Issues with American wealth and income inequality

Over many years, America’s population has been growing at an exponential rate due to our birth rates and the increase of immigrants coming into the US. With the explosion of the population, the United States has become a more diverse country than in our past years. One topic that the book talks about is the inequality of wealth. Income and wealth inequality has only gotten worse over time. In the 70’s, the top one percent only had about eight percent of the national income. According to the book, during the first three years of the economic recovery after the Great Recession of 2008, the top one percent made 95 percent of the gain in national income. With such a huge inequality in our income and wealth, the poverty rate of Americans is enormous with 46.5 million living in poverty. A majority of the impoverished are African Americans taking up 27 percent and Hispanics at 26 percent. How does a country have such a big poverty rate while having what seems to be a luxurious society and a great economy? Well it all ties back into the inequality of wealth and income. Greenberg and Page say that America’s economy is a capitalist one, meaning the productive assets of society are privately owned and most of the decisions on how to use these assets are not made by the government, but by the owners themselves. This allows owners of huge companies to control their price of products, as well as the payment of workers. Why does this matter? Well let’s say that all of the big companies in the United States decide to boost the price of their products while their workers still earn the same minimum wage. This would only allow wealthy people to buy their products leaving the majority of the population unable to purchase anything. In the book, it already explains that the median household income has lagged significantly behind the overall rate of growth in the economy. What this means is that while our economy keeps on growing and things are getting more and more expensive to buy, the income of most Americans largely remains the same. This shows the flaw in the system through the inequality in our wealth. Due to this inequality and how it seems to only get worse, asks the question: “should the government intervene?” The intervention of the government could be a solution to the problem. A possible solution for the government to help reduce the wealth inequality is to create more jobs. They could create more jobs by investing in infrastructure, increase the minimum wage, and/or improve job quality. All three of the possible options could lessen the income inequality.

5 Responses to "Issues with American wealth and income inequality"

Kendall Crispin says:

September 26, 2017 at 12:49 pm

Wealth inequality is definitely a huge problem in the United States. I personally wonder if it has to do with the framers being the ones to create the constitution. They were all wealthy, white men, so they had no intent of creating anything to protect the poor people, or make income even. Wealth inequality also derives from the equality of opportunity. Americans believe that each person has the same possibility of reaching success, so we are less likely to help anyone who isn’t successful, because we believe they brought it upon themselves. This has to do with individualism.

You talk about government intervention, but that would go against the American standard of capitalism. We believe in free markets, private property, and enterprise. Since the majority of people voting are educated and more well off, the government is much more likely to respond to their wants than the wants of the poor who are not voting. Thus, this wealth gap only will increase. In class, we learned that the top 10% has 50% of wages, top 1% has 22% and top 0.1% has 6%. That is an extreme amount for a group of people to have, and it simply isn’t fair. If the government were to get involved, we would have equality of condition, which is forcing things to be the same for everyone, which is more unjust. It is difficult to find a balance, which is one of the reasons this problem still exists today.

When talking about median wealth income, I believe that it hasn’t changed significantly because the people at the top keep making more and more money, which doesn’t change the people in the middle’s incomes. The median income for the US right now is around $56,000, but there are people who make hundreds of millions, which is just crazy to think about. This is also because men and women, as well as ethnic minorities make different incomes. According to Business Insider, “Asian women face the smallest wage gap – they earn 84% of what white men earn, resulting in a pay gap of 16%. White women earn 75% of what white men do, while black women earn 65% and Hispanic women earn 55%.” http://www.businessinsider.com/gender-wage-pay-gap-charts-2017-3/#women-of-color-face-the-biggest-pay-gap-when-compared-to-white-men-2

Overall, I think the income inequality is a problem in America, but solving it will be very hard.
Omar Ibrahim says:

September 26, 2017 at 10:00 pm

At the end of your article you mention government intervention. A topic of hot debate has been whether or not the government should increase the minimum wage. The federal minimum wage changed starting in July 2007 in phased increases. These increases continued until 2009 but have not changed since. It should be taken into consideration that the minimum wage should be annually raised based on inflation and other economic factors.
The purpose of minimum wage is establish a “minimum” standard of living. No one can live on the federal minimum wage of $7.25. Someone who works a full time job on the federal financial is paid around $15,000 annually which is just above the poverty level, and no where near a minimum standard of living. According to Time Magazine around 80% of business owners supported increasing the minimum wage. This may seem like a very high amount but it is very noticeable that minimum wage isn’t get the job done. This is fantastically captured by a fact that says, “an employee earning this salary(75 cents/hour) in 1950 had more buying power than someone making $7.25 an hour today.” The government has been holding back on a well earned raise for the American people since 2009 and it’s about time that this changes.

