The American economy has changed in ways that favor those at the top. In the past, most Americans worked in manufacturing or agriculture. This meant that there were many opportunities for individuals to get good-paying jobs without a college degree.
But today, these jobs have been replaced by service sector jobs that are often low-paying and provide few benefits. The economy today is based on knowledge and information technology. This means that individuals with college degrees and specialized skills are more likely to succeed, while those without a college degree or specialized skills are at a disadvantage.
In the past, when the economy grew, everyone benefited. Today, however, most of the benefits from economic growth are going to those at the top. This is due to several factors, including globalization, the decline of unions, changes in the tax code, deregulation, and the rise of new industries like tech and finance. Other events, including the Great Recession and the COVID-19 pandemic, disproportionately harmed those at the bottom, while those at the top continued to prosper.
Globalization is the process of expanding economic ties between countries. This has led to a more interconnected world, where goods, services, people, and money can move more easily than ever before. The North American Free Trade Agreement (NAFTA) is an example of globalization. NAFTA is a trade agreement between the United States, Mexico, and Canada that removed barriers to trade and investment. The goal of NAFTA was to promote economic growth by making it easier for businesses to operate in North America.
The rise of globalization has had a mixed impact on the American economy. On the one hand, it has created new opportunities for businesses and workers. For example, it’s now easier for companies to set up operations in other countries, and this can lead to new jobs for American workers. On the other hand, globalization has also led to job losses as companies move their operations to other countries where labor is cheaper. In addition, globalization has put downward pressure on wages, as workers in other countries are willing to work for less money.
2) The Decline of Unions
Unions are organizations that represent workers and bargain with employers for better wages and working conditions. They help to ensure that workers receive a fair share of the profits they help to generate. In the past, unions were a major force in the American economy. They helped to raise wages and improve working conditions for all workers, not just union members. However, in recent years, unions have declined in both membership and power. In 1970, there were roughly 17 million union members in the United States, or over 30% of private-sector employees. By 2002, it had declined by more than half. In 2014, there were just over 14 million union members in the United States, or around 11% of private-sector employees. The decline of unions has been especially pronounced in the private sector, where only 7% of workers are unionized. In the public sector, however, unions are still fairly strong, with 35% of workers being unionized.
The decline of unions has hurt workers, who have lost a powerful advocate for their interests, and it has had a significant impact on the American economy. In addition, the decline of unions has contributed to the growth of income inequality, as union workers have seen their wages stagnate while those at the top have continued to prosper. There are several reasons for the decline of unions, including globalization and the decline of manufacturing. In addition, changes in the economy and the law have made it harder for unions to organize new members. Large companies have also become more resistant to unionization for various reasons, including the desire to keep costs low and the belief that unions make it harder to be agile and respond to change. In reality, large companies favor the status quo, and unions are often a force for change. The bottom line is that the decline of unions has made it harder for workers to get ahead, and it’s one of the reasons why income inequality has grown in recent years.
3) Changes in the Tax Code
The tax code is the set of laws that govern how taxes are collected and spent. In recent years, there have been several changes to the tax code that have favored those at the top. The last law to change rates was the Tax Cuts and Jobs Act of 2017. The primary features of this law were a reduction in the corporate tax rate from 35 percent to 21 percent and a reduction in the top marginal income tax rate, which is the rate of tax paid beyond a certain threshold. In the United States, the top marginal tax rate in 2020 was 37%. In the 1970s, the marginal tax rate for the top income brackets was 70%, which means that those at the top were paying a much higher rate than they are today. These changes have been criticized by some as being unfair to middle- and low-income taxpayers, as they receive a smaller tax cut than those at the top. In addition, the estate tax, which is a tax on inherited wealth, has been reduced. This benefits wealthy families who can pass their money down to future generations without paying taxes on it.
For the middle class, the effects of tax reform have been mixed. The Tax Cuts and Jobs Act did result in a tax cut for most middle-class families, but the size of the tax cut was smaller than for those in the top income brackets. In addition, the tax code changes have added to the national debt, which will likely have to be paid for by future generations through higher taxes. The changes to the tax code have been criticized for making income inequality worse. This is because the changes provide the most benefit to those who are already wealthy. In addition to changes in marginal tax rates, the tax code has become increasingly complex, making it more difficult for average Americans to understand and comply with the law. The primary reasons for these kinds of tax reforms are to lower taxes on businesses and the wealthy, which proponents argue will lead to economic growth. However, there is little evidence that tax cuts for the wealthy lead to economic growth, and they often result in increased budget deficits.
Deregulation is the process of removing or reducing government regulations. This can include regulations related to labor, the environment, and financial institutions. Deregulation can be beneficial for businesses, as it can make it easier to operate and expand. However, deregulation can also lead to negative consequences, such as increased pollution and financial instability. For the middle class, deregulation can lead to job loss and wage stagnation, as businesses seek to reduce costs. For example, the deregulation of the trucking industry in the 1980s led to a decline in wages for truck drivers. Other deregulated industries, such as the airline and banking industries, have also seen wage stagnation or decline.
Deregulation can lead to increased income inequality, as those at the top are more likely to benefit from it. The biggest beneficiaries of deregulation are often large corporations and the wealthy, as they have the resources to take advantage of the new opportunities it provides. For example, the deregulation of the banking industry in the 1990s led to the creation of large banks that were “too big to fail.” These banks took on more risk, knowing that they would be bailed out by the government if they failed. This eventually led to the financial crisis of 2008, which had a devastating effect on the middle class. The environmental impacts of deregulation can also be severe. For example, the deregulation of the coal industry has led to increased air pollution and a decline in the quality of life for those living in coal-mining communities. Again, the biggest beneficiaries of deregulation are often the largest corporations, as they can externalize the costs of pollution onto society.
