As this wonderful Harvard Business Review article explains, the stratification of corporate wealth is a prime driver of individuals’ income inequality.
While better performing companies can afford to hire better talent, it’s not just the hard skills that count in the competition for labor. Employees value the soft skills, in both themselves and others, and seek out collaborative environments that compound their own labor value, which helps the firm’s performance, which helps the pay, which helps the recruitment…and the upward cycle continues.
Also, once a leading company reaches #1, they can often use their clout to “raise the drawbridge” to potential competitors via M & As, or by influencing political regulations.
This tension-balance of democracy and oligarchy within the US economy simultaneously both furthers and checks social inequality: things aren’t as good as they could be, but they aren’t as bad as they could be.
“Maybe competition creates corporate inequality. But maybe it’s lack of competition that preserves it.”