Why the Rich Get Richer, While the Poor Get Poorer Essay Example

a casualty of our ever more modern society. In the late 1980s, Nippon Steel joined with America’s ailing Inland Steel to build a new $400 million cold-rolling mill fifty miles west of Gary, Indiana.

The mill was celebrated for its state-of-the-art technology, which cut the time to produce a coil of steel from twelve days to about one hour! In fact, the entire plant could be run by a small team of technicians, which became clear when Inland subsequently closed two of its old cold-rolling mills, laying off hundreds of routine workers. Foreign-owned companies, such as Phillips, Sony, and Toyota, are highly automated and will become far more so in years to come.

Routine production jobs account for a small fraction of the cost of producing most items in the United States and other advanced countries, and this fraction will continue to decline sharply as computer-integrated robots take over (Reich 427). A third reason why the rich are getting richer and the poor poorer is outsourcing. As companies expand their workforce into the global web of workers available, the competition of unskilled/routine workers also expands from their fellow Americans to any able-bodied person on the planet that is willing to do that same job.

This is especially dangerous because the standard of living in most (if not all) of the countries that are now being hired to do the work is much lower than that of ours in America, and these countries are usually impoverished, so the people there are willing to do the same work their American “counterpart” was to do for a much smaller wage. This means that most of

these unskilled/routine jobs are shipped overseas for good. Until the late 1970s, AT&T had depended on routine producers in Shreveport, Louisiana to assemble standard telephones.

In the early 1980s they stopped hiring routine producers in Shreveport and began hiring cheaper routine producers in Singapore, discovering that Singaporeans would produce the same telephones for a much smaller cost. In 1989, AT&T stopped hiring Singaporeans to make telephones and began hiring even cheaper routine producers in Thailand for the same reason (Reich 423). As corporations lose national borders, another phenomenon occurs. The bond between employer and employee is severely strained or completely severed.

As these corporations expand all over the globe, and as more and more job-searching can be accomplished through Internet job sites, the CEO’s of these companies become almost a myth to entry-level employees and lower-level management; a name on the training manuals they receive and that gets brought up every once in a while. The same can be said for middle management jobs. As America’s core pyramids metamorphosed into global webs, many middle-level routine producers were as obsolete as routine workers on he line. Between 1981 and 1986, more than 780,000 foremen, supervisors, and section chiefs lost their jobs through plant closings and layoffs. Large numbers of assistant division heads, assistant directors, assistant managers, and vice presidents also found themselves jobless. GM shed more than 40,000 white-collar employees and planned to eliminate another 25,000 by the mid-1990s (Reich 426-427).

Finally, the most major factor of the schism between the rich and the poor is by a so-called “secession of the rich. As the rich become richer, they are said to be

more willing to invest and create more jobs. This is not necessarily true, especially not in this day and age. As the rich become richer, it would be incorrect to say that they do not invest, because they do. However, they are investing in “emerging markets” in India and China and other countries all over the world, so less of the money they acquire gets reinvested into our national economy. They also immerse themselves in more foreign travel and buy imported goods to a greater extent.

As for job creation, the rest of the money that the rich receive goes to their savings or paying off any debts they or their company may have. If, after investing in the worldwide economy, hitting their quota for their savings account, and paying off all their debts, they’re still feeling extra generous, then they will invest in improving the infrastructure of their company and creating jobs; it becomes almost an afterthought. These are not the only problems with the rich becoming richer, however.

As the rich become richer, they become less interested in the public welfare. They have their own means of private transportation, seclude themselves to gated communities, can afford to send their children to private schools, and invest in a small private security force (rent-a-cops), so the rich actually combat efforts to improve public transportation and public safety, and combat efforts to fund public education. Also, as rich business owners want to increase their profit margins, they slash the wages of their lowliest employees.

A study done by Jeffrey Thompson and Elias Leight of the Political Economy Research Institute (PERI) at the University

of Massachusetts Amherst, shows that if you raise the income disparity between the rich and the poor (if the rich get richer) by 10%, the annual income of middle income households actually drops by 2% (Thompson). This “secession” can be felt in the retail market. More and more retail stores are polarizing: either glamorizing their products to make them more high-end to appeal to the higher-end clients, or dumbing down and becoming a bargain mart for sensible, budget-oriented consumers.

Unemployment and stagnant wages continue to wreak havoc on the middle class, and the middle-priced retailers that have long catered to them (Lefcourt). The JCPenney’s and the Kohl’s of the world are some currently casualties to middle-income malez. The Liz Claiborne company was once aimed to target the middle-income shopper. Now, their main divisions (Kate Spade, Lucky Brand Jeans, Juicy Couture, etc. ) have upscaled to now carry designers shoes, purses, handbags, jeans, sweats, etc. There has been a flight to luxury/pedigree; the Gucci’s, Louis Vuitton’s, and Chanel’s of the world are doing exceptionally well in this “down” economy.

This can also be said for bargain stores. At Jack’s 99? Stores in midtown Manhattan, business is really good. The joint was jumping, especially for a weekday afternoon. When customers were asked why they were shopping there, the responses were typical: the prices (of course), the economy, I’m on a strict budget because I’m still paying off my house. In addition to their normal, low-income customers, they are receiving a new wave of middle-income shoppers that have traded down to the dollar store; and people are not browsing to see what they can get next

week or when they have the money, they are shopping (Solmon).