Income Inequality Essay

Additionally, rapid globalization, enabled by advances in technology in transportation and communication, has opened up cheaper foreign labor markets for U. companies, further eroding the domestic manufacturing base. “Tech Leaps, Job Losses and Rising Inequality.” 3 (12). Applying technology to the economy thus creates both “winners” and “losers.” It enables entrepreneurs and inventors, people with natural creativity and determination, to have the chance for great profits. 2 Porter, Eduardo. These factors of production include physical holdings (land, money) as well as intangibles (labor time, creativity).

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In order to satisfy stockholders, managers are forced to increase profits.

Payroll led to less full-time employees and more contract or temporary employees.

As technology is applied to skilled jobs (which are already high paying), the productivity of those workers increases and their income increases too, further extending the income inequality between skilled and unskilled laborers.

However, not everyone benefits from advances in technology; laborers whose jobs can be substituted by technology are negatively affected.

Recent government tax policies have helped investors more than low wage earners.

Since there have been cuts in government regulatory agencies, there are fewer investigations of labor disputes.It also increases the productivity (and therefore, income) of those whose “jobs are enhanced by machines”; these groups are the “winners.” However, technology eliminates the jobs of less-skilled (already lower-paid) workers by providing a more productive, albeit less “human,” alternative and forcing workers into lower-paying service jobs; these workers are the “losers.” There is a clear schism widening between those benefiting and those being harmed by technology, and it is reflected in increasing income inequality. Ned Ludd was right to be concerned, and there is no easy answer to closing the gap. Businesses, by investing in capital such as new technology, will increase outputs while decreasing labor inputs (e.g., automation where purchasing a robot will replace a human worker). The Bureau of Labor Statistics reports that manufacturing employees’ real output per hour increased from 51.2 units (which is proportional to dollars) per hour in 1990 to 110.3 in 2013; businesses produced 42 percent more output in 2013 than 1998. “Wealth Inequality in the United States Since 1913: Evidence from Capitalized Income Tax Data.” Working Paper 20625. Zucman20145 This paper will address income inequality primarily. Thus, their marginal revenue has increased, and the price the firm will be willing to pay, in salary, will also increase. These traders’ incomes therefore increase with the addition of technology. Technology leads companies to, inevitably, eliminate the workers whose labor has been replaced by a more efficient process in order to remain competitive in their markets. businesses worked the same number of labor hours (194 billion) in 2013 as in 1998, yet productive output increased 42 percent over that same time frame. However, income inequality goes hand in hand with wealth inequality, as excess income allows one to invest in other capital, such as stocks and bonds, leading to the accumulation of wealth. Thus, these workers’ income has dropped to zero, forcing them into other lower-skill industries, such as food and restaurant services, that already have an ample supply of workers and thus driving wages downward. Note that this unequal distribution of income is not necessarily a bad thing for the economy—in fact, the U. government openly supports new innovation by offering patents through the Patent and Trademark Office, thereby granting a (time-limited) legal monopoly (and the monopoly profits that follow). While the number of manufacturing jobs has decreased from 1990 to 2013, the number of food and restaurant service workers has increased from 6545.3 to 10487.1 (in thousands) during that same time period. But once an inventor earns these large incomes, the wealth inequality over others is unlikely to dissolve easily. “Manufacturing Globalization: The Real Sources of U. Inequality and Unemployment.” Council on Foreign Relations. 16 See Rotman.


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