](https://www.economist.com/united-states/2018/10/04/amazons-15-minimum-wage-is-welcome)
[https://www.cnbc.com/2021/01/23/what-the-biden-administration-means-for-amazon.html](https://www.cnbc.com/2021/01/23/what-the-biden-administration-means-for-amazon.html)
**TurningtheTablesClass1.pdf**
This file is too large to display. [View in new window](https://www.sweetstudy.com/files/turningthetablesclass1-pdf)
**## Untitleddocument18.pdf**
Please answer the following questions. Answers should be written in paragraph form,
with multiple sentences and incorporate course readings, videos and other materials
1. Based on the ‘Turning the Tables’ reading excerpt, how would you characterize
the legal and political environment in which collective bargaining is taking place?
2. How does the article, ‘There is Power in the Union,’ and the Department of Labor
(DOL) economist video challenge Friedman’s argument? Explain.
3. Summarize the essential elements of Milton Friedman’s argument about unions
in the video, ‘The Real-World Effects Of Unions.’ What counter
evidence/arguments are presented by the article on Amazon Monopsony?
For question #3: https://www.youtube.com/watch?v=xzYgiOC9cj4
Other readings are attached. Please ONLY use the readings that I provided. Do not use
any other resources.
[https://www.youtube.com/watch?v=xzYgiOC9cj4](https://www.youtube.com/watch?v=xzYgiOC9cj4)
**## ThereIsPowerinaUnionTheNation.pdf**
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 1 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
Toggle Menu
INEQUALITY UNIONS THE SCORE JUNE 18-25, 2018, ISSUE
By Mike Konczal
MAY 23, 2018
fb tw mail Print
There Is Power in a Union
A new study overturns economic orthodoxy and shows that
unions reduce inequality.
(Tracy Matsue Loeffelholz)
Share
2 of 3 free articles left. To continue, please provide your email address or subscribe for
unlimited access.
SUBSCRIBE LOGIN
Click here for more information.
Your email SUBMIT
[https://www.thenation.com/](https://www.thenation.com/)
[https://www.thenation.com/subject/inequality/](https://www.thenation.com/subject/inequality/)
[https://www.thenation.com/keyword/unions/](https://www.thenation.com/keyword/unions/)
[https://www.thenation.com/content/the-score/](https://www.thenation.com/content/the-score/)
[https://www.thenation.com/issue/june-18-25-2018-issue/](https://www.thenation.com/issue/june-18-25-2018-issue/)
[https://www.thenation.com/authors/mike-konczal/](https://www.thenation.com/authors/mike-konczal/)
[https://twitter.com/@rortybomb](https://twitter.com/@rortybomb)
javascript:void(0)
javascript:void(0)
javascript:void(0)
javascript:void(0)
[https://www.thenation.com/wp-content/uploads/2018/05/Score-Unions-Web_img.jpg](https://www.thenation.com/wp-content/uploads/2018/05/Score-Unions-Web_img.jpg)
javascript:void(0)
[https://subscribe.thenation.com/flex/NA/key/G0F1TB2/](https://subscribe.thenation.com/flex/NA/key/G0F1TB2/)
[https://www.thenation.com/login?return_to=https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1](https://www.thenation.com/login?return_to=https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1)
[https://www.thenation.com/meter-system-faq](https://www.thenation.com/meter-system-faq)
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 2 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
FF or a period of 40 years, something managed to keep
inequality in check in the United States. From 1940
to 1980, the richest 1 percent took home 9 percent of
the wealth generated by the economy. Today, just as
they did in the 1920s, the top 1 percent grabs about
double that share. Surprisingly, the cause of this
midcentury “Great Compression” has been largely
neglected by economists, with many of them casually
dismissing the role of unions.
One influential theory, especially among pundits, is that
the supply of skilled workers curbed the growth of
income inequality. Starting in the 1940s, the argument
goes, the increasing education of the American
workforce propelled a broad prosperity. Another recent
account, associated with the economist Thomas Piketty,
maintains that the devastation of World War II drove
down the returns on capital.
But a groundbreaking new paper, “Unions and
Inequality Over the Twentieth Century: New Evidence
From Survey Data,” written by the economists Henry
Farber, Dan Herbst, Ilyana Kuziemko, and Suresh
Naidu, proposes a different engine for that broad
prosperity: unions. The growth of union membership—
to a height of nearly 30 percent in 1955, before falling
[https://www.nytimes.com/2008/07/29/opinion/29brooks.html](https://www.nytimes.com/2008/07/29/opinion/29brooks.html)
[http://www.nber.org/papers/w24587](http://www.nber.org/papers/w24587)
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 3 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
to its current low of 10.7 percent—explains the Great
Compression every bit as much as theories about
education or any other single factor.
