How Did the Distribution of Wealth in The United States

How Did the Distribution of Wealth in The United States Change


How Did the Distribution of Wealth in The United States Change Due to Industrialization in The Late 19th Century?


The context of wealth distribution has changed many times in history. Many factors have resulted in changes in wealth distribution, and industrialization was among the significant factors. Industrialization brought technological advancements to the national economy of the United States in the late 19th Century.

1. Widening of wealthy people bracket

One way industrialization changed the wealth gap in the United States was by widening the bracket of wealthy people. Before the industrialization, wealth was concentrated in the hands of a few.

Prior to industrialization, most American families lived on farms. They could work on these farms and make their daily livelihood.

By default, it made elites with lands and plantation owners the wealthiest. These could employ people to work on their farms, exploit cheap labour and make substantial products on sales of their farm produce.

When industrialization got enough traction, there was significant growth in American cities. Cities like New York and Baltimore, which were started before industrialization, experienced most of their growth during this time.

With urbanization, new career opportunities came in calling. Young Americans started travelling to these cities for better-paying jobs than they could earn working in farms and plantations. This migration to urban cities where there were factories started creating a flourishing middle class among Americans. With time, the bracket of wealthy Americans had significantly widened.

2. Increased wealth inequality gap

The second way industrialization changed wealth distribution in the United States was by widening income inequality. Wealth inequality was there before industrialization, but this was the first time in America’s history when wealth inequality grew sharply.

Not everyone was lucky in a revolution that created well-paying job opportunities for many. Those still working on plantations were paid less than they would earn before industrialization. This was due to the lower sales proceeds of farm produce and landed elites had to reduce their expenditure of farm labor.

The lower profits from farm produce were contributed by increased competition by farm produce from mechanized farms. These farms would produce in large quantities and at lower costs using machines. They could sell at lower prices than farmers who relied on human labour. This posed stiff competition for farmers who utilized human labour, forcing them to lower the prices of their farm produce in the quest to compete with mechanized farmers.

To put this into perspective, industrialization brought two divides among America’s population. Some were securing new and better job opportunities in cities and factories. On the other hand, those on dwindling wages were still working on farms and plantations.

This divide resulted in an inevitable widening gap in wealth inequality. Those who were not lucky to find better jobs in cities, their economic status suffered adversely even further.

Industrialization brought with it racially discriminatory employment practices. Racial discriminatory practices in employment disadvantaged immigrants and favoured native-born Americans. Native-born Americans secured most job opportunities in factories and big cities. They were awarded higher salaries and promotion opportunities than racial minority workers like African immigrants.

3. Rise of powerful business magnates

Before industrialization, America’s economy was literally anchored on agriculture. With industrialization, things changed altogether. Industries like finance, steel and oil emerged and flourished rapidly. This rapid expansion of these non-agricultural industries created business magnates and very powerful industrialists like never before in America’s history.

This era was when business magnates like John D. Rockefeller were born and flourished into prosperity. Such individuals became among the richest in the modern history of mankind. These business magnates mastered the art of horizontal and vertical integration to amass their wealth and keep power, influence and control in their hands.

Business magnates like Andrew Carnegie became wealthy through vertical integration in the steel industry.

Andrew Carnegie was yet another business magnate who became one of the most successful industrialists in the steel industry. As an immigrant, he was a shrewd businessperson who was very sharp in his judgment of business matters. His success and judgement in the steel business was the founding father of the concept vertical integration.

4. Shift in economic status

Before industrialization in the United States, there were some glorified artisan skills, and anyone with them earned lucratively. For instance, clockmakers had a high economic status. This was due to their ability to make clocks that could help elites and other influential people to keep their time.

Industrialization enabled the mass production of clocks, clothes and infrastructure on a large-scale basis. This changed the economic status from individuals with artisan skills to the founders of companies manufacturing these products on a large-scale commercial basis.

Industrialists who leveraged technology during industrialization to displace traditional artisans took over the economic status of those they displaced. As craft-based industries and professionals suffered more and more, the economic power of corporations leveraging technology back then grew sharply.

Related Articles: