Heimler's History: Changes in the American Economy (1980-Present)

Overview

• Focus on the transformation of the American economy through technology and global economic participation from 1980 to the present.
• Key objective: Explain causes and effects of economic and technological changes over time.

Rise of Digital Technology

• Origins of Computers

  • 1946: Computers were large and required substantial space.
  • Technological innovations (transistors, microprocessors) reduced their size.
  • 1977: Apple introduced a home computer; IBM followed with PCs in the 1980s.
  • By the end of the 1980s, PCs were common in workplaces.

• Impact of the Internet (1990s)

  • Enabled global access to information and communication.
  • Changed aspects of American life, especially in workplaces and the economy.
  • Email replaced traditional letters and memos.
  • File sharing (e.g., Napster) reshaped the music industry.
  • Online retailing (e.g., Amazon.com) led to the decline of physical stores.

Economic Impact

• Increased Productivity
  • Starting in 1995, digital advancements boosted productivity.
  • Global communication facilitated by the internet improved economic health.
• Standard of Living
  • Despite productivity gains, expected improvements in living standards did not materialize due to:
    • Changing nature of work.
    • Growing income gap.

Changes in the Workforce

• Decline of Manufacturing

  • Sharp decline in American manufacturing since the late 20th century.
  • Increased outsourcing to countries like China due to free trade agreements (e.g., General Agreement of Trade and Tariffs, 1994).
  • Decline in labor union membership (35% in 1954 to about 12% today).
  • 1981: Reagan's pro-business policies, exemplified by firing striking air traffic controllers, weakened unions.

• Rise of the Service Sector

  • Service sector jobs (education, legal services, food service, etc.) increased.
  • Service sector accounts for about 71% of American jobs today.
  • Most tangible goods are manufactured overseas, particularly in China.

Income Inequality

• Wealth Disparity
  • Wealth of the top 1% increased by 275% (1979-2007), compared to a 40% rise for the middle 60%.
  • Contributing factors:
    • Outsourcing of manufacturing jobs, rise of low-wage service jobs.
    • Tax code restructuring under Reagan favoring wealthy earners.

Conclusion

• The digital revolution fundamentally altered the American economy, with ongoing impacts.
• Emphasis on understanding changes for academic success in AP U.S. History.