Economic Inequality In The United States Essay

The best way to demonstrate the new trend in income distribution is to look at the salaries of CEO's compared to that of the average worker and how they changed in the last thirty years.In 1970 the average annual salary in America was ,522.

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By 1999 this number grew to $35,864, which is a small increase.

In that same span of time the average annual compensation of the top one hundred CEO's went from $1.3 million to $37.5 million.

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.

Consider highly skilled hedge-fund managers: These managers are already making a good income and would not be replaced with a computer (as of current technology) because they use human judgment to select investments. 8 For a real world example of the potential for inventors, consider Bill Gates, founder of Microsoft.

However, they become much more productive (and profitable for the firm) with the addition of computerized data and the skill to use it. Rotman refers to these individuals as technology “superstars” who invent new technologies or generate new ideas for creative uses 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Technology leads companies to, inevitably, eliminate the workers whose labor has been replaced by a more efficient process in order to remain competitive in their markets.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.

This spring the Minneapolis Fed held its 27th Annual Student Essay Contest, which is open to all high school students in the Ninth Federal Reserve District.

The contest drew 269 essays from schools throughout the district. Other top essays can be found at under the Student Resources section of the Community & Education tab. The third-place winner received an additional 0, and the second-place winner an additional 0.


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