On April 21, 2026, a series of high-profile economic publications and legislative warnings highlighted the role of monopsony power in suppressing U.S. wages. The W.E. Upjohn Institute for Employment Research released a new working paper, Monopsony in Academia and the Gender Pay Gap, which quantifies the exploitation rate—the gap between a worker's marginal revenue product and their actual pay—at approximately 7% for tenure-ranked faculty. The study utilized individual-level data and campus-level labor supply elasticity to demonstrate that even in highly skilled sectors, limited employer competition allows for significant wage markdowns.
Simultaneously, economist Arindrajit Dube published The Wage Standard: What’s Wrong in the Labor Market and How to Fix It. The work provides an empirical framework for understanding how monopsony power operates in modern labor markets. Dube’s research challenges traditional economic models by showing that labor markets are far less competitive than often assumed. According to data presented in the book, a 5% wage difference between competing firms resulted in only a 0.5 percentage point increase in the monthly quit rate, rising from 6.5% to 7.0%. This indicates a quit elasticity of -1.4, suggesting that workers do not transition to higher-paying roles as rapidly as competitive theory predicts, thereby granting employers substantial wage-setting power.
The publication of these findings coincided with formal warnings from a group of U.S. Senators regarding the proposed merger between United Airlines and American Airlines. In a statement issued on April 21, the lawmakers argued that the consolidation would create an industry behemoth with the capacity to exercise monopsony power over specialized labor pools, including pilots and flight attendants. The Senators noted that reducing the number of major employers in the aviation sector would likely exert downward pressure on industry-wide compensation and benefits by limiting the number of firms bidding for these workers.
Further evidence of this trend was included in the April 2026 Economic Report of the President, released by the White House Council of Economic Advisers. The report identifies monopsony power as a primary driver of the widening gap between worker productivity and real wages. It notes that while U.S. productivity has increased by more than 70% since the late 20th century, typical wages have remained largely stagnant. The administration’s report advocates for the implementation of sectoral wage boards and more aggressive antitrust enforcement to counteract the unbalanced labor market power that currently favors large employers over individual workers.
These developments collectively signal an increasing focus among economists and policymakers on the structural barriers to wage growth. The research published today suggests that geographic concentration, high switching costs, and industry consolidation are key factors enabling firms to maintain low-wage strategies despite broader economic growth.