Low Wages and Inequality Solutions in the USA

Introduction

Unemployment and low wages are the issues of the day in the USA. Despite the fact that official unemployment rates remain relatively low, standing at 4.1% (Paul et al.), the number of individuals being partially employed has increased dramatically. The high-paying end of the labor market enjoys reasonable yearly growth, whereas the low-paying end, where a good portion of the U.S. population currently resides, experiences stagnation.

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According to Murray and Forstater (6), between 1973 and 2017, U.S. worker hourly wages practically stagnated, increasing only 12.4%, while productivity has increased by 77%. With continuing globalization, more jobs being moved to other countries, and increasing automation of labor, the world may experience even greater unemployment rates in the next 20-30 years (Drum). With that in mind, the government needs to address the issues of rising poverty, inequality, and prospective unemployment.

Strong unionization of the workers, the establishment of a higher minimum wage, and the provision of guaranteed permanent workplaces would help improve the financial and social standing of America’s middle and low-income classes in order to help transition through this difficult period.

Issues with Low Wages in the USA

According to McCormack & Madrick (19), the low-wage gap has been steadily increasing since the 1970s, when American society had taken a course towards the hourglass labor market system that is in place today. The article dedicated to low and high wages highlights the importance of many policies as well as geopolitical and economic factors that took place. Some of these include racial and gender inequality, education inequality, poor federal industrial policies, overreliance on the free market, deregulations, and attacks on labor unions.

McCormack and Madrick (38) believe that the solution to these issues includes fixing a good portion of them by introducing tighter regulations, higher minimum wages, and government subsidizing of the manufacturing process, and reimagining corporate responsibility. It is stated to be possible to turn the American economy from its current course and towards a system that benefits its people rather than foreign entities and the 1%.

Inequality and Unemployment

The issues of rising inequality of labor are directly linked to unemployment. A lack of a decent and stable source of income contributes to poor family support, reliance on welfare, generational poverty, and a plethora of other issues that only exacerbate the problem. According to Baker and Bernstein (8), the unemployment spike in the U.S. appeared as a result of the housing bubble, which, in turn, was caused by deregulation and the free-market policies supported by the government. It brought upon a consumption boom while draining the resources needed to maintain stable economic growth. At the same time, the article reports controversial views that the American economy suffers from having too many workers or too few workers.

The idea for fixing the shortage of qualified workforce is said to be in sound immigration policies, but it is unlikely that the country with open borders would manage to attract high-skilled labor en-masse. Baker and Bernstein (13) connect inequality to unemployment by stating that unemployment directly affects the population’s purchasing power. Families who did not have any savings prior to the housing bubble are unlikely to help pull the economy up after it. Their solution to the problem is to engage in temporary budget deficit policies to improve the financial standing of the people, increase foreign exports, and reduce structural unemployment.

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The Role of the Unions in the Growth of the Middle Class

Weller et al. (40), who has performed an extensive study of unionized vs. not unionized middle-class families, make an argument for increasing unionization. According to their findings, the middle class is falling into poverty, as the majority of the middle-class families barely make it above the 59,000 dollars per year, which, at the same time, makes them ineligible for many government support programs including welfare, Medicare, and others. It effectively drives their standards of living down, despite having greater earnings than those underneath the poverty line.

The solution, according to the authors, is expanding the membership for the unions and imposing government regulations against bullying workers out of them. Weller et al. (48) state that unionized households analyzed in the period between 1989 and 2013, in general, have more access to healthcare, more net worth, higher-paying wages, and more net savings. However, the analysis provided by the authors does not include a very important demographic factor, such as age. It has the potential to obfuscate the argument, as the statistics would include individuals that have been in the trade for more than 30 years, having achieved their financial and economic success before the low-wage policy spike that was mentioned by McCormack and Madrick (38) in their article.

Robots and the Inevitable Increase in Unemployment

The idea that unemployment rates are going to spike in the future is supported in the article by Kevin Drum, who analyzes the existing situation in the labor market and how it will change in the next 30-60 years. According to his predictions, the newest technological revolution will not be like all the others. Previous industrial advancements have brought upon the automation of mechanical labor, eventually pushing humans into decision-making and technical maintenance roles.

However, the advances in A.I. technology will make for an intellectual revolution, where machines would perform all the maintenance and decision-making. Machines will overtake even humanitarian professions such as medicine, writing, and the socialization sphere (Drum). In the distant future, it promises a utopia, where everyone can dedicate their lives to higher pursuits. However, before robots manage to replace the burdens of existence from the shoulders of humanity, there will be a difficult transitional period of mass unemployment followed by poverty and suffering.

This trend is perceivable even now, as Google Translate is effectively replacing modern translators and interpreters. The author states that in order to survive long enough for the potential utopian future, advanced government regulation, welfare programs, and renewable energy sources are a necessity.

Permanent Full Employment – A Potential Solution?

The issues of mass unemployment caused by legislative, economic, and technological factors are discussed in a proposal by Paul et al., who support the idea of permanent full employment. Their idea is to include the right to work into the existing bill of rights, thus putting the government in a position where supplying the population with work is their constitutional duty. The proposal is supposed to help restore local tax revenues, eliminate involuntary unemployment and provide visible macroeconomic gains for the nation (Paul et al.). The program is similar in nature to Roosevelt’s New Deal plan in that it expands the role of the government in providing reliable income, professional reserves, and better distribution of wealth across the country.

Conclusions

The provided solutions are not mutually exclusive and are supported by legislative and scientific studies. When combined together, they may provide short-term and long-term solutions to the economic and social issues experienced by poor and middle-class families in the USA. Strong unionization of the workers, the establishment of a higher minimum wage, and the provision of guaranteed permanent workplaces would make the country’s economy work for its people rather than rich shareholders of powerful corporations alone.

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Works Cited

Baker, Dean, and Jared Bernstein. “Want to Attack Inequality? Reduce Unemployment!” Challenge, vol. 57, no. 6, pp. 6-16.

Drum, Kevin. “You Will Lose Your Job to a Robot – And Sooner Than You Think.” Mother Jones. 2017. Web.

McCormack, Michael, and Jeff Madrick. “We Can Have a High-Wage America.” Challenge, vol. 61, no. 1, 2018, pp. 19-41.

Murray, Michael J., and Mathew Forstater. The Job Guarantee: Towards True Full Employment. Palgrave, 2013.

Paul, Mark, et al. “The Federal Job Guarantee – A Policy to Achieve Permanent Full Employment.Center on Budget and Policy Priorities. 2018. Web.

Weller, Christian E., et al. “Building Middle-Class Wealth Through Unions.” Challenge, vol. 60, no. 1, 2017, pp. 40-50.

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StudyCorgi. (2021, May 30). Low Wages and Inequality Solutions in the USA. Retrieved from https://studycorgi.com/low-wages-and-inequality-solutions-in-the-usa/

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"Low Wages and Inequality Solutions in the USA." StudyCorgi, 30 May 2021, studycorgi.com/low-wages-and-inequality-solutions-in-the-usa/.

1. StudyCorgi. "Low Wages and Inequality Solutions in the USA." May 30, 2021. https://studycorgi.com/low-wages-and-inequality-solutions-in-the-usa/.


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StudyCorgi. 2021. "Low Wages and Inequality Solutions in the USA." May 30, 2021. https://studycorgi.com/low-wages-and-inequality-solutions-in-the-usa/.

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StudyCorgi. (2021) 'Low Wages and Inequality Solutions in the USA'. 30 May.

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