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Why the Rich are Getting Richer and Poor, Poorer

Give examples of products and/or services that you use which have been directly or indirectly produced in a country other than the one in which you reside. How can one relate this to Reich’s discussion at the beginning of his chapter, about US companies moving their routine production to other countries?

Table of Contents

One of the three important issues discussed in this chapter is the fate of the routine producers. Reich describes them as workers employed in the manufacturing industries who perform tasks that are eventually taken over by technology. There are numerous products and services available to us that are directly or indirectly made in a country outside of the US. Products by Apple are an example of this as the company uses contract manufacturers to produce devices in China. The price offered by Chinese suppliers is difficult for the competitors to match as they are willing to lake low-margin businesses. Apple also sources raw materials such as circuits, boards, wiring, and chips from China (The Guardian, 2021). The same is true for almost all products that are completely or partially produced in other countries. The reduced cost of transportation and fewer barriers to entry has resulted in reduced profits. With the option of setting up the production unit anywhere in the world, the competition for routine producers of the United States is great and global. Companies ultimately seek the cheapest labor that is easily accessible and a large population is willing to get an opportunity to work in the US for lesser wages as the routine producers. On the other hand, the shift of routine production opportunities from advanced nations to developing countries has offered employment opportunities to the otherwise unemployed populations. While the developing nations may achieve some benefits out of it, the burden is faced by the routine producers belonging to progressive economies such as the United States.

Reich argues that the gender gap in wages began to close during the 1980s. What is the current status of this gender gap – and what does this mean for questions of gender identity formation?

Over the past century, women’s participation in the labor force has significantly grown. They have been working long hours and a greater percentage of women pursue higher education. Despite these efforts, a substantial wage gap persists between men and women – with women of color facing a wider gap in this regard. The 2018 Census Bureau data reveals that for every dollar earned by men of all races, women earn 82 cents. This wage gap for women also varies on basis of race and ethnicity with white American females earning 79 cents in contrast to black women who earn 62 cents and Hispanic women who earn 54 cents (Bleiweis, 2020). This disparity in the wages of males and females is embedded in the societal norms and structural sexism that forces women to opt for certain career paths and not the other. Moreover, consideration of work-life balance and wage penalty link to flexible hours are perceived as an issue related to women. This is because of the identity role of childcare and home production associated with women (Petrongolo, 2019).

Discuss the correlation between routine production jobs and high school-level education in the 1980s. compare and contrast the contemporary social and economic climate with that of the 1980s relative to the relationship between the job market and one’s education level.

The prospects for individuals with high school-level education to get routine production jobs are not great. In the 1980s, the social and economic climate of the job market was characterized by unions and in such unionized industries, routine production jobs vanished the fastest. These industries maintained their wages during inflation and protection was offered to the older member based on seniority. The first ones to be laid off were the young workers. A labor union member who was most seniors often favored job cuts instead of a wage cut. This resulted in a decrease of approximately half of all routine steelmaking jobs between 1974 to 1988. An automobile company has one-third of its total routine workers. Additionally, the wage gap between the union members and non-union members widened by the end of the 1980s. The wage gap increased approximately 6% from 1973 to the 1980s. These circumstances indicate that for a student with a high school diploma, the prospects of securing and maintaining a good routine production job are not high (Reich, 2008).

How much of Reich’s discussion on social security holds true today? How has the social security system in the US changed in recent years, and with what implications?

The social security system uses a percentage of payroll taxes that paid by higher-wage workers to raise the living standards of lower-income retirees. However, according to Reich, well-educated and influential young individuals correctly estimate the wealth that they will accumulate during their careers as compared to the workers with lesser means. With this knowledge, such higher-wage individuals prefer to form a mutual fund by merging their savings with other promising young individuals. This way they can collect the full returns of their private investment, instead of subsidizing poorer retirees. In recent times also the debt ceiling details have raised concerns regarding the social security payments. As estimated the social security funds for retirement and disability benefits may be depleted and only 78% of promised check benefits will be payable (Konish, 2021). Every year, certain changes are made to the social security system. The recent changes include a raise for retirees in the form of the cost-of-living adjustment. This adjustment is based on the rate of inflation and for the year 2021, it is 1.3%. While the rate of social security has remained unchanged, the amount on which tax is imposed has increased. The age of retirement is slightly high for the current year. While for the individuals born between 1943 to 1954, the age of retirement is 66, for those born in 1960 or later, the age of retirement is 67 years (Wasik, 2021).

Reich argues that in-person servers will be competing with a growing number of immigrants both legal and illegal, for whom in-person services will comprise the most accessible jobs. How has this contributed to the various debates and policy decisions in the US in recent years?

