,,,Shareholder Primacy and Worker Prosperity: A Broken Link

The increasing financialization of America’s large public companies has profoundly affected labor markets. Wages are stagnant, income inequality has grown, and corporate America is no longer a provider of stable employment for middle-class workers. Common explanations include globalization, the rising power of the financial sector itself, the decline of trade union power, and skill-biased technical change. However, changes in how corporations earn profits, and how they use those profits—the two strands of behavior that I call corporate financialization—are key drivers of rising economic insecurity, and require further consideration.