Of the options given in this question, the best choice is the second; a decrease in demand for highly skilled workers in the labor force has helped contribute to inequality.
We can see this partly because none of the other options can be true. International competition has increased over the past few decades. Unions have lost power. The baby boomers were not less skilled and, even if they were, the last of the official baby boomers would have been entering the work force in the mid-1980s.
As global competition has grown and America has become less industrial, demand for skilled workers has dropped. Our economy has been divided into “haves” (those who have mainly knowledge-based jobs) and “have-nots” (who work largely in low-paid service sector jobs).