All around the glob economic inequality has risen. Economic inequality is the economic gap between the income and wealth of the richest people in the world compared to the poorest. Specifically, in the United States, economic inequality is the highest it has ever been. According to the Organization for Economic Co-operation and Development (OECD), in 2008 the average income of the top ten percent of Americans was nearly fifteen times higher than that of the bottom ten percent (“Social Welfare Issues”). Those numbers have risen even higher today. Some of the causes of this inequality can be traced back to the roots of the mechanisms that were put in place in order to promote economic growth. This information begs the question, should the top one percent of the country be taxed more heavily? Although heavy taxation of the rich may seem like an optimistic economic solution this may, in fact, hinder economic prosperity. Economic inequality is a serious issue that almost everyone in America faces. Causes of this inequality must be explored and understood in order to develop a solution to this economic crisis. One of the major causes of such vast inequality in America today is because the systems that have been implemented to increase economic growth, such as labor unions, have deteriorated. According to Bernstein, Thirty percent of the workforce following World War two were involved in labor unions. This number has slowly decided to around eleven percent today. Between the years 1949 and 1979 America had full employment almost seventy percent of the time. But since then America has only seen full employment thirty percent of the time (Bernstein). In addition to these factors, wage gaps are a big part of the reason for economic inequ... ... middle of paper ... ...ttom. But industry shifts in labor demand away from less educated workers are perhaps a more important explanation of declining wages than the outsourcing of manufacturing. Also, factors putting downward pressure on the wages of less educated workers are increasing global competition and immigration. As well as the decline of the proportion of workers belonging to unions, and the decline in the real value of the minimum wage (Weinberg). All of these factors are what causes the global economy to suffer from inequality. A diminutive percentage of American citizens hold almost half of the public wealth. While taxing this minuscule percentage of people may seem like a solution, this will only continue to hurt the poorer families and benefit the rich.Some of the many effects of this crisis are; lower wages, less education, and a general decrease in the quality of life.
Both Sklar and the Economist offer suggestions to improve the inequality in America, but unfortunately the inequality continues to grow. Sklar’s use of detailed facts about the richest Americans, the poorest Americans and her discussion of the impact on society add clarity to the Economist’s argument that the American dream is broken due to the inequality in America. Until the American government starts to make changes, the problem of inequality will continue to grow.
3. What are the effects of this wealth inequality in the US and what causes it, as well as some possible solutions and their ramifications, will all be discussed and answered below. There has always been a wealth gap between the richest and poorest in society. However, in the past decade, the wealth gap between the richest and poorest citizens in the US has been growing rapidly. In the 70s and 80s, the wealth and income growth rate for both poor and rich people were similar, however, between the years 2009 and 2012 the top 1% income increased 31% while for the bottom 20%, their income actually dropped and for the vast majority of Americans, the average yearly income only increased by 0.4% [4].
Throughout the years, “ U.S income inequality has been increasing steadily since the 1970s and now has reached levels not seen since 1928” (Source A).
Briefly state the main idea of this article: The main idea of this article is that economic inequality has steadily risen in the United States between the richest people and the poorest people. And this inequality affects the people in more ways than buying power; it also affects education, life expectancy, living conditions and possibly happiness. Another idea that he brought up was that the American government tends to give less help to the unemployed than other rich countries.
Political scientists Jacob S. Hacker and Paul Pierson are mentioned in Boom, Bust & Exodus, with a quote saying, “There is more inequality among workers with the same level of skills (measured by age, education and literacy) in the United States than there is among all workers in some of the more equal rich nations.” This is because the elite of the United States have come to value their own businesses for their own financial gain by outsourcing workers in other countries, which then hurts blue collar workers within the U.S. and mistreats as well as underpays the outsourced workers. This is exactly what happens in Boom, Bust & Exodus, where workers of the Maytag appliance plant go out of work because of the company’s decision to move to Mexico for cheaper labour. The workers in Illinois were making approximately $15 an hour, but once the company moved to Mexico, their wages were set to $1.10 an hour. Globalization has deeply affected those in the lower-class, who may be considered as less educated or unskilled to low skilled workers. In the text of Boom, Bust & Exodus, Broughton states, “Rising inequality is less about education gaps than it is about those at the very top of the income distribution pulling away.” The income rates of those who are rich have exponentially increased over the last few decades, while the poor have only become poorer. According to our notes,
The highest earning fifth of U.S. families earned 59.1% of all income, while the richest earned 88.9% of all wealth. A big gap between the rich and poor is often associated with low social mobility, which contradicts the American ideal of equal opportunity. Levels of income inequality are higher than they have been in almost a century, the top one percent has a share of the national income of over 20 percent (Wilhelm). There are a variety of factors that influence income inequality, a few of which will be discussed in this paper. Rising income inequality is caused by differences in life expectancy, rapidly increases in the incomes of the top 5 percent, social trends, and shifts in the global economy.
Between the end of World War II and the late 1970s, income inequality in the U.S. was reduced; but since 1970s, the situation with wealth distribution has changed. Data from tax returns in 1976 show that the top 1 percent of households received 8.9 percent of all pre-tax income. In 2008, the top 1 percent’s share had more than doubled to 21.0 percent.
