The US ranks at the top of developed countries for income inequality. The majority of income growth has gone to a fraction of US elites. The gap continues to get widen, and many Americans lack the mobility to climb out of the low income workforce.
Here are five reasons for Income Inequality in the US
Decrease in demand for low skill labor. The US has outsourced low skill labor to countries like China. American manufactures cannot compete with the low cost wages. This has reduced the demand for low skill jobs available leaving a surplus of low skill laborers.
Increase in demand for high skill labor. The demand for high skill jobs has increased in industries such as technology creating a high demand and low supply of high skill laborers.
40 year trade deficit. Over the past four decades, the US has imported more goods than it exported. In other words, Americans are buying foreign goods at a faster pace than people in other countries are buying American goods. This trade deficit reduces the internal demand for supply, negatively effects GDP, and adds to an increasing the national deficit.
Unequal access to Education. Students from higher income families attend better schools, are more likely to attend college, and less likely to be burdened by student loans. Thus, perpetuating the inequality cycle.
Automation. Robots are rapidly replacing people in the workplace. This is predominantly occurring in factories where less complex tasks can be replicated by machine.
Illegal immigration. Immigration can be a very good thing for the economy. However, many illegal immigrants enter the low skill labor market doing jobs for less than American workers, thus continuing to saturate the low skill force.
In statistics, the phrase “the richer get richer” is a description where the probability of the next outcome in a series is proportional the number of same value outcomes that already occurred. People with high skill jobs will continue to make more money, while low skilled laborers will continue to get poorer. This perpetuated cycle seems to have no end in sight.