https://en.wikipedia.org/wiki/Causes_of_income_inequality_in_the_United_States
Overview
Income inequality in the United States has grown significantly since the early 1970s,[2][3][4][5][6][7] after several decades of stability,[8][9][10] and has been the subject of study of many scholars and institutions. The U.S. consistently exhibits higher rates of income inequality than most developed nations, arguably due to the nation's relatively enhanced support of free market capitalism.[11][12][13][14][15]According to the CBO and others, "the precise reasons for the [recent] rapid growth in income at the top are not well understood",[16][17] but "in all likelihood," an "interaction of multiple factors" was involved.[18] "Researchers have offered several potential rationales."[16][19] Some of these rationales conflict, some overlap.[20] They include:
- the globalization hypothesis – low skilled American workers have been losing ground in the face of competition from low-wage workers in Asia and other "emerging" economies;[21]
- skill-biased technological change – the rapid pace of progress in information technology has increased the demand for the highly skilled and educated so that income distribution favored brains rather than brawn;[21]
- the superstar hypothesis – modern technologies of communication often turn competition into a tournament in which the winner is richly rewarded, while the runners-up get far less than in the past;[21][22]
- immigration of less-educated workers – relatively high levels of immigration of low skilled workers since 1965 may have reduced wages for American-born high school dropouts;[23]
- changing institutions and norms - Unions were a balancing force, helping ensure wages kept up with productivity and that neither executives nor shareholders were unduly rewarded. Further, societal norms placed constraints on executive pay. This changed as union power declined (the share of unionized workers fell significantly during the Great Divergence, from over 30% to around 12%) and CEO pay skyrocketed (rising from around 40 times the average workers pay in the 1970s to over 350 times in the early 2000s).[24][25]
- policy, politics and race – movement conservatives increased their influence over the Republican Party beginning in the 1970s, moving it politically rightward. Combined with the Party's expanded political power (enabled by a shift of southern white Democrats to the Republican Party following the passage of Civil Rights legislation in the 1960s), this resulted in more regressive tax laws, anti-labor policies, and further limited expansion of the welfare state relative to other developed nations (e.g., the unique absence of universal healthcare).[24]