In-person servers are individuals that are associated with the service industry and work as telephone operators, restaurant servers, and so on. The jobs of in-person servers are threatened by various factors. With the advancement of technology, much of the manpower jobs are being replaced with types of machinery such as computerized cashiers and automatic carwashes. Additionally, a growing threat is that of immigrants who arrive legally or illegally, taking over the job market. Although immigrants are considered a drain on the United States economy, various research has proven them to be drivers of innovation and great entrepreneurship. In recent years, especially during the Trump administration, an aggressive push was observed against these immigrants whether legal or illegal. These measures included the Muslim ban, construction of The Wall, and separation of children from their parents at the Mexican border. Although nationalistic policies are becoming more prevalent across countries, these might have serious implications. The debate about immigrants stealing American jobs or being beneficial to the economy has revealed varied results. Some researchers believe that the important feature of the knowledge economy and a recipe of prosperity is attracting, developing, and integrating smart minds. Other economists, skeptical of immigrants, have also identified its modest impacts (Blanding, 2018).

How has the globalization of US corporations affected Stakeholders and workers around the world? What is the nature of the Power Dynamics between the various countries in this phenomenon?

The most important impact of globalization is that it brings diversity to the stakeholder groups. While some stakeholders may become more influential, the claims of others might erode. With the globalization of the US corporation, the stakeholders transformed into a large and diffused group that was spread around the globe. Within a national market, the economy is limited by borders however, globalization breaks barriers and offers a chance to engage with less visible stakeholders in a less noisy environment as compared to the one produced by the national stakeholders. With the business expanded all over the world, and goods and services becoming international, the focus shifted on the economic survival of the US corporation rather than the purchasing power of workers. Consequently, while the salaries and benefits of such workers have declined, top executives have gained wealth. Since globalization is associated with economic gains, it is considered an important factor in enhancing and establishing oneself as a powerful nation (Reich, 2008). The interdependence between countries is often perceived as an imbalance of authority. Countries such as the United States and China are often engaged in such power dynamics to establish their economic supremacy.

Do you agree with Reich’s comment, “All Americans Used to be in the Same Economic Boat?” Give reasons for your answer.

The statement that “all Americans used to be in the same economic boat” may be considered true during an era when the country was a national economy, rising and falling together. At such a time, the economy, on the whole, could either be deteriorating or flourishing, however, I think that even then everyone was not in the same boat. The rich have enjoyed privilege in every era. Even in a poor economy, the rich are better off as compared to the poor. Additionally, our economies are now no longer defined by national boundaries, therefore, the rich and the poor have disparate experiences. The huge wealth gap and income inequality have resulted in increased discontent. With increased innovation, the rich can enjoy expanded choices while benefits for the poorer Americans are limited. In this age of privilege, everyone is certainly not in the same boat (Reich, 2008).

Expanding on Reich’s analysis of nations emerging from communism, how have these nations’ educational systems been impacted by the trends of Capitalism?

The Communist educational philosophy focuses on the development of polytechnic skills. This teaching model is based on learning about production and getting labour training. Youngsters are provided with work experience during secondary education and above. In contrast, the education system under capitalism is characterized by schools and universities that are advertised for customers to choose from. Under the capitalist view, learning becomes a secondary process. In the countries emerging from communism, the effects of capitalist educational trends were observed in an increased need of these countries for capitalist consultants. From politics to engineering, and public relations to banking, the capitalist impact was seen in every field. The countries emerging from communism realized the importance of skill and insight. These countries actively promoted education to resolve its radical, financial, and moral problems. These innovative educational trends were also imposed onto other nations emerging from communism. The reconstruction of these educational systems adapted them to their local conditions. After World War II, many of the Eastern European countries implemented educational systems that replicated substantial features of Soviet practice. Other nations that were less impacted by the Soviet presence also adopted a great deal from these models of education. The course material that dealt with technical and scientific teachings was part of Soviet translations. Emphasis was placed on teacher training by the development of teacher preparation courses. The focus of these courses was the Russian language, the psychology and pedagogy of the Soviet method, and Marxist-Leninist dialectics. The most important reform to this education system was the secularization of education i.e., embedding the requirements of economic developmental planning into the schools’ outcomes; broadening the educational opportunities, especially for women, youth belonging to the rural areas, and the poor. They also replaced the formal curriculum with one stressing natural science and mathematics for all; and integrated the elements of practical training into school programs (Jeong, 2009).


Blanding, M. (2018, June 25). In America, Immigrants Really Do Get the Job Done. HBS Working Knowledge.

Bleiweis, R. (2020). Quick Facts About the Gender Wage Gap. Center for American Progress.

Jeong, H. Y. (2009). WHKMLA : History of Education in Communist Countries.

Konish, L. (2021, September 30). Here are the changes that could be coming to your Social Security benefits. CNBC.

Petrongolo, B. (2019). The gender gap in employment and wages. Nature Human Behaviour, 3(4), 316–318.

Reich, R. (2008). Why the rich are getting richer and the poor, poorer. In The Way Class Works. Routledge.

The Guardian. (2021, June 3). Apple uses more suppliers from China than Taiwan for the first time, data shows. The Guardian.

Wasik, J. F. (2021). What 4 Big Social Security Changes Should You Know About. Forbes.



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