Globalization: Not a New Sensation Sweeping Our Nation

The frustrations that accompany economic inequality can often lead people to blame the obvious but less important causes of the issue. One of the most prominent examples is the overestimation of globalization as a major source of economic inequality. While brainstorming potential principal causes of the issue, I listed globalization just because I’ve heard so many complaints of outsourcing and firms moving across the country or globe in search of cheaper labor. I remember the outrage of Americans when it was announced that Disney would be replacing U.S. workers with foreign ones. This is bad for American workers in the short-term because they’d be taking an initial hit by losing their jobs. However, as we discussed in class, this may be beneficial in the long-term because it could ultimately bring in better service jobs for the former employees. Generally, younger people are more likely to be relocated or retrained for new work and find jobs that pay the same amount or higher. Yet, outsourcing can lead older workers to lose their jobs and never find as good or well-paid of one again. Ultimately, though, globalization is not as large of a factor as the general consensus believes it to be. Given that globalization has been around for centuries and the gap in socioeconomic class has drastically widened in the past few decades, it doesn’t make sense for this to be a major cause of economic inequality.

According to The Balance, it is technology rather than globalization that feeds income inequality. This is because technology has replaced many workers at factory jobs and increased the demand for highly skilled workers (of which there is a less abundant supply compared to the number of lower-skilled workers in the U.S.). However, there are projections (as broadcasted through sites like “Will Robots Take My Job”) that some high-skilled jobs will also become automated in the future. For example, the site predicts a 94% risk of automation for accounting and auditing jobs. This indicates that while lower-skilled workers in areas such as retail and fast food will be most affected, there will be several high-skilled areas that also take a hit.

The article also lists deregulation, which means less serious investigations into labor disputes, as a cause of income inequality since businesses benefit much more than (and at the expense of) their employees. Additionally, our current president’s tax plan has aided businesses and investors more than wage earners thus creating structural inequality. A case of this comes in the form of Wal-Mart’s treatment of its employees. Being the nation’s largest employer with 1.4 million workers, it is especially unfortunate that it has set new standards for reducing employee pay and benefits. It also provokes its competitors to follow suit so they are able to provide the same low prices.

Furthermore, The Balance mentions that, in recent years, the Federal Reserve deserves some of the blame for economic inequality. The Federal Reserve has created an asset bubble by keeping Treasury rates low which helped the top 10% of Americans who own 91% of the wealth in stocks and bonds. Other investors, meanwhile, have been purchasing commodities which has driven food prices up 40% since 2009. This exerts more pressure on the bottom 90%, who spend a greater percentage of their income on food. Having to spend more of their income on food, it’s increasingly difficult for the bottom 90% to invest which is a critical stepping stone to augment one’s wealth.



Amadeo, K. (2018, September 12). The True Cause of Income Inequality in America. Retrieved October 3, 2018, from


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