Income inequality just hit a 50 year high in the U.S.—which means the rich are getting richer and the poor are getting poorer. But how did we get here and how does this income gap affect us?
More than five decades ago, the government started tracking all of the income being created across the U.S. Fast-forward to 2019, we’re seeing that the distribution of income across the U.S. is more unequal now than it has ever been.
One contributing factor is demographics—right now, baby boomers are nearing retirement, and in theory have more savings, and interest-based income than millennials. Meanwhile, many of their children are working on entry-level salaries with outstanding debt like student loans, and expenses like housing are at an all-time high. This is creating a large income gap between the two groups.
Economic factors also contribute to the gap. The federal minimum wage is $7.25 an hour, and isn’t rising fast enough in a fast-growing economy. And while many individual states have raised their minimum wage, 17 are still tied to the federal figure, which hasn’t been changed since 2009. This, along with the vanishing of unions has contributed to the inflated gap.
With the U.S.-China trade war and a potential recession on the horizon, there’s a lot that could fluctuate the economy in the near future, but all of these factors have generally led to an ever-shrinking middle class. Low-skill jobs, like mowing lawns or child care, are in demand, and high-skill technical positions like software engineers or surgeons, are also in demand—but middle-skill jobs aren’t—especially with the automation of so many of them.