The Great Income Divide

Updated: Dec 19, 2018


There’s been a lot of talk about the ever-widening wealth gap between rich and poor Americans. Some, including myself, feel that this is the most pressing challenge facing us today. When I see evidence of economic inequality, I often reminisce about a trip I took to Guatemala in 1994.


Stretching from the Gulf of Mexico to the Pacific, Guatemala has an abundance of natural beauty, from its many beaches to its tropical forests to its breathtaking mountains. It’s hard to imagine many other places so well endowed.


At the time of my visit, Guatemala was well known in the apparel industry as a place to manufacture clothing at a fraction of the what it would cost in the U.S., thanks to very low wages. One of my stops was a visit to a large fabric mill whose owner, a tall and slender young man in his thirties, was said to make over one million dollars a month in profits. He lived in a mansion in a gated community and drove a very expensive car. As I toured the factory nature called, and I proceeded to climb over some huge rolls of fabric to get to the restroom. Coming out, I was startled to see two men in fatigues with automatic rifles slung over their soldiers. My first thought was that I was in the middle of a coup. When I asked my guide why they were in the factory, his response was; “The owner’s kids just got out of school.” It turned out that their grandfather, the founder of the company, was gunned down in the plant by rebels a decade earlier and, due to continuing political unrest, the children each had an armed guard who accompanied them everywhere and stood outside their classrooms while school was in session.


Inequality in Guatemala was caused government corruption and the exploitation of workers by the very wealthy. Inequality in America is different. Here, the main cause is something much more difficult to control – technological progress. Where tens of thousands of workers assembled cars decades ago, today we have entire assembly lines made up of robots and a handful of highly skilled jobs for people who keep the robots running. At its peak, Eastman Kodak employed 120,000 workers processing film. Thanks to digital photography, those jobs are gone. And where are all those workers today? Most likely, holding down two service jobs that together provide less income than their old job did.


Futurists used to predict that technological advances would translate into higher living standards and more free time for everyone. Just the opposite has occurred and today we have the largest concentration of wealth since the Gilded Age. Decades from now, as technology expands exponentially, when robotics become commonplace in the service sector, when truckers and Uber drivers are replaced by self-driving vehicles, when cashiers are replaced by smart phone apps, where will the jobs be? Some would argue that we simply need to train workers with new skills. Skills for what?


It’s time to recognize that we’re heading toward a major societal upheaval unless we come up with ways to take care of the millions who will be displaced. In anticipation, some developed countries are experimenting with a guaranteed income, a monthly stipend paid to every adult and child regardless of need. It’s too soon to know if this is a viable solution but it’s clear that soon, those benefiting the most from technology advances will have to help those benefiting the least.


If you are among the fortunate, you must ask yourself; “Is it better to pay more in taxes or, like the factory owner in Guatemala, live in fortified communities and pay for armed security?” And for the rest of us, it’s important to know where the candidates stand on this critical issue before we cast our votes in November.

#Inequality

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