Income Inequality in America
Trade unions play a role in income inequality in America between unionized members and non-unionized members. Trade unions represent employee rights and oversee the fair treatment of employees who have joined the trade union. According to Piketty, trade unions “negotiate not only minimums but also complete wage schedules with employers in each branch of industry” (Piketty 310). Although trade unions represent the needs of employees, they fail to oversee the rights and needs of those who are not registered or unionized. Trade unions may negotiate the increase in wages of employees in a particular company, but not all companies. For example, a union of the Coca Cola company negotiates pay increase for their employees but not for those working for Pepsi. This creates wage inequality since only members of a particular union experience pay increment while the other does not experience the wage rise. Therefore, unions play a role in wage disparity because they only bargain for wage increment for unionized members and not non-members.
Over the years, the population of immigrants entering the country in the hopes of making their lives better has been on the rise. Immigrants provide a large number of unskilled laborers in the country, leading to wage disparity between them and the U.S. born citizens. During her presentation on the issue of rising income inequality in the country, Valerie Remy states that an increase of immigrants in the country increases unskilled labor, which contributes to greater disparities of income (University of California Television 00:18:39-00:19:40). Immigrants receive low wages for unskilled labor, and this leads to labor-competition wages. The increase of unskilled labor receiving low wages puts pressure on other earners since it reduces the bargaining power for a wage. Thus, an employer will most likely hire a non-citizen for less pay than an American born-citizen who demand a higher wage. An increase in immigration, therefore, puts a strain on the wage-bargaining power of workers born in the U.S. because they provide a higher labor force for little wages.
Apart from an increase in unskilled labor due to immigration and trade unions, economic trends also affect income inequality in America. Economic trends are indicators and factors that show that a country is improving its economy. Economic trends like digital economies have seen the rise of income inequality. Also, competition from emerging economies in the world has also increased the prospect of unskilled labor; thus, driving further a wage gap between skilled and unskilled labor. Economic trends requiring skilled labor will see an increase in unemployment of unskilled people leading to wage disparity. A report by CNBC news on the growth of the wage inequality gap between the rich and the poor states that the economic rise of China led to the outsourcing of manufacturing jobs in America to China (CNBC 00:04:03-00:04:28). The loss of these jobs led to an increase in wage disparity since many people lost their jobs. Therefore, economic trends lead to inequality because most of people may lose their jobs to support the rising economic trend.