Rubbing along

A number of people wrote, blogged, or commented to point out that monopsony does not require collusion, only substantial search friction. This is very true. However, I saw no emails, posts, or comments that actually explained why it might be reasonable to believe that the minimum wage job market is particularly characterized by search friction. Retail and fast food are pretty much the least frictional job markets there are. You're talking about industries that have annual turnover rates well in excess of 100%--I've heard numbers in excess of 1000%. If there is substantial search friction, the workers sure seem to enjoy the rubbing. By comparison to this explanation, tacit collusion among hundreds of employers seems positively reasonable. But perhaps I am missing something.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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