People Aren’t Unequal; Companies Are

Wage inequality, according to one popular view, arises from differences in the talent and determination of individuals: Some superstars win, and everyone else does not.

What if the winning superstars aren’t people, however, but companies? Then if you’re working at one of those companies, you’re doing great, and if not — well, good luck.

Consider this: Capital returns at companies are diverging sharply, and the share of them that reap annual returns of more than 25 percent or even 50 percent is growing. This is what Jason Furman, chairman of the President’s Council of Economic Advisers, and I found in a study whose results are being released Friday. It’s plausible that some of those big returns are shared with the companies’ employees. And that may well be playing an important role in growing wage inequality.

from Bloomberg View – Articles by Peter R. Orszag


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s