Income inequality is at an all time high in the U.S. and on a constant rise. Income inequality refers to the disproportionate distribution of income among different groups of a population.
In recent years, the issue of income inequality has gained prominence as economic disparities have widened, leading to various social and economic consequences. There are various economic factors that come into play in terms of income inequality, one of those being the influence of technological changes.
Advances in technology are supposed to drive productivity, which then is supposed to increase the growth of the economy. But lately, that has not been the case. Technologies have increased, but the growth in productivity has slowed down significantly, causing the rise of income inequality.
Technological change has led to displacement for certain skill sets while, simultaneously, creating opportunities for others. Those with skills demanded by the evolving economy tend to see their income rise, while others face unemployment or stationary wages. Most new technologies are made and used to improve the relative positions of skilled workers, thus permitting highly skilled workers to focus more on tasks that set them apart from low skilled workers and technologies.
Back in 2016, the basic technology skill the average worker needed was email writing. Now, one must be proficient in Word, Excel spreadsheets and many other digital skills just to stand out in the competition.
Artificial Intelligence (AI) is also a huge factor in today’s new technology. AI is the simulation of human intelligence processes by machines, especially computer systems. Specific applications of AI include expert systems, natural language processing, speech recognition and machine vision. AI automates tasks done by humans, such as customer service work, fraud detection and quality control.
AI performs much faster than humans and completes jobs with relatively few errors. In the workplace, chatbots are used a lot. It provides immediate service to customers. Because of AI and other technologies, there has been a decline in creativity, empathy, jobs and skills.
Social implications and reduced consumer spending are two other consequences of income inequality. High levels of economic inequality correlate with increased poverty rates. Those on the lower end of the income distribution face limited access to education, job opportunities and healthcare, which all contribute to a perpetuating cycle of poverty.
The gap between skills and opportunities will continue to widen as long as there are disparities in educational attainment. This also hinders social mobility. It is difficult to move up the social and economic ladder when access to resources is limited. As of recently, especially post COVID-19 pandemic, it has been difficult for most to afford the basic necessities to live. People with lower incomes face challenges in accessing affordable housing, food and needed services.
Although it may be hard to come to a solution to income inequality, there are possible solutions like fair wages and employee benefits. Increasing the wage of workers will raise the earnings for millions of workers that earn low wages and improve their way of living which lowers poverty rates. Imagine if workers get paid fairly and receive benefits. There will no longer be a struggle to pay medical bills, buy food or receive insurance. Also, closing the gender gap between men and women will result in more equal opportunities and increase employee productivity.
In conclusion, it is important to know and understand the economic state of the country. Once people understand and become aware of the consequences of income inequality, people can encourage further discourse and action to create a more equitable society.