9.4 A Changing Economy

Globalization & Post-industrialization

The rise of globalization in the late 20th century continued to affect the United States’ economy as it became more and more enmeshed with the rest of the world. Some jobs went overseas and US companies became even larger multinational corporations. 

The United States was the world’s manufacturing powerhouse during the late 19th and early 20th centuries, but this began to change after the 1950s and 1960s. The US economy in the 1980s continued to lose industrial jobs as more manufacturing jobs went overseas or became automated. This transition into a post-industrial economy especially hurt industrial cities in the midwest like Pittsburgh, Toledo, Detroit, and Gary. They made up the new Rust Belt, a term that describes their downgraded status as factories closed and fewer and fewer unionized, blue-collar jobs were available. This increased demand for post-secondary education (college or university) since booming fields like healthcare, finance, or computing often required BA or BS degrees. 

The Digital Age

While the shifting US economy hurt sectors of workers in manufacturing towns and other blue-collar areas, the economy as a whole did well during the 1980s and 1990s. This was partly thanks to a new focus on digital companies like Apple and Microsoft that increased automation and digital workflows in factories and companies. More and more people began to use the internet, which went public in 1991 in the form of the World Wide Web—why websites sometimes begin with “www.” Desktop computers began affordable and then ubiquitous. 

While not unfamiliar, you should know some of the more recent digital inventions and trends and how they changed American society and the US economy as a whole. Email, the internet, and cellular phone continued and accelerated globalization and enabled new working patterns like tele-commuting. Sites like Amazon, Ebay, and Paypal all changed the way people shopped and paid, often to the detriment of brick-and-mortar stores; malls began to fade away or adapt by the 21st century. Social Media sites like MySpace, Xanga, Facebook, Twitter, and Instagram changed how people connected and communicated and even dated (see Tinder and Match.com). They also changed the media and more and more media began to be consumed online instead of in print: long-running newspapers and magazines developed digital presences or failed. Some websites like pets.com failed in 2000 in the so-called Dot Com Bubble as early internet commerce was risky and new. 

Two inventions require a bit more detail. Cell phones, and later smartphones (the iPhone was first launched in 2007 by Apple) continued the trend toward more instant gratification and less privacy, but they also increased connection and changed the definition of loneliness and solitude. Cell phones also changed how Americans drove: it started with the popularity of car phones in the 1980s and led to problems with texting and driving or Pokémon Go and driving during the 21st century. 

Growing Income Inequality

The effects of the unstable economy in the 1970s and then the deindustrialization and deregulation of the 1980s and 1990s meant that the US economy did really well for some people and failed to help others. Economic inequality increased as real wages for the working and middle classes stayed largely the same—when adjusted for inflation—from the 1970s through the 21st century. 

The causes of this are many and debatable, but some saw the Reagan and Bush (43) tax cuts as examples of policies that benefited the rich and left the rest behind. The transition into a post-industrial economy meant that many working and middle class people could no longer have union-protected, steady jobs. The jobs that replaced those manufacturing jobs were often minimum-wage service sector jobs. The federal minimum wage also failed to keep up with inflation: it was the highest in 1968, when it was $1.60/hour, which, adjusted for inflation, would have been about$12/hour in 2019. In fact, if the minimum wage in 1968 had kept up with the increasing productivity growth in the next few decades, it would have reached $19.33 by 2017. 😳

Finally, racism often played a role in economic inequality, with the the racial wealth gap continuing to grow (medians of $110,000:$7,000 for White and Blacks, respectively, in the most recent post-2010 recent data) and economic downturns like the 2008/2009 Great Recession often hurting minorities the most, partly thanks to predatory loans from banks that targeted minority communities. 

This wealth inequality existed on an international scale too: the World Trade Organization (WTO) was established in 1994 to oversee trade agreements, but critics attacked it for increasing globalization, global wealth inequality, and favoring developed nations like the US. The US and other advanced economies formed international cooperative organizations like the Group of 8 (G8) in 1997 and included more emerging economies like China, India, and Saudi Arabia in the Group of 20 (G20) in 1999. 

Trade Relations

Over the past 50 years, the United States has had a complex and evolving relationship with other countries when it comes to trade. In the early 1970s, the United States was a major player in the global economy, and it had a number of significant trade relationships with other countries. In the late 1970s and early 1980s, the United States was led by President Jimmy Carter, who implemented a number of trade initiatives, including the creation of the Department of Trade and the negotiation of a number of free trade agreements.

In the 1980s and 1990s, the United States was led by President Ronald Reagan, who implemented a number of trade initiatives, including the negotiation of the Canada-United States Free Trade Agreement and the North American Free Trade Agreement (NAFTA). These agreements helped to increase trade between the United States and its North American neighbors, and they helped to stimulate economic growth in the region.

In the early 21st century, the United States was led by President George W. Bush, who implemented a number of trade initiatives, including the expansion of free trade agreements with countries in Latin America and Asia. The Bush administration also supported the creation of the World Trade Organization, which helped to facilitate trade between countries around the world.

In 2009, President Barack Obama took office and implemented a number of trade initiatives, including the negotiation of the Trans-Pacific Partnership (TPP), a free trade agreement with countries in the Asia-Pacific region.

In 2017, President Donald Trump was elected to office, and his presidency has been marked by a number of significant changes in American trade policy, including the withdrawal from the TPP, the renegotiation of trade agreements with countries like Mexico and Canada, and the implementation of tariffs on a number of imported goods.

Overall, the past 50 years have seen significant changes in American trade relations with other countries, with a number of different presidents implementing a wide range of trade initiatives.