Discussion on Income Inequality

Course: ECONS 102 Why Has Income Inequality Been Rising Since The 1970s? Proposition #1is consistent with Autor’s analysis because they both claim that the income distribution in the United States has been skewing as a result of the growing culture of dependency. On the other hand, Proposition #2 is consistent with Autor’s analysis because they both assert that the gap between the incomes of the American poor and rich populations has been widening further due to resolute policy decisions, which have benefitted the rich at the poor people’s expense. According to Autor, the increasing culture of dependency and purposeful policy decisions have been created by the dramatic rise in the wage premium relating to higher education and the cognitive ability of the labor force. Autor argues that about two-thirds of the overall increase in earnings distribution in the United States between 1980 and 2005 is as a result of the increased premium linked to education, particularly, postsecondary schooling (Autor 843). The reduction in demand for less-learned workers and an increase in the need for highlyeducated employees in the U.S. labor market is as a result of a broad range of factors. Some of these factors include a significant decline in the U.S. minimum wage’s real value and the drastic reductions in non-college job opportunities in clerical, manufacturing, and administrative support positions. Other factors include the sharp increase in international competition from developing countries, the significant increase in taxes above the marginal tax rates, as well as the decline in U.S. labor unions’ fellowship and bargaining power (Autor 843). All these factors have made significant contributions to magnifying income inequality in the country by eroding real wages among less-learned employees. In other words, these factors have adversely impacted the actual earnings and employment of the United States’ less-educated workforce. Proposition #2 is more consistent with Autor’s analysis than Proposition #1. While Proposition #2 is entirely consistent with Autor’s evaluation, Proposition #1 is only consistent with Autor’s assessment in the context of skewing income distribution as a result of the growing culture of dependency. According to Proposition #1, income inequality in the U.S. is attributed to the increasing culture of dependency. This is consistent with Autor’s argument that less-educated workers are increasingly depending on highly-educated employees who are substantially rewarded in the current labor market. Autor claims that the current U.S. economy is technologically advanced and, therefore, requires numerate, literate, and scientifically and technically trained workforce that can manage complex organizations, develop ideas, provide insurance and financing, deliver healthcare services, operate critical infrastructure, as well as administer government services. This was not the situation before the 1970s when 40 percent of employment opportunities in the United States were in the agriculture sector, with 11 percent of the population being illiterate. The physical labor, which was a key job skill during the 1900s, has today been replaced by the cognitive workforce, which has compelled less-educated workers to depend on highly-educated employees (Autor 845). Proposition #2 generally asserts that the income inequality in the U.S. is primarily as a result of purposeful policy decisions, which have systematically channeled economic rewards towards the rich and away from the poor. According to Autor, public policy has played a crucial role in defining the inequality trajectory in the country. The various ways through which public policy has contributed to the increase of income inequality in the United States include the fall in U.S. minimum wage’s real value, the decline in the U.S. labor unions’ bargaining power, and significant drops in federal marginal tax rates (Autor 850). Autor’s explanation of these public policy aspects demonstrates that Proposition #2 is more consistent with Autor’s analysis than Proposition #1. Work Cited Autor, David H. “Skills, Education, and the Rise of Earnings Inequality among the “Other 99 Percent””. Science, vol 344, no. 6186, 2014, pp. 843-851., doi:10.1126/science.1251868. Accessed 19 Jan 2020.


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