5) The Rise of New Industries
The rise of new industries like tech and finance has favored those with college degrees and specialized skills. These industries are often located in cities, which means that workers who live in rural areas are at a disadvantage. In addition, these industries tend to pay higher salaries than manufacturing, which has led to a widening of the income gap. The most rapid growth of tech and finance industry jobs occurred from the year 2000 to the year 2016. It was also during this period that the income gap between the top 1% and the rest of the population reached its highest level since the 1920s. At the same time that new industries were emerging, existing industries were in decline. This was particularly true of manufacturing, which lost millions of jobs from the year 2000 to the year 2016. The loss of manufacturing jobs has had a devastating effect on communities that relied on these jobs for their economic stability.
The rise of new industries and the decline of old industries has led to a change in the composition of the middle class. In the past, the middle class was largely made up of workers in manufacturing and other traditional industries. Today, the middle class is increasingly made up of workers in service industries, such as healthcare and education. This shift has made the middle class more vulnerable to economic downturns, as service jobs are often more susceptible to job loss than manufacturing jobs. The change in the composition of the middle class has also made it more difficult for families to achieve economic stability. In the past, a single breadwinner in a manufacturing job could support a family. Today, families often need two incomes to make ends meet. This is particularly true in high-cost areas, such as major cities. For example, the median rent for a two-bedroom apartment in San Francisco is $4,500 per month. This is an unaffordable amount for many families, particularly those who are living paycheck to paycheck.
6) The Great Recession
The Great Recession was a period of economic decline that began in 2007 and lasted for several years. The recession was caused by several factors, including the housing market crash, high levels of debt, and the failure of financial institutions. The recession led to job losses, wage cuts, and increases in poverty and inequality. The Great Recession had a particularly negative impact on middle-class families, as many lost their homes and savings. In addition, the recession contributed to the growth of income inequality, as those at the top were able to weather the economic downturn better than those at the bottom. The U.S. gross domestic product, which is a measure of the country’s economic output, declined by 4.3% from the year 2007 to the year 2009. This was the sharpest decline since the Great Depression. The unemployment rate more than doubled, from less than 5 percent to 10 percent. It remained above 9% for the next two years. In total, 8.7 million jobs were lost during the Great Recession. It was also the longest recession, lasting eighteen months.
While the economy has recovered since the Great Recession, many middle-class families have not. This is due in part to the fact that many jobs that were lost during the recession, such as manufacturing jobs, have not returned. In addition, wages have failed to keep up with inflation, meaning that families’ purchasing power has declined. As a result, many middle-class families are struggling to make ends meet. Inequality has also continued to grow in the years since the recession, as those at the top have seen their incomes rise while those at the bottom have seen their incomes stagnate or decline.
7) The COVID-19 Pandemic
The COVID-19 virus has caused widespread job losses, business closures, and economic decline. This was mainly because businesses were forced to shut down due to government-mandated social distancing measures. The pandemic has had a particularly negative impact on service industries, such as hospitality and tourism, which have been hit hard by the closures. In addition, the pandemic has led to a decrease in consumer spending, as many people are hesitant to spend money during such uncertain times. The COVID-19 pandemic has also exacerbated existing inequalities, as those who are already struggling financially have been hit the hardest by the economic downturn. The ultra-rich were not only able to withstand the economic consequences of lockdowns and uncertainty, but they also profited from them. During the epidemic, the world’s billionaires’ net worth increased by $3.9 trillion while the overall economy shrank by 3.7%.
The pandemic has also hurt the middle class by causing a decrease in home values. This is because many people are unable to make their mortgage payments or keep up with their property taxes. As a result, foreclosures and evictions are on the rise. This is likely to have a long-term impact on the middle class, as it will make it more difficult for families to accumulate wealth and attain economic stability. The pandemic has also led to an increase in government debt. This is because the government has had to spend trillions of dollars to bail out businesses and provide relief to families who have been impacted by the pandemic. The increase in government debt is likely to have negative consequences for the economy in the long run, as it will lead to higher taxes and inflation.
Supply chain issues caused by the pandemic have also led to inflation, as businesses have had to raise prices to cover their increased costs. This has been particularly difficult for middle-class families, as they have been struggling to make ends meet even before the pandemic. The combination of job losses, wage stagnation, and inflation has caused many middle-class families to fall into poverty. The pandemic is likely to cause an increase in poverty rates in the United States. This is because poverty is not just about having a low income, but about not having enough resources to meet basic needs. The pandemic has caused a decrease in resources, as well as an increase in needs. For example, families who can no longer afford to pay for child care or health care are more likely to fall into poverty.
The American economy has changed in ways that favor those at the top. The decline of the middle class and the rise of inequality are two of the most significant changes. Globalization, the decline of unions, changes in the tax code, deregulation, the Great Recession, and the COVID-19 pandemic have only exacerbated these trends. As a result, the middle class is struggling while the rich are getting richer. This is not sustainable and will eventually lead to an economic collapse. To build community wealth, we need to level the playing field and create opportunities for everyone to participate. We need to ensure that everyone has a voice in decision-making and that the resources of our community are used for the benefit of all.