Arindrajit Dube has written a lucid, empirically rigorous, and—in the current political climate—audacious book. The Wage Standard marshals decades of labor economics research to make a case that should be obvious but somehow still needs making: Most American workers have been systematically underpaid for the past half-century, not because markets dictated it, but because power did. This argument deserves to be read widely, taken seriously, and debated vigorously. Among other things, it raises questions that progressive advocates for higher minimum wages need to address.
The Wage Standard: What’s Wrong in the Labor Market and How to Fix It
By Arindrajit Dube
Dutton
The Diagnosis
Dube’s central exhibit is by now familiar to labor economists but remains startling to anyone encountering it for the first time. From the postwar period through roughly 1980, productivity and wages grew together. After 1980, they diverged sharply. Between 1980 and 2019, nonmanagerial wages grew at around half a percent per year while productivity grew at roughly three times that rate. Had the postwar link held, the inflation-adjusted median hourly wage in the United States in 2019 would have been closer to $33 than the $24 workers actually took home. That gap is not a rounding error. It represents an enormous and ongoing transfer of economic value away from workers.
Dube’s detective work in tracing the causes of this divergence is among the book’s startling contributions. He dispatches the usual suspects with care. Technological change and globalization matter, he concedes, but they cannot explain the peculiar magnitude of American inequality relative to that of peer nations that experienced similar shocks without similar outcomes. What ultimately matters, Dube argues, are the institutional arrangements—unions, minimum wages, tight labor markets, and shared workplace norms—that once constrained employer discretion and have since been systematically dismantled.
The concept of monopsony is central here. In competitive labor markets, employers who underpay lose workers to competitors. But when workers have few alternative employers—whether because of geographic concentration, high switching costs, or the social and psychological obstacles to job mobility that Dube documents persuasively—employers acquire significant wage-setting power. His empirical evidence on quit elasticities is striking: Even workers paid substantially below prevailing wages leave at only marginally higher rates than more highly paid workers—consistent with a labor market far from the textbook competitive ideal.
From this diagnosis flows a set of remedies that are well grounded in evidence and refreshingly nontechnocratic in spirit. A meaningful federal minimum wage, indexed to median wages rather than to the arbitrary accidents of congressional attention; a revival of sectoral bargaining through wage boards that can extend collective negotiation to workers without requiring majority union membership at each individual firm; macroeconomic policy willing to run the economy hot enough to give workers real bargaining leverage. These proposals are compelling.
The Democratic Principle
Among the book’s most important contributions is what Dube calls the “wage standard”—the idea that there is, or ought to be, a societally determined acceptable range of pay for most jobs. This is not simply a technocratic benchmark. It is a claim about democratic agency over economic life. Markets do not simply discover wages the way they discover prices for soybeans. Wages are always already shaped by power—by the relative bargaining strength of employers and workers, by the institutional context in which that bargaining takes place, and by shared social norms about what constitutes fair treatment. If wages are a political and social phenomenon, then setting them is a legitimate exercise of democratic deliberation rather than an interference with neutral market outcomes.
This point cannot be emphasized enough. One of the most disabling features of mainstream economic discourse over the past several decades has been its tendency to treat existing wage distributions as reflections of workers’ marginal productivity, and therefore as essentially fair by definition. Dube does not accept this framing, and he is right not to. The evidence that wages are determined in substantial part by institutional and political factors—by whether unions are strong or weak, by whether minimum wages are high or low, by whether the Fed prioritizes employment or inflation—means that wage-setting is inescapably a collective choice. The question is not whether we will exercise democratic agency over wages but whether we will do so transparently and accountably, or by default through the exercise of unaccountable employer power.
This is where Dube’s book makes its most significant contribution to a broader public debate. The political data he cites on minimum-wage ballot initiatives—nearly universally supported when voters are given a direct choice, but often blocked by legislative capture—illustrates exactly the democratic deficit his framework addresses.
But Where Is the Care Economy?
If the foregoing were the whole of The Wage Standard, this review would be an endorsement with no reservations. But a feminist political economist must note, regretfully, that Dube’s analysis has a large blind spot: It pays almost no attention to gender, and little to care provision.
Consider first the gender gap. Women represent nearly half the paid labor force and are disproportionately concentrated in low-wage work. The wage gap between men and women—now persisting most stubbornly in its “unexplained” form, reflecting the undervaluation of female-dominated occupations rather than differences in education or experience—is one of the most well-documented features of the American labor market. Yet it is largely absent from Dube’s account. A book about what workers are owed that does not seriously grapple with the gendered structure of who gets paid what, and why, is working with an incomplete picture.
This matters not only for equity but for the analysis of monopsony itself. Women face specific labor market constraints—occupational segregation, the motherhood penalty, disproportionate responsibility for dependent care—that reduce their exit options and enhance employers’ wage-setting power in ways that compound the general monopsony dynamics Dube documents. The quit elasticities that Dube finds so revealing across the labor market as a whole are likely substantially lower for mothers of young children, for workers in geographically limited care occupations, and for women in male-dominated industries who face the particular costs and social penalties of changing jobs. A fuller account of monopsony would engage directly with these gendered dimensions,
What About the Living Wage?
But the deeper feminist objection goes beyond the gender wage gap to a more fundamental conceptual problem: Dube’s argument is organized entirely around paid employment. The wage standard he proposes is a standard for workers and—since his starting point is the disjuncture between trends in productivity and wages—is implicitly based on assessments of their productivity on the job.
