By: Christopher Avcollie,
“Money is like manure; it’s not worth a thing unless it’s spread around encouraging young things to grow.”
-Thornton Wilder, The Matchmaker (1955)
Thornton Wilder probably wasn’t thinking about labor economics when he wrote that line. But he could have been. Because in 2026, the question of how money flows, or fails to flow, to the workers who earn it is one of the most consequential legal and economic debates of our time. If you’ve been wondering why your paycheck doesn’t seem to keep up with the cost of everything else in your life, there’s a good chance something called monopsony has something to do with it.
Employers are not always the passive, market-driven wage-setters your Econ 101 textbook described. The law is beginning to catch up to that reality, and as an employee, you have more rights than you may realize. Here’s what you need to know.
The Word That Changed How Economists Think About Your Wages
Most people are familiar with monopoly, when a single seller dominates a market. But far fewer know its lesser-known twin: monopsony. And that asymmetry in public awareness has cost workers a lot of money.
The concept dates to 1930s Britain. According to a recent NPR Planet Money analysis, economist Joan Robinson coined the term over afternoon tea with a classical scholar, combining ancient Greek roots to describe what monopoly describes on the seller side, but flipped to the buyer side. In the labor market, employers are the buyers. They buy your labor. And when they face limited competition for workers, they gain the power to pay less and treat workers worse than they otherwise could.
For decades, mainstream economists treated monopsony as a curiosity, something relevant only to tiny towns with a single factory employer. The conventional wisdom held that labor markets were generally competitive enough that workers could simply leave bad jobs for better-paying ones. The “invisible hand” of the almighty market place would sort it all out.
That assumption has been steadily demolished by modern research.
Economist Arindrajit Dube, in his new book The Wage Standard: What’s Wrong in the Labor Market and How to Fix It, argues that monopsony power is far more widespread than previously understood, even in markets with multiple employers. As NPR reports, research suggests “the typical American [labor] market is about as concentrated as having about three employers,” which Dube himself calls “a very shocking number.”
Dube identifies three forces he calls the “triumvirate of endemic monopsony” that explain why this happens even outside of one-employer towns:
- Concentration. Fewer employers compete for your particular skills in your particular area than most people assume.
- Search Frictions. Finding a new job takes time, risk, and effort. That logistical burden gives your current employer leverage over you even when better-paying jobs theoretically exist.
- Job Differentiation. Your commute, your manager, your co-workers, your schedule, these create a form of “loyalty” that reduces your willingness to quit, giving employers wage-setting power that has nothing to do with your value in the open market.
And it gets worse. The NPR piece describes how employers sometimes actively collude to suppress wages. The most notorious example: in the early 2000s, Silicon Valley’s biggest tech companies, including Apple and Google, maintained secret no-poaching agreements. A Google recruiter who approached an Apple employee was fired after Steve Jobs sent a one-line complaint email to Google’s CEO Eric Schmidt. When Jobs learned of the firing, he reportedly replied with a single smiley face.
The punchline is grim: the people who could least afford to be underpaid were being systematically prevented from earning more, while the people enforcing those agreements were among the wealthiest executives in history.
Dube’s conclusion, as cited by NPR, is unsparing: “It was the result of choices by corporations, by policymakers, and by experts, including economists who told us too often that markets were working just fine.”
The Policy Response: Minimum Wage Laws Are Fighting Back
If monopsony power is part of the structural architecture of wage suppression, what dents it? Dube argues, and recent history supports, that minimum wage laws are one of the most effective tools.
The old dogma said that mandating higher wages would kill jobs. Nobel Prize–winning economist David Card’s landmark research on New Jersey’s minimum wage, research that helped overturn decades of economic orthodoxy, showed that wasn’t true. Why not? Because employers with monopsony power have what Dube calls “wiggle room” to pay more. They were already keeping wages artificially low. A mandated floor just reduces that artificially suppressed gap.
The legislative response, particularly at the state level, has been significant. As of 2026, more than 19 states have raised their minimum wages, and the momentum shows no signs of stopping.
Here is where things stand in our region:
- Connecticut: Connecticut’s minimum wage is $16.35 per hour as of 2025 and is indexed to inflation going forward, meaning it adjusts automatically, no legislative action required each year.
- New York: New York City, Long Island, and Westchester County are at $16.50 per hour. The rest of New York State is at $15.50, with scheduled annual increases. Tipped workers, home care aides, and fast food employees may be subject to different thresholds.
Critically: being paid below the applicable minimum wage is not just unfair, it is illegal. And yet wage theft, the failure to pay legally required wages, remains one of the most common, and most underreported, labor violations in the country. If you’re not sure whether your employer is complying, that question alone is worth a phone call.
Pay Transparency Laws: Your Right to Know What the Job Actually Pays
Here’s something that shouldn’t be radical: knowing what a job pays before you accept it, negotiate for it, or realize your employer has been paying your colleague 30% more for the same work.
Pay transparency laws are reshaping the employment landscape across the country, and the change is accelerating. The basic premise is simple: if workers don’t know what others are paid, employers can exploit that information asymmetry. Pay transparency laws are a direct legislative response to monopsony power, even if legislators don’t always use that word.
Here is what the law now requires in our region:
- Connecticut (Effective October 1, 2021, strengthened 2023): Connecticut employers must provide a wage range to applicants upon request before a job offer is made, and must disclose it to current employees when they are offered a promotion or transfer. Employers must also provide the range upon request at any time during employment. Retaliation against an employee for asking about or discussing pay is prohibited.
