The income gap has spread from individuals to businesses, largely due to low-level employees being reclassified as independent contractors. When companies contract out low-paying jobs instead of hiring employees and promoting them, these low-level employee never get a chance to become high-level employees.
For example, General Electric has employed roughly the same amount of people since the 1960s, but the average salary has increased almost 40%. Over that time General Electric has eliminated low-level employees and instead started started hiring high-paying engineers and coders. In place of the low-level employees, GE started using independent contractors.
This trend has created an income gap between businesses. In 1980, the average salaries of the highest paying companies was roughly $45,000 and the lowest paying companies was roughly $22,000. In 2010, the highest paying companies now pay almost $80,000, while the lowest paying companies pay almost $25,000. This trend is caused by exactly the same thing General Electric is doing: Getting rid of low-level employees and hiring highly-skilled workers. Thus, the low-level employees get trapped in the low-paying companies as independent contractors, and the cycle repeats. What do you think about "indepenent contracting"?
- Does the trend of contracting vs. hiring increase the income inequality?
- Should independent contracting be regulated? Or even eliminated?
- Do you think this has a strong effect on the overall income gap?
- Will this create a further divide in the job market?