Income inequality in the United States, as of 2007, has reached levels not seen since 1928. In 1928, the top one percent received nearly 24% of all income within the United States (Volscho & Kelly, 2012). This percentage fell to nearly nine percent in 1975, but has risen to 23.5% as of 2007 (Volscho & Kelly, 2012). Meanwhile, in 2007 (see
Inequality exist and is high in America because the amount of income and wealth that is distributed through power. In America the income distribution is very inequality and the value of a person wealth is based on their income with their debts subtracted. “As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers)” (Domhoff, 2011). In contrary the poor do not get ahead and the rich get more. Americans are judged and placed in class categories through their home ownership which translates to wealth. Americans social class is often associated with their assets and wealth. “People seek to own property, to have high incomes, to have interesting and safe jobs, to enjoy the finest in travel and leisure, and to live long and healthy lives” (Domhoff, 2011). Power indicates how these “values” are not distributed equally in American society. Huge gains for the rich include cuts in capital gains and dividends and when tax rates decrease for the tiny percent of Americans income is redistributed. Taxes directly affect the wealth and income of Americans every year.
America’s upper class has been getting richer since the past three decades, and we have still not found a way to stop this. We have been unable to find a way to distribute America’s wealth equally, so we can have a decent lower class and a good middle class. Inequality has caused many people to struggle in various ways, but their is alway another side to the story.
Income inequality has affected American citizens ever since the American Dream came to existence. The American Dream is centered around the concept of working hard and earning enough money to support a family, own a home, send children to college, and invest for retirement. Economic gains in income are one of the only possible ways to achieve enough wealth to fulfill the dream. Unfortunately, many people cannot achieve this dream due to low income. Income inequality refers to the uneven distribution of income and wealth between the social classes of American citizens. The United States has often experienced a rise in inequality as the rich become richer and the poor become poorer, increasing the unstable gap between the two classes. The income gap in America has been increasing steadily since the late 1970’s, and has now reached historic highs not seen since the 1920’s (Desilver). UC Berkeley economics professor, Emmanuel Saez conducted extensive research on past and present income inequality statistics and published them in his report “Striking it Richer.” Saez claims that changes in technology, tax policies, labor unions, corporate benefits, and social norms have caused income inequality. He stands to advocate a change in American economic policies that will help close this inequality gap and considers institutional and tax reforms that should be developed to counter it. Although Saez’s provides legitimate causes of income inequality, I highly disagree with the thought of making changes to end income inequality. In any diverse economic environment, income inequality will exist due to the rise of some economically successful people and the further development of factors that push people into poverty. I believe income inequality e...
The gap in wealth between the rich and the poor continues to grow larger, as productivity increases but wages remain the same. There were changes in the tax structure that gave the wealthy tax breaks, such as only taxing for social security within the first $113,700 of income in a year. For CEOs this tax was paid off almost immediately. Free trade treaties broke barriers to trade and resulted in outsourcing and lower wages for workers. In “Job on the Line” by William Adler, a worker named Mollie James lost her job when the factory moved to Mexico. “The job in which Mollie James once took great pride, the job that both fostered and repaid her loyalty by enabling her to rise above humble beginnings and provide for her family – that job does not now pay Balbina Duque a wage sufficient to live on” (489). When Balbina started working she was only making 65 cents an hour. Another huge issue lies in the minimum wage. In 2007, the minimum wage was only 51% of the living wage in America. How can a person live 51% of a life? Especially when cuts were being made in anti-poverty and welfare programs that were intended to get people on their feet. Now, it seems that the system keeps people down, as they try to earn more but their benefits are taken away faster than they can earn. Even when workers tried to get together to help themselves they were thrown
Income inequality has been a big factor for many years; Americans hold the wealthy, mostly responsible because of their irresponsible obligations of the economy, stimulated to some degree by rising inequality. Taxing the wealthy does not seem to be the most undeviating resolution to these problems, however putting the economy back on track through justifiable growth does. Americans support guideline laws, job development, fair pay, and education opportunities. Mostly Americans care about opportunities, previously stated, and not income inequality, which was the wrong route to go down. Inequality can itself twist incentives and limit opportunities. This income inequality eventually leads to recessions and depressions. The non-awareness of Americans for income inequality is from chasing opportunities that are not there instead of standardizing the income
Income inequality continues to increase in today’s world, especially in the United States. Income inequality means the unequal distribution between individuals’ assets, wealth, or income. In the Twilight of the Elites, Christopher Hayes, a liberal journalist, states the inequality gap between the rich and the poor are increasing widening, and there need to have things done - tax the rich, provide better education - in order to shortening the inequality gap. America is a meritocratic country, which means that everybody has equal opportunity to be successful regardless of their class privileges or wealth. However, equality of opportunity does not equal equality of outcomes. People are having more opportunities to find a better job, but their incomes are a lot less compared to the top ten percent rich people. In this way, the poor people will never climb up the ladder to high status and become millionaires. Therefore, the government needs to increase all the tax rates on rich people in order to reduce income inequality.
A widening income gap can impede the development of a country's consumer markets as purchasing power becomes concentrated among a small elite. Higher income inequality can also result in non-income disparities such as health and education, thus hindering a government's effort to invest in these areas