This is a significant departure from the tradition of living-wage campaigns based on benchmarks of what full-time wage earners need in order meet the basic minimum needs of their families without depending on public or private assistance. The types of families considered range from a single employed adult with no children to two adults, one employed, with three children. These benchmarks point to the need to consider the productivity of producing, developing, and maintaining human capabilities, rather than market output—sometimes referred to as the production of labor power, or social reproduction.
Dube does not engage with this aspect of the living-wage tradition, but it has obvious implications for wage standards. A very large fraction of the socially necessary labor performed in the United States—and in every other economy—is unpaid. It is the labor of raising children, caring for the elderly, supporting people with disabilities, and maintaining one’s own capabilities. Estimates based on the American Time Use Survey show that in the U.S. today, more than half of all work performed on a daily basis is unpaid, involving the production of goods and services for oneself or others rather than for market exchange.
This labor is largely performed by women. It is economically indispensable—without it, the paid labor force could not be reproduced, educated, or sustained—but it is largely invisible to the framework of The Wage Standard. Dube is right that workers deserve better wages. But what do unpaid workers deserve? And what do employers owe them?
In fairness to Dube, the living-wage approach does not fully answer this question either, largely relying on benchmarks akin to higher poverty-threshold lines. Indeed, this approach, like Dube’s, largely avoids consideration of a universal basic income, or a more targeted caregiver’s allowance, which could provide a floor for those whose economic contributions take place outside wage employment.
Many European countries have experimented with various forms of direct support for caregiving, and the evidence on their effects on the well-being of women and children is instructive. One may have reservations about particular universal basic income proposals—especially those designed to replace public services rather than supplement them—but a universal basic income would improve the bargaining power of all wage earners. Indeed, economists Adam Aboobaker and Peter Skott argue persuasively that public cash transfers during the COVID-19 pandemic in the U.S. (as well as the subsequent tight labor market) boosted the power of low-wage workers to switch jobs and demand higher pay.
Measuring Productivity
Wage standards are nonetheless an important and much-needed policy tool. Dube’s proposal for wage boards and sectoral bargaining could and should be extended to paid care workers—child care workers, home health aides, nursing home staff, to very good effect. In an excellent recent public talk that I attended, he emphasized this particular payoff, offering important examples such as the higher minimum wage for health care workers recently set in California, and higher standards for nursing home employees in Michigan. These are important gains.
Still, I worry that Dube relies heavily on the well-documented divergence between productivity growth and wage growth since 1980, which, however significant, sidesteps the difficulty of accurately measuring productivity in the care industries in which women wage earners are concentrated. In manufacturing and many tradeable service sectors, productivity measurement is reasonably tractable. Units produced, revenue per hour worked, and similar metrics provide workable proxies. Health, education, and social services are far less standardized than other industries, and the value of their “output” depends heavily on the characteristics of their “consumers.”
Paid care services also yield public benefits that are difficult for specific providers to measure, much less capture. A nurse who spends more time with a patient may be providing higher-quality care that improves long-term health outcomes, yet standard productivity measures will record this as lower output per hour than that of a nurse who spends less time. A teacher who develops deeper relationships with struggling students may generate long-run human capital benefits that will never appear in any productivity account. A home health aide whose attentive care keeps an elderly person out of the hospital generates savings for the public health system that are entirely external to any measure of her own productivity. I have contributed to empirical research that documents industry-level earnings penalties for those employed in care services relative to counterparts in business services (for men as well as women).
If productivity measurement systematically undercounts value in health, education, and social services—which I believe it does—then the productivity-wage gap Dube documents is simultaneously overstated in some dimensions and understated in others. Workers in care occupations are underpaid not merely because of monopsony power, though that is certainly part of the story, but because the value they produce is genuinely difficult to capture in any standard productivity framework.
Who Sets the Standards, and How?
Finally, a word about democratic deliberation—which Dube rightly emphasizes but leaves underdeveloped. His recommendation for wage boards is appealing precisely because it institutionalizes collective bargaining at the sectoral level, extending the benefits of negotiated wage standards beyond union membership. But who sits on these boards? How are workers’ representatives chosen? How is the scope of a “sector” determined? What mechanisms ensure that the interests of part-time workers, migrant workers, domestic workers, and care workers—whose bargaining power within any conventional representative structure is typically weakest—are heard and weighted appropriately?
These questions matter especially for care services, where the workforce is highly fragmented, often informally employed, and disproportionately composed of workers with the least institutional voice. A wage board for home care workers, for instance, would need to grapple with the fact that many such workers are employed by the people they care for under personal care attendant programs, blurring the conventional employer-employee relationship. Domestic workers are explicitly excluded from the National Labor Relations Act, a historical injustice whose remediation requires specific attention. Migrant care workers on temporary visas face threats of deportation that fundamentally compromise their ability to exercise voice even within well-designed collective-bargaining structures. The mechanism through which workers gain genuine voice in setting wage standards—and through which the value of their public contributions is actually counted—requires more sustained attention.
Conclusion
The Wage Standard is a valuable and timely contribution to the debate about labor market reform. Its core argument—that wages are a political, not merely a market, outcome and that democratically set wage standards are both legitimate and necessary—is exactly right, and Dube makes it more rigorously than it has been made before for a general audience. The empirical case against the deregulatory consensus of the past four decades is persuasive and should change minds.
Still, the workers who need a wage standard most urgently—child care workers earning poverty wages while enriching the cognitive development of other people’s children, home health aides whose attentiveness keeps the health care system from collapsing, the millions of women whose unpaid care labor underwrites the entire economy—are largely missing from Dube’s analysis. I cling to the hope that this book will help start a larger debate about what represents a fair wage, one that challenges the basic assumptions of labor economics by bringing care provision into the picture.
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