http://time.com/4870916/congress-federal-minimum-wage/

https://webapps.dol.gov/elaws/faq/esa/flsa/001.htm

https://www.zanebenefits.com/blog/2017-federal-poverty-level-guidelines
Emily Dunbar says:

September 26, 2017 at 10:27 pm

I agree that income inequality is a major issue in the United States, how can people afford to do anything when prices keep rising and the minimum wage stays the same. They can’t, forcing more people to fall below the poverty line. Although you say, that the government should step in and create more jobs, that still does not allow people to make enough money to afford the product that keep rising in price. There may be more people making minimum wage but that does not allow them to buy the increasingly expensive products.

Although you also say, to increase the minimum wage, this can cause many issues. According to “Raising Minimum Wage Is Not The Answer” article from Forbes, raising the minimum wage would in theory lower the rate of poverty, however the idea that employers having to increase the amount they pay their workers would make them lose money which means they would have to lay off workers to survive. If they just increased everyones wages, that does not mean they will increase their revenue, to account for that loss, they would have to decrease the amount of jobs they supply, which still does nothing to eliminate the income inequality. This almost makes things worse, paying few people more money but laying off a large number of workers.

Also, minimum wage is not the only issue, income inequality between races and gender is also a major issue, according to a New York Times Article, “Even College Doesn’t Bridge the Racial Gap.” According to this article, last year, black college graduates earned 21% less than white college graduates, which has increased from 13% in 1979. For black college educated males, they earn 25% less than white college educated males. And lastly the top 5% of black male earners make 47% less than the top earning white male. And for white college educated women, they make 31% less than college educated males. Along with that, black college educated women make 38% less than white college educated males.

These numbers show that even if you increased the number of jobs available, racial and gender income inequalities will still exist and the idea of raising the minimum wage will just decrease the number of jobs available when employers have to resort to laying people off to make their businesses survive. These solutions that you brought up, while they do have some good qualities, most likely would result in the same issues we face today, it is very difficult for the government to intervene without causing more issues along the way.

https://www.nytimes.com/2017/09/20/opinion/college-racial-income-gap.html?rref=collection%2Ftimestopic%2FIncome%20Inequality&action=click&contentCollection=timestopics&region=stream&module=stream_unit&version=latest&contentPlacement=3&pgtype=collection

https://www.forbes.com/sites/johntharvey/2014/07/06/raising-minimum-wage-not-the-answer/#2f76cca55b5c
Lauren Toth says:

September 28, 2017 at 12:47 pm

Wealth inequality has been a largely discussed topic in the past elections for years. Even after the elections, when it is time to change tax brackets and pass other taxes, inequality is a buzz word for everyone. There are different types of inequality; inequality of rights, education, housing, and discussed in this post, wealth. Capitalism was briefly talked about in the post, but what about the ideas of individualism. Every person has the right to be able to work harder and make a better living for themselves. This is described in our political culture and is a large part of our society. In the constitution private property laws and the values of individualism were written so people with less cannot just take what people with more have. I believe this same rule applies here. Yes you have wealthy individuals who have a much higher income than others, but they have (for the most part) worked hard for this wealth. They used their skill to have success in a capitalist free market.

The government has basic policies to help individuals under the poverty line maintain a better life. This is great, but if they were to make more direct policies that take from the wealthy and give to the poor they are infringing on the rights of the wealthy. They are beginning to invade on the wealthy’s individualism and right to be able to work hard and earn more than others. By continuing to fund all these social programs it is infringing on the individualism rights of the wealthy by penalizing them for working and using their skills. Currently, the government maintains 22 programs to help the poor. Most programs that help to advance the skills of the poor are considered failures, while the ones that are just “hand outs” are deemed success. I’m not stating we should get rid of all programs and just leave the poor out to dry, we should just be cautious of individualism and work on creating better programs that actually help, not just magically create a equality of condition for all.

http://www.heritage.org/budget-and-spending/report/do-federal-social-programs-work
Seyoum Settepani says:

September 28, 2017 at 1:55 pm

I agree with what Colby is saying about the income inequality gap being a very important issue in the United States. It is one of those problems that has many moving parts and is not looking to get any better. With that being said the probability of fixing these issues are very difficult because I believe that their are many people that believe that in America those who work hard are given a opportunity to work their way up in social status. Possible government solution is raising the minimum wage however this does put a lot of stress on small businesses that don’t have the ability to pay their workers more. another option is the government providing jobs in infrastructure. this dos not alway work because people don’t like paying more taxes, people are not going to elect a person who’s platform is rising the taxes.

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