It may surprise some readers that economists consider
the statement “unions help workers” a revelation akin
to discovering general relativity. (Another recent
finding, “where you grow up matters,” has also shaken
the economics establishment to its core.) But
economists haven’t had the necessary data to study
unions in any depth. Detailed data on education goes
back to the 1940s, but the government only introduced
questions tracking union status in 1973. Yet the authors
of “Unions and Inequality” newly applied a Gallup data
set that allowed them to analyze workers back to the
1930s.
READ MORE
TOP ARTICLES 1/5
Harry Dodge’s ‘My Meteorite’ Is Like a Wonderful
Sculpture
javascript:void(0)
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 4 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
Before this paper, economists generally believed that
unions largely helped the most skilled and educated
workers—i.e., those who already had higher wages.
Many economists insisted that unions work by creating
insiders who benefit at the expense of outsiders—in
other words, those who get in the union receive a
premium, while those outside the union are denied
opportunities. This theory implies that, since unions
merely transfer wealth among workers, they wouldn’t
lower inequality overall and might even slow economic
growth. But the new paper pushes back on all these
notions.
It turns out that, at their peak, unions were
disproportionately made up of the least-skilled workers
and people of color. Historians continue to debate how
racially segregated unions were in this period, but this
new research finds that nonwhites became more likely
than whites to be in a union starting in the early 1940s,
and that this trend continued until the late 1970s.
(People of color also received a higher union premium.)
This rise in union membership among people of color
begins around 1941, when President Franklin Roosevelt
desegregated the defense industry with Executive
Order 8802, a move designed to stop a march on
Washington planned by civil-rights leaders. As Suresh
Naidu, one of the paper’s authors, told The Nation,
“Starting around World War II, labor unions became no
[http://www.pbs.org/fmc/timeline/eexec8802.htm](http://www.pbs.org/fmc/timeline/eexec8802.htm)
6/9/20, 2:38 PMThere Is Power in a Union | The Nation
Page 5 of 7https://www.thenation.com/article/archive/there-is-power-in-a-union/?print=1
Mike Konczal Mike Konczal is a contributor to The Nation and a
director at the Roosevelt Institute, where he focuses on inequality,
unemployment, and new economic ideas.
more likely to be white than the labor market as a
whole. Union households would go on to become less
likely to be white up and through the civil-rights
movement.”
Most economists have also been wrong about unions
and wealth distribution. If unions were largely about
helping insiders at the expense of outsiders, they
wouldn’t bring down every indicator of economic
inequality—but that’s what happened with the Gini
coefficient, the 90-to-10 ratio, and the rest of the
jargon-heavy measures of inequality. The paper also
reveals that decreasing inequality doesn’t reduce
economic growth: The researchers couldn’t find a single
model in which the economy slowed because of a high
union share.
These results should end the simplistic tales in which
education alone challenges the dominance of the 1
percent. If we want to change whom our economy
works for, we must change who gets to exercise power.
And this paper makes it clear: There is power in a
union.
[https://www.thenation.com/authors/mike-konczal/](https://www.thenation.com/authors/mike-konczal/)
[https://twitter.com/@rortybomb](https://twitter.com/@rortybomb)
**## Amazon_MonopolyorMonopsony__TheBullBearpdfversion.pdf**
1/26/25, 4:14 PMAmazon: Monopoly or Monopsony? | The Bull & Bear
Page 1 of 3https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/
I
n October 2020, the US House Democrats’ antitrust subcommittee published a 449-page
report(https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_sta!_report_and_recommendations.pdf)
describing their view that big tech companies Apple, Facebook, Google and Amazon possess unfair market power.
Discussions of whether big tech companies wield monopoly power have been growing in intensity, exemplified by the
recent FTC lawsuit against Facebook(https://bullandbearmcgill.com/monopolies-in-a-modern-world-implications-of-the-antitrust-lawsuit-
against-facebook/).
The issue of Amazon’s market power is a more complex one. On the surface, it may appear foolish to paint Amazon as a
monopoly given that it provides consumers access to seemingly endless amounts of products at low prices from a wide
array of suppliers/third-party sellers. Behind the scenes however, signs point to Amazon wielding a di!erent type of
market power – monopsony power.
