Why Incomes Are Becoming More Unequal
Incomes have become more unequal in the United States for three primary reasons:
• Changes in employment patterns
• Increased returns to education
• Changes in households
Let’s take a look at each of these reasons.
Changes in Employment Patterns
As we discussed in Chapter 9, the percentage of workers who belong to a labor union decreased dramatically in the past 40 years. That in itself results in a lower wage for millions of workers, because unions exist to push wages upward, and they usually succeed.
As a result, however, management often moves jobs to lower-wage locations. Many high-paying U.S. manufacturing jobs have been replaced by lower-paying jobs in service industries, such as retail and restaurants. ...