News Income Inequality Causes Social Unrest?

[mege]

I think the inequality we have today is a result of the lack of available jobs. We don't have enough job creation to create enough scarcity in the labor markets to get wages moving. The economy has been hemorrhaging job creation ability due to automation, globalization, and other factors. So the labor markets are ending up more and more saturated as more and more workers are being displaced. And quite frankly, automation is going to continue to climb up the corporate ladder and so is globalization.

See I don't think our inequality is structural. Education may help spread the saturation of the labor market, and it may help some, but I don't think it will solve the problem. In general, I think we have crossed an equilibrium were we simply don't need everyone in our economy. Technology is wiping out the need for a segment of the population.

I think the recent economic crunch forced many companies to tigthen their belts when they were otherwise on 'cruise control' and able to support a lot of extra employees (layoffs cost cache). Companies have all realized that they CAN get along with less workers, especially considering the extra expenses that come along with workers. I think too long the US was escaping the shift to a 'worker lite' society, and now it's been forced upon us.

The government needs to lower the per-worker cost enough to allow for companies to higher more (but each individual probably will work slightly less). Hopefully the SCOTUS will strike down the ACA as a good start and it will spur some hiring since employers will know what to expect for costs better.

 

[SixNein]

I think the recent economic crunch forced many companies to tigthen their belts when they were otherwise on 'cruise control' and able to support a lot of extra employees (layoffs cost cache). Companies have all realized that they CAN get along with less workers, especially considering the extra expenses that come along with workers. I think too long the US was escaping the shift to a 'worker lite' society, and now it's been forced upon us.

I don't see a way to get out of this situation, and I expect it to become more pronounced as time goes forward. In my mind, the question is what to do with these people? How much inequality can people stand?

Sure, we could strip minimum wage laws, but I don't think this will solve anything. It'll increase corporate profits because the saturation will drive those prices down, but I don't expect more jobs to suddenly appear. We are in a situation were one group can produce for all. And the size of that group is likely to continue to shrink in the future.

I can't think of too many things that can't be automated.

 

[ThomasT]

Wrt the title question, I agree with what I take to be the OP's basic premise that income inequality per se isn't generally causally linked to social unrest; and I agree with the hypothesis that unemployment associated with the economic crisis, associated with questionable practices by the financial sector (associated with the perception that the government in some ways reinforced the questionable practices and has not only done little to prevent them, but has actually rewarded many who engaged in those practices) are the more significant precursors of the OWS phenomenon rather than income inequality.

The fact that a relatively small percentage of the population controls a relatively large percentage of the total wealth would seem to have little to do with the unemployment rate.

 

[russ_watters]

I think the inequality we have today is a result of the lack of available jobs. We don't have enough job creation to create enough scarcity in the labor markets to get wages moving. The economy has been hemorrhaging job creation ability due to automation, globalization, and other factors. So the labor markets are ending up more and more saturated as more and more workers are being displaced. And quite frankly, automation is going to continue to climb up the corporate ladder and so is globalization.

See I don't think our inequality is structural. Education may help spread the saturation of the labor market, and it may help some, but I don't think it will solve the problem. In general, I think we have crossed an equilibrium were we simply don't need everyone in our economy. Technology is wiping out the need for a segment of the population.

I think that's an odd thing to say considering how low unemployment is/has been and given the inverse relationship between unemployment and inequality in the short term, but in either case you didn't even address my question much less answer it. I'm not sure why you even bothered to quote it! Since my question was designed to help answer yours, I must conclude yours was simply a red herring that you didn't really expect a serious answer to.

 

[mheslep]

I'm sure you can find similar creation of jobs during the Clinton presidency.

Agreed. Not as great, but yes.

The slump in job creation seems to have started during Bush.

Slower under Bush than the 80's late 90's, but still plenty to maintain a 4-6% unemployment rate with a growing labor force, unlike now.

Or fed policy, or a different international climate, or completely different population demographics, or some combination of other conditions. There are lots and lots of things different today than in the 80s.

Yes, agreed, government policy (including the Fed) is not the only factor, but IMO it is the most important reason for the current lousy jobs condition.

 

[SixNein]

I think that's an odd thing to say considering how low unemployment is/has been and given the inverse relationship between unemployment and inequality in the short term, but in either case you didn't even address my question much less answer it. I'm not sure why you even bothered to quote it! Since my question was designed to help answer yours, I must conclude yours was simply a red herring that you didn't really expect a serious answer to.

I must have taken your question the wrong way. I read it as if you were challenging the very idea of inequality.

I'm not sure that its odd per say. Technology and globalization are rendering quite a few skill sets worthless. So more and more people are competing for skill-less jobs, and its causing the labor market to be saturated. Either the economy has to create enough jobs to get those wages moving, or it has to create a wider diversity of jobs.

http://www.irle.berkeley.edu/events/spring08/feller/productivity_wages_graph.gif

Technology is driving our productivity more than people.