Income inequality today

Income inequality has always existed. The likes of John D Rockefeller, J.P. Morgan, Cornellius Vanderbilt and on and on have always dotted not only American society, but most countries of the world. Today the issue in our country is a matter of degree.

The extraordinary income disparity which we experience now could be attributed to greed and avarice, which have been around since the beginning of time. In my view the current extremes between the haves, the struggling and the have-nots are inherent in the impact of computerization in two modes.

The computer has not only made it easier for companies to engage in acquisitions and mergers, but far more profitable. An excellent example of this is the banking industry. In 1933, there were 30,000 banks in America. Today, through mergers and acquisitions, with a much larger population and economy there are about 7,500 banks. This could not have been accomplished without extensive computerization. So Chase Bank acquired JP Morgan, Manufacturers Hanover, Washington Mutual and Chemical, which creates what are called “redundancies”; unecessary employees. Many of those who are caught up in such an overall reduction in force are those who held good-paying positions requiring judgment and seasoned experience. Jobs requiring those qualities tend to be the well-salaried jobs. Computerization is gobbling them up. 

Many companies today are making a tradeoff between the computer and human judgment outside the environment of acquisitions and mergers. An example of this is the department store industry as particularly represented by Macy’s.  Up until 2008 there were five separate department store divisions, each with a central merchandising and operating staff. In 2009 Macy’s eliminated 7,000 high-paying executive jobs by doing away with these divisions and opting instead for an extensive and sophisticated computer system centralizing these functions.  They essentially traded off the experience and judgment of 7,000 executives in favor of computerization. I bring Macy’s up as an example, but they are most certainly not the exception.  

Computerization is for better or worse, and due to degree, in many cases worse, replacing human judgment.  Good-paying careers with a promising career path are generally those that require judgment and experience.  Far too often industry is trading that off for computerization. 

Organizational charts are beginning to look less like a pyramid and more like an upside-down martini glass.

Howard Ring lives in Riverdale.