(https://bullandbearmcgill.com/)
M C G I L L ' S S T U D E N T – R U N N E W S M A G A Z I N E
B Y ( J U L I A N R O B I N S O N J U L I A N R O B I N S O N ) J U L I A N R O B I N S O N / J A N U A R Y 3 0 , 2 0 2 1
AMAZON: MONOPOLY OR
MONOPSONY?
i
[https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_staff_report_and_recommendations.pdf](https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_staff_report_and_recommendations.pdf)
[https://bullandbearmcgill.com/monopolies-in-a-modern-world-implications-of-the-antitrust-lawsuit-against-facebook/](https://bullandbearmcgill.com/monopolies-in-a-modern-world-implications-of-the-antitrust-lawsuit-against-facebook/)
[https://bullandbearmcgill.com/](https://bullandbearmcgill.com/)
[https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/Julian%20RobinsonJulian%20Robinson](https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/Julian%20RobinsonJulian%20Robinson)
[https://bullandbearmcgill.com/author/julian-robinson/](https://bullandbearmcgill.com/author/julian-robinson/)
1/26/25, 4:14 PMAmazon: Monopoly or Monopsony? | The Bull & Bear
Page 2 of 3https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/
A monopsony(https://www.investopedia.com/terms/m/monopsony.asp), as opposed to a monopoly, is a situation where there is
only a single buyer for a good or service. Amazon reflects this in two respects: its interactions with its third-party sellers
and its behaviour in the labour market.
Beginning with its suppliers, the House subcommittee estimated that Amazon controls around 50%
(https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_sta!_report_and_recommendations.pdf)
of the e-commerce market. Given Amazon’s massive user base, Amazon is the main and possibly only choice for many
smaller companies to sell their wares. This is a telltale sign of monopsony power since no other e-commerce company
has a grip on the market like Amazon’s. No other company has a user base like Amazon’s; therefore, Amazon can keep
prices for its suppliers’ products very low. The flip side is that by suppressing product prices in this way, Amazon has
shrunk the profit margins of some of its third-party sellers to very thin levels(https://prospect.org/economy/amazon-controls-
marketplace/).
This issue came to a head in 2014 when Amazon found itself in a dispute(https://www.fastcompany.com/90352975/why-
monopsonies-not-monopolies-are-the-tech-industrys-biggest-threat) with book publisher Hachette. Amazon argued that it should
be able to sell e-books at whatever price it wanted and when Hachette disagreed, Amazon halted sales of Hachette’s
books – a tactic enabled by Amazon’s secure hold on the market.
“ it is also true that since some third-party sellers’ profit margins are being kept so
low, that they may be unable to innovate or be forced to provide a less than ideal product
to keep costs low
”To the contrary, a case can be made that Amazon operating this way is exactly what makes it such a great service for
consumers. In response to the House subcommittee report, Amazon made the
argument(https://www.aboutamazon.com/news/policy-news-views/fringe-notions-on-antitrust-would-destroy-small-businesses-and-hurt-
consumers) that it is not abusing its market power since it gives consumers access to a wide range of products at low
prices and gives sellers access to a large consumer base. While this is true it one sense, it is also true that since some
third-party sellers’ profit margins are being kept so low, that they may be unable to innovate or be forced to provide a
less than ideal product(https://nymag.com/intelligencer/2019/05/amazon-antitrust-monopoly.html) to keep costs low.
Another way that Amazon’s monopsony power reveals itself is through Amazon’s labour market activity. Amazon has
around 798,000 employees(https://www.statista.com/statistics/234488/number-of-amazon-
employees/#:~:text=In%202019%2C%20the%20American%20multinational,dollars%20in%202019%20net%20revenues.) in the US alone.
Amazon has also come under fire from politicians and workers alike over working
conditions(https://www.theguardian.com/technology/2020/feb/05/amazon-workers-protest-unsafe-grueling-conditions-warehouse),
resistance to unionization(https://www.cnbc.com/2020/10/24/how-amazon-prevents-unions-by-surveilling-employee-activism.html) and
some workers being unable to pay their bills(https://www.bloomberg.com/news/features/2020-12-17/amazon-amzn-job-pay-rate-
leaves-some-warehouse-employees-homeless). In a more competitive market, it may not be possible for a firm to act this way
but the reality is that in many, especially smaller communities, Amazon is the main or only employer of warehouse
workers.
Surprise came for many, when Amazon decided to raise its minimum wage(https://www.cnbc.com/2018/10/02/amazon-raises-
minimum-wage-to-15-for-all-us-employees.html) for US employees to $15 and vowed to use its lobbying power to push for an
increase in the federal minimum wage. It would be naïve to assume that this was an act of altruism, since in many ways
it was a clever business decision and an example of Amazon using its monopsony position.
