This year's economic slowdown and inflation has only made things worse, with many families are going into debt just to pay for their daily lives. (See July Credit Card Debt Holding Steady at $8,200 per Household)
New York Times columnist Bob Herbert recently chided President Bush as well as the leading Presidential candidates, stating that "No one will tackle the crucial issue of employment in a serious way." (See Economic Slowdown Affecting All Income Levels)
However, I also believe the U.S. is caught up in an inevitable trend that is about lessening global income inequality. The richest 1% of the world's population has 40% of its wealth, and 25% of that wealth is held by Americans. On the other hand, China has 22% of the world's population and 9% of its wealth, while India has 15% of its population and 4% of its wealth. (Source: World Institute for Development Economic Research, "Estimating the Level and Distribution of Global Household Wealth, November 2007)
To remain competitive in a global economy, U.S. companies must drop wage levels to match those in foreign countries with a much lower cost of living. At the same time, the education and skill level of their labor force is increasing. Furthermore, technology and the global spread of English is making it easier to employ foreign workers.
Unfortunately, the brunt of this shift is being born by the least wealthy Americans. Those in the top fifth of the U.S. income bracket must realize that those in the bottom two-fifths cannot bear the brunt indefinitely. Changes in tax policies, access to education and employment training should be planned for now so that the transition is gradual and healthy for the economy overall.
- Income Inequality in the U.S.
- The Big Squeeze - Book Review
- Why You are Working Harder, But Feel Like You Are Earning Less
- U.S. Losing its Competitive Edge