As farms got bigger over the years, so did the equipment that farms use to cover the land. Farm equipment dealerships also got bigger, buying or pushing out competitors, and that may explain the problem of stagnant wages in rural areas: When there are fewer employers, wages show less growth, reports the New York Times.
“In the past few years, a growing chorus of economists has expressed concern that consolidation among companies, often considered a problem for consumers, may be limiting workers’ employment options and holding their wages down as a result,” said the Times. A working paper by three economists found that when a small number of companies dominant a job market, wages are less dynamic. “The phenomenon appears to hit workers hardest outside major cities,” said the Times, which used the example of mechanics who work at farm-equipment dealerships. They faced one of the most concentrated group of employers among the two dozen occupations examined by the economists.
Marshall Steinbaum, one of the economists involved in the study, said there “is definitely a strong rural/urban pattern that I see. Rural areas are more likely to have a higher level of concentration — and, for any given unit of concentration, a larger effect” on wages, reported the Times. Labor Department data say farm-equipment mechanics are paid $6 an hour less, on average, than mechanics who repair construction or forestry machinery.