The income distribution depends on the rate of job creation
versus the rate of job destruction. If we create jobs faster than jobs
are being destroyed, then incomes will rise. The decade starting in
2010 does not look good for rising incomes or the income
distribution. Let us consider various factors affecting job
creation and job destruction.
1. Human Factors:
Education: Repeating
from previous section: Up to 1970 the US
educated the
highest percent of its population first with high school and then
college. Since 1970 the rest of the world has been catching up and
surpassing the US education system. If US workers are not as well
educated as workers in other countries, it is doubtful that they will
be able to earn higher wages. The US has a more difficult problem
in educating its children because the US has so many different ethnic
groups. Recently several schools, such as the Harlem
Success Academy, have developed successful
programs to educate minority inner city children. At the
university level, schools need to place more emphais on education and
less on semi-professional sports.
Obesity: The US has the
highest rate of obesity in the
world. Overweight workers are less productive and have higher
medical costs.
2. Automation:
Paper: The automation
of paperwork is taking place
slowly, but steadily. The number of clerical workers will drop sharply.
Manufactuing:
Slow, but steady progress is also being made in production
automation. It is doubful any new manufactuing industry in the US will
employ large numbers of assembly workers. Consider making solar
panels competitive. The
production process must be automated.
3. Outsourcing:
WalMartization of production.
WalMart epitomizes the
shift of production overseas to get lower prices. They put pressure on
their suppliers and they move production abroad. In general production
is moving abroad.
IBM type international organization: IBM
has learned
how to obtain good performance with groups whose members are in
different countries. This means that transnationals will search around
the world to find the lowest cost employees with the needed education
level and skills. This is factor price equalization in action. To start
investigating this phenonomenon, use the keywork remote
site workers in Google
4. Need for growth industry:
Algae: If any alternate
energy such as algae became
cheap it might take off.
High Speed Internet:
Given the move to high speed Internet, new industries might develop
5. My Opinion:
With growth of international economy the owners of capital in the
US will prosper and the income distribution will get worse.
When you graduate, you should start considering yourselfs as
future capitalists. The genius of American marketing is to
convince the US consumer that their self-worth is based on
consumption. You need to resist the bombardment of advertising
and instead invest 20% of your income so that in 20 years you are rich.