“ Beneath the surface of Amazon’s easy-to-use and convenient online store, lies
potentially harmful treatment of its third-party sellers and its workers
”First, the pay raise may have been an attempt to stall growing e!orts for unionization. Additionally, Amazon is
positioned better to absorb increased labour costs than its competitors. Amazon is then able to drive other warehouse-
based companies’ profits down, while maintaining its own profits through its massive share of the e-commerce market
and its other successful business activities. The fact that Amazon was able to introduce a pay rise like this implies
monopsony power in itself, since such an option is likely too costly for smaller firms. While a pay raise may improve
[https://www.investopedia.com/terms/m/monopsony.asp](https://www.investopedia.com/terms/m/monopsony.asp)
[https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_staff_report_and_recommendations.pdf](https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_staff_report_and_recommendations.pdf)
[https://prospect.org/economy/amazon-controls-marketplace/](https://prospect.org/economy/amazon-controls-marketplace/)
[https://www.fastcompany.com/90352975/why-monopsonies-not-monopolies-are-the-tech-industrys-biggest-threat](https://www.fastcompany.com/90352975/why-monopsonies-not-monopolies-are-the-tech-industrys-biggest-threat)
[https://www.aboutamazon.com/news/policy-news-views/fringe-notions-on-antitrust-would-destroy-small-businesses-and-hurt-consumers](https://www.aboutamazon.com/news/policy-news-views/fringe-notions-on-antitrust-would-destroy-small-businesses-and-hurt-consumers)
[https://nymag.com/intelligencer/2019/05/amazon-antitrust-monopoly.html](https://nymag.com/intelligencer/2019/05/amazon-antitrust-monopoly.html)
[https://www.statista.com/statistics/234488/number-of-amazon-employees/#:~:text=In%202019%2C%20the%20American%20multinational,dollars%20in%202019%20net%20revenues.](https://www.statista.com/statistics/234488/number-of-amazon-employees/#:~:text=In%202019%2C%20the%20American%20multinational,dollars%20in%202019%20net%20revenues.)
[https://www.theguardian.com/technology/2020/feb/05/amazon-workers-protest-unsafe-grueling-conditions-warehouse](https://www.theguardian.com/technology/2020/feb/05/amazon-workers-protest-unsafe-grueling-conditions-warehouse)
[https://www.cnbc.com/2020/10/24/how-amazon-prevents-unions-by-surveilling-employee-activism.html](https://www.cnbc.com/2020/10/24/how-amazon-prevents-unions-by-surveilling-employee-activism.html)
[https://www.bloomberg.com/news/features/2020-12-17/amazon-amzn-job-pay-rate-leaves-some-warehouse-employees-homeless](https://www.bloomberg.com/news/features/2020-12-17/amazon-amzn-job-pay-rate-leaves-some-warehouse-employees-homeless)
[https://www.cnbc.com/2018/10/02/amazon-raises-minimum-wage-to-15-for-all-us-employees.html](https://www.cnbc.com/2018/10/02/amazon-raises-minimum-wage-to-15-for-all-us-employees.html)
1/26/25, 4:14 PMAmazon: Monopoly or Monopsony? | The Bull & Bear
Page 3 of 3https://bullandbearmcgill.com/amazon-monopoly-or-monopsony/
workers’ standard of living for now, in the long-run monopsony power is known to lead to downward pressure on
wages(https://www.economist.com/united-states/2018/10/04/amazons-15-minimum-wage-is-welcome), and in Amazon’s case poor
working conditions also.
Like Facebook, Amazon is an example of a big tech company with massive market power, although in a di!erent sense.
Beneath the surface of Amazon’s easy-to-use and convenient online store, lies potentially harmful treatment of its third-
party sellers and its workers. This stems from Amazon’s monopsony power, a less heard-of term than monopoly, but an
equally important one. With a new, Biden administration o"ce in the US, it may prove more di"cult for tech giants like
Amazon to keep a hold on their market power(https://www.cnbc.com/2021/01/23/what-the-biden-administration-means-for-
amazon.html) and the debate over how best to regulate tech firms like this is bound to continue. Monopsony as well as
monopoly power should be kept in mind as these issues continue to play out.
[https://www.economist.com/united-states/2018/10/04/amazons-15-minimum-wage-is-welcome](https://www.economist.com/united-states/2018/10/04/amazons-15-minimum-wage-is-welcome)
[https://www.cnbc.com/2021/01/23/what-the-biden-administration-means-for-amazon.html](https://www.cnbc.com/2021/01/23/what-the-biden-administration-means-for-amazon.html)
**TurningtheTablesClass1.pdf**
This file is too large to display. [View in new window](https://www.sweetstudy.com/files/turningthetablesclass1-pdf)
– 1
– 2
– 3
– 4