"there’s reason to believe the link between falling unemployment and rising wages has been severed"

[seabeckind]

36. Outsourcing results in factories closing when the entire function is outsourced

Those jobs that were lost in the local factory most times drove the entire economy within that area. Each factory job probably has a half dozen or so service jobs to help support that worker.

Auto dealers, repair shops, groceries, restaurants, etc.

Then there is the competition for labor in the area. If a worker has the talent to make more working in the steel mill, why would he work in a local foundry? That means the foundry has to pay more to get decent workers. But what happens if that steel mill closes? What pressure is on the foundry for wages and benefits?

Each entity in the supply chain has a dependency on a supply of resources which it then manipulates to send on to its consumers. It is both a supplier and a consumer.

That entity on the consumer side of its equation wants to reduce that cost as much as possible. Labor is his supplier, as well as the materials they use. If the entity can get the labor force to bid for his job he can hold them hostage to his offers. He wants the individual workers to compete with the other workers for his jobs. And the more they compete the better off it is for him.

On his demand side for his product, he wants as little competition as possible. He wants to control the market...to get a corner. Then he can charge as much as the market can bear. And even worse for us, he can control the quality of the product also.

Hence the oligoply. They control the wages, they control the pricing.

I think that is what Reich was saying. That there is no longer a link between the labor supply and wages.