Technology

  • 10.02.16

    Facing Up To Income Inequality

    Jeffrey Sachs begins this article with a description of stagnating incomes "While household median incomes have stagnated since the late 1990s, the inflation-adjusted earnings of poorer households have stagnated for even longer, roughly 40 years" while higher income households have seen substantial increases. Sac...

    Jeffrey Sachs begins this article with a description of stagnating incomes "While household median incomes have stagnated since the late 1990s, the inflation-adjusted earnings of poorer households have stagnated for even longer, roughly 40 years" while higher income households have seen substantial increases. 

    Sachs describes that there are three main factors that contribute to this income inequality: technology, trade, and politics.

    Technology has raised demand for higher skilled, higher educated workers and has increased income for those groups while leaving other groups behind. While trade has increased competition for lower skilled industrial workers. Finally, politics in the United States has not tended to favor the working class and instead it benefits those who can pay for lobbying.

    Sachs then investigates the policies in the U.S. compared to those in other countries using the Gini index (a measure of income inequality varies between 0 - full income equality across households, and 1 - full-income inequality, in which one household has all the income) to compare countries both through market income and disposable income. He finds that the net distibution in the U.S. is especially low when compared to many other first world countries and ends with the statement that "these income comparisons underscore that America's high inequality is a choice, not an irreversible law of modern world economy."