Businesses, by investing in capital such as new technology, will increase outputs while decreasing labor inputs (e.g., automation where purchasing a robot will replace a human worker).
The Bureau of Labor Statistics reports that manufacturing employees’ real output per hour increased from 51.2 units (which is proportional to dollars) per hour in 1990 to 110.3 in 2013; businesses produced 42 percent more output in 2013 than 1998. “Wealth Inequality in the United States Since 1913: Evidence from Capitalized Income Tax Data.” Working Paper 20625. gabriel-zucman.eu/files/Saez Zucman20145 This paper will address income inequality primarily.
Additionally, rapid globalization, enabled by advances in technology in transportation and communication, has opened up cheaper foreign labor markets for U. companies, further eroding the domestic manufacturing base. “Tech Leaps, Job Losses and Rising Inequality.” 3 (12).
Applying technology to the economy thus creates both “winners” and “losers.” It enables entrepreneurs and inventors, people with natural creativity and determination, to have the chance for great profits. merriamwebster.com/dictionary/luddite 2 Porter, Eduardo.
There is a “snowballing effect on wealth distribution: top incomes are being saved at high rates, pushing wealth concentration [further] up,” perpetuating the cycle of inequality.
While by no means will every inventor “strike gold” with his/her invention (in fact, most do not succeed), a skilled and lucky few will reap tremendous income; thus, propelling them into the highest echelon of income.
The first-place winner, Solomon Polansky of the Blake School in Minneapolis, received an additional 0 and was offered a paid summer internship at the Minneapolis Fed. productive output has soared while the number of labor hours has remained constant.
The Luddites’ concerns are not without merit and remain relevant today in the United States. Ongoing technological advances enable these productive strides, but also drive increasing income inequality by spawning two very distinct groups of winners and losers: those who benefit from technology, such as inventors of technology and workers whose productivity is enhanced by technological advance, and those who are negatively impacted through substitution of labor by technology.
In addition to that, minimum wage remained the same until 2007.
Since inflation increases price on basket of goods and services, lack of wage increase contributes to income inequality due to the value of their money that is decreased over the time.