2017-06-16 — nytimes.com
With Amazon buying the high-end grocery chain Whole Foods, something retail analysts have known for years is now apparent to everyone: The online retailer is on a collision course with Walmart to try to be the predominant seller of pretty much everything you buy.
Each one is trying to become more like the other -- Walmart by investing heavily in its technology, Amazon by opening physical bookstores and now buying physical supermarkets. But this is more than a battle between two business titans. Their rivalry sheds light on the shifting economics of nearly every major industry, replete with winner-take-all effects and huge advantages that accrue to the biggest and best-run organizations, to the detriment of upstarts and second-fiddle players.
That in turn has been a boon for consumers but also has more worrying implications for jobs, wages and inequality.
If retail were the only industry becoming more concentrated, it would be one thing. But a relative few winners are taking a disproportionate share of business in a wide range of industries, including banking, airlines and telecommunications. A study by the Obama White House's Council of Economic Advisers found that in 12 of 13 industry sectors, the share of revenue earned by the 50 largest firms rose between 1997 and 2012.
That in turn may help explain why the income gap has widened in recent years. Essentially, the corporate world is bifurcating between winners and losers, with big implications for their workers.
Research by Jae Song of the Social Security administration and four colleagues found that most of the rise of inequality in pay from 1978 to 2013 was because some companies were paying more than others -- not because of a wider gap between high-paid and low-paid workers within a company.
"Employees inside winning companies enjoy rising incomes and interesting cognitive challenges," the Stanford economist Nicholas Bloom, one of the co-authors of that paper, wrote recently in Harvard Business Review. "Workers outside this charmed circle experience something quite different."
And David Autor of M.I.T. and four colleagues found in a recent paper that the rise of these "superstar firms" -- the big winners in the kind of face-off that Walmart and Amazon are now engaged in -- is a likely explanation for the decrease in the share of the overall economic pie that is going to workers.
How much of that is because of shifting technology -- as opposed to changing corporate behavior, or loose antitrust policy -- is an open debate.
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