Monday, March 13, 2006

The Rich Get Poorer and the Poor Get Richer

After decades of a widening income gap between the poorest and the wealthiest in America, the trend may be reversing. Recent studies indicate that since the turn of the new century, the wealthiest Americans have seen a slight decrease in their earnings while the poorest have seen a slight up tick.

If this is not just a statistical aberration, what does it mean? One theory:

Perhaps so many lower-skilled jobs have now left the U.S.--or have been created elsewhere to begin with--that today's high school grads are left doing jobs that cannot be easily outsourced--driving trucks, stocking shelves, building houses, and the like. So their pay is holding up.

College graduates, by contrast, look more outsourceable by the day. New studies from the Kauffman Foundation and Duke University show companies massively shifting high-skilled work--research, development, engineering, even corporate finance--from the U.S. to low-cost countries like India and China. That trend sits like an anvil on the pay of many U.S. college grads.

While it is fundamentally unfair when the rich get richer and the poor get poorer, we also gain little when the middle and upper-middle classes grow poorer. America has always been defined by a self-starting, upwardly mobile middle class and the last thing we want is for our middle classes to lose their financial security.

I don’t think any of us can fully predict what globalization will do to our economy. I’m fairly certain the American people are capable of adjusting. I just hope our system is also nimble enough to change accordingly.

1 Comments:

Blogger Tom Strong said...

While it is fundamentally unfair when the rich get richer and the poor get poorer, we also gain little when the middle and upper-middle classes grow poorer.

I'd certainly like to see the figures for the top 2%, rather than the top 20%. I highly suspect they will not be representative.

The effect Colvin is describing doesn't sound like increasing income equality, at least not from a socialist point of view. It sounds like stratification - towards having an underclass and an overclass. If that happens, Marxism will make a comeback in a hurry.

12:21 PM  

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