- New York City (Effective November 1, 2022): Employers with four or more employees must include the minimum and maximum salary or hourly wage in all job postings, promotions, and transfer opportunities. This applies to remote jobs that might be performed in New York City.
- New York State (Effective September 17, 2023): New York expanded pay transparency requirements statewide. Covered employers, those with four or more employees, must include a compensation range and a job description (if one exists) in job advertisements. This applies to any role that can be performed in whole or in part in New York State, including remote work. Employers cannot post a range with the intention of not paying within it.
These laws matter more than they might appear at first glance. Pay transparency doesn’t just help you negotiate, it exposes discriminatory pay gaps. If you are a woman, a person of color, or an older worker and you discover through pay transparency that colleagues with comparable roles are being paid substantially more, that information may be the foundation of a legal claim.
And if your employer retaliates against you for asking about your pay, disciplines you, demotes you, or treats you differently, that retaliation is itself a legal violation in both Connecticut and New York.
The Full Picture: Benefits Costs, Severance, and Leave Pay
Wages alone tell only part of the story. As minimum wage floors rise and pay transparency expands, employers are increasingly trying to manage their total labor costs by adjusting the less-visible parts of compensation, benefits, severance, and paid leave. Workers need to understand what they are legally entitled to in each of these areas.
Paid Leave
- Connecticut Paid Sick Leave: Connecticut’s paid sick leave law was significantly expanded effective January 1, 2025. It now covers virtually all employers and employees, not just those in specified service industries. Employees accrue one hour of paid sick leave for every 30 hours worked, up to 40 hours per year. Leave can be used for the employee’s own illness, a family member’s care, or for reasons related to domestic violence, sexual assault, or stalking.
- Connecticut Paid Family and Medical Leave: Connecticut’s PFML program provides eligible employees up to 12 weeks (and in some cases 14 weeks) of paid leave at up to 95% of the employee’s weekly wage, capped at 60 times the state minimum wage. This covers serious health conditions, bonding with a new child, and qualifying military exigencies.
- New York Paid Family Leave: New York’s PFL provides up to 12 weeks of leave at 67% of the statewide average weekly wage. New York City employers with five or more employees must also provide four months of unpaid pregnancy-related disability leave under the NYC Human Rights Law, which can run concurrent with or in addition to state leave entitlements.
Severance Pay
Here’s something many employees don’t know: there is no legal requirement in Connecticut or New York that an employer offer severance pay. None. If your employer offers it, they are doing so voluntarily, or because they are contractually obligated to. That distinction is critical.
What this means practically is that if your employer offers you a severance agreement, they want something in return. Almost universally, that something is a release of legal claims, a contract in which you agree, in exchange for the severance payment, that you will not sue them for anything that happened during your employment. If you sign without understanding what you’re giving up, you may be waiving claims worth significantly more than the severance offered.
Federal law (the Older Workers Benefit Protection Act) requires that employees age 40 and over be given at least 21 days to consider a severance agreement that includes a release of age discrimination claims, and 7 days to revoke after signing. If you are part of a group layoff, the consideration period extends to 45 days. These are rights, not suggestions. An employer who tries to pressure you to sign immediately is not just being aggressive, they may be violating the law.
Benefits Costs and the Total Compensation Picture
As wages rise due to statutory minimums and public pressure, some employers respond by quietly trimming elsewhere: reducing employer 401(k) contributions, shifting more health insurance costs to employees, or eliminating ancillary benefits. This can leave workers nominally earning more while their actual economic position has not improved. If your employer has recently restructured its benefits package, particularly after a wage increase or a change in company leadership, it is worth evaluating your total compensation carefully, and determining whether any promised benefits were contractually guaranteed.
What Workers Should Do Right Now
The law is moving in your direction, but knowing your rights and enforcing them are two different things. Here is what we recommend:
- Ask about pay ranges. In Connecticut and New York, you have the legal right to know the wage range for your position. Use it. The information can reveal pay disparities that may be evidence of discrimination.
- Talk to your colleagues about pay. Federal law (the National Labor Relations Act) protects most private-sector employees’ right to discuss wages with coworkers. Employer policies prohibiting such discussions are often illegal. If your employer punishes you for discussing pay, that may be a separate legal violation.
- Do not sign a severance agreement without legal review. Once you sign, you almost certainly cannot undo it. The cost of an initial consultation is trivial compared to the potential value of claims you may be releasing.
- Track your time and pay carefully. Wage theft, including misclassification as exempt, off-the-clock work, and tip pooling violations, is rampant. If you suspect your wages are short, document everything.
- Connect pay disparities to discrimination claims. If you learn through pay transparency that you are being paid less than similarly situated employees of a different gender, race, or age, do not assume it is just a negotiating difference. It may be actionable under Title VII, the Equal Pay Act, the ADEA, or their Connecticut and New York counterparts.
The Bottom Line
Monopsony power is not a textbook abstraction. It is the reason wages at two companies with identical business models, same trucks, same routes, same neighborhoods, can look completely different. It is the structural force that has kept paychecks artificially low for decades. And it is the reason pay transparency laws, minimum wage mandates, and robust enforcement of compensation rights matter so much.
The law is giving workers new tools. But tools are only useful if you know how to use them.
At Carey & Associates, P.C., we represent employees across Connecticut, New York, and nationally in wage and hour claims, pay discrimination cases, severance negotiations, and related employment disputes. If something about your compensation doesn’t add up, or if you’ve been asked to sign something you don’t fully understand, call us. The conversation costs you little. The silence might cost you everything.
If you would like more information, please contact Carey & Associates, P.C. at info@capclaw.com or call (203) 255-4150.
