Global Labor Trends & Inequality The World of Labor is changing rapidly, are you ready?

New Labor Trends Over the past 15 years Labor has significantly changed United States: ↓ Union power ↓ “Job Security” overall ↓ Manufacturing Jobs (blue collar) ↑ use of Automation (robots) & ↑ immigration ↑ Demand for Educated Workers (white collar) ↑ Women advancing in both education/income ↑ Income Gap (Rich & Poor) Globally: Collapse of Soviet Union & Communist Economies Signing of free trade agreements around world China, India, Brazil emerge as new economic powers European Union struggles with common currency & global competition

Income Distribution Free markets focus on EFFICIENCY not EQUALITY United States has enormous wealth but tremendous inequality record gap between the rich and poor

Top 1% real wages keeps rising faster

Numbers to know for Final Exam 47% of Americans pay no federal incme taxes (still pay social security, Medicare & sales tax) Top 1% keeps paying more! Top 1% earns 19% Income Pays 37% of income taxes

Falling Income of Low-Skilled Low-Skilled Workers Highly Educated Workers Wages S Wages S ---------- ---------- W1 W1 ---------- D ---------- D Q1 Quantity Q1 Quantity Demand Falls: outsourcing of jobs automation Supply Rises ↑ low skilled immigration Demand Rises: more technology jobs automation required skilled workers What is good about inequality? => Incentive to ↑ Human Capital

Reasons for rising inequality?

Why do a few get most of the MONEY? Classroom Reading: Why do a few get most of the MONEY? Economic Theory on the Distribution of Income

Winner Take All: Superstar Theory Why Now?

Top 1% versus Top 0.1% Top 1%: Top 0.1%: Income: Over $350,000 per year 1.5 million households Top 0.1%: Income: $1.4 million per year Only 146,000 households

LeBron James signs lifetime contract http://espn.go.com/nba/story/_/id/14314807/lebron-james-signs-life-deal-nike

Technological Unemployment https://www.youtube.com/watch?v=5g8_VKDYwks

Is this a problem?

Globalization BENEFITS COSTS

Machines replace Workers http://www.pbs.org/newshour/economy/makingsense/

Entitlements & Income Distribution http://www.pbs.org/newshour/bb/business/july-dec11/inequality_09-21.html