Great Divergence can be said to be the period of great income inequality or unequal wealth distribution which took place between periods in 170s up to 2007. Great divergence in the U.S. saw the high income earners continue getting more and more while the low earners continues to earn less and less. This increased the gap between the rich and the poor thus greater income distribution inequality. It was more pronounced in United States and lesser in other countries such as Canada and UK. According the research carried by CBO in 2011 on income distribution in the US for the years between 1979 and 2007 indicated that “1% top earners of households gained over 275% while the lower earners gained 80% which was more than half difference in income distribution” (Timothy 64). Various reasons are said to have contributed to this problem as discussed below.
Causes of Great Divergence in the U.S.
On Globalization
Globalization during that time was unfair to workers in the globe and thus various countries had various ways of dealing with this. Many of this countries were successful by their move however, the U.S.was not among the successful countries of the world in controlling the effects of globalization. The U. S was unable to protect the interest of its workers. As a result, more of highly skilled labor than the medium skilled was offshored. This is to say that globalization increased the disparity in wealth distribution between the high income earners and low income earners.
Technology
The late 1970s and throughout the 20th century technology advancement cropped in with great strength. Technology was more complicated thus requiring well advanced and better educated workforce. The start of these changes saw major changes in electricity, motion pictures, airplanes, telephones and many more others. Technological demand for more skilled workers rose up during this period in the U.S. With increased technological demands, skilled labor found less to fulfill this demand. As a result, “more skilled labor has a lot to do while the skilled labors have nothing to do in order to earn living. As a result, technological demands led to increased income inequality in the U.S” (Timothy 198).
On migration
Migration is another factor which led to increase income distribution disparity in the U.S. although it has a little effect on the same. The part which was much affected as far as immigration is concerned was the high school dropouts. On the other hand, illegal migration had a negative impact on the labor pool for the high school dropouts. Most of these illegal immigrants were less uneducated than the citizens thus they earned too little from their services. “This group of people where unskilled laborers hence are unable to get jobs to earn living thus increasing the income distribution disparity in the U.S” (Thomas 210).
Decline of labor unions membership
Demise of labor unions in the U.S. lead to increased inequality among the workers. Labor unions play a vital role in fighting for fair wages and compensation benefits of workers. Their absence so the unskilled laborers lose strength in fighting for fair salaries and benefits. As a result, the skilled labor was able to get more income from their services following their more skills while the unskilled labors got the low incomes since they lacked the solidarity to fight for more.
Trade with low wage nations
The increasing trade for manufacturing goods with developed countries saw many of the U.S. citizens involved in the trade earn less compared to their counterparts in the United States. As a result, there was also a wide gap between the high wage nations and the low wage nations which were some of the U.S. trade partners. This played a great role in lowering the U.S. average wages thus increasing the income disparity in America.
Racial Disparity
U.S. was well known for racial disparity during this time. This disparity was in favor of Americas against the blacks. Since income earning in the U.S. is greatly influenced by the level of education, the whites were able to get quality education which was not the same for the blacks. As a result, the whites were able to get blue collar jobs where they earned more and the blacks got technical jobs whereby they earned less. This accelerated the income distribution inequality in the U.S.
Conclusion
Although tireless efforts of the federal government to cut down income disparity, it continues to remain unequal. Great divergence was really investable during following the industrial revolution which was taking place during that time. Ideally, great divergence was subject to all factors which surround the work force in the U.S. There is great need for the U.S. to come up with various policies to help cut down the income distribution inequality. For instance, the government should focus on greater investment in education. The investment in education, especially in higher education will result in higher rates of economic growth and consequently lead to lowered income inequalities. Since the low income earners shall be capable of getting the high paying jobs and hence higher wages.
Work Cited
Timothy Noah. The Great Divergence; America’s Growing Inequality Crisis and What We Can Do About It (Bloomsbury Press, 2012)Thomas McCraw. American Business, 1920-2000: How It Worked (Wheeling, Ill.: Harlan Davidson, 2000)
