Income Inequality In The United States

3442 words - 14 pages

Income inequality not only harms us fiscally, but also affects our mental and physical wellbeing; therefore, it is important to identify the right ways to control wealth distribution among people.
Income inequality in the United States has increased and decreased throughout history, but in the recent years, the widening gap has become a serious issue. Income inequality is usually measured by Gini coefficient. According to this method coefficient varies between 0 and 100; while 0 represents complete equality (income is distributed equally among all the population of the country), 100 represents complete inequality (only one person receives all the country’s income, while the rest of the population receives nothing). According to the Census of Bureau, the official Gini coefficient in the U.S. was 46.9 in 2010. This is way higher than the all-time low coefficient of 38.6 set in 1968 (qtd. in Babones).
The first era of income inequality in the United States lasted from post-civil war to around 1937, but in the following ten years income inequality fell dramatically.
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.

Source: “Income Inequality.” (n.d.)
In the years from 1979 to 2009, the top 5 percent witnessed large increases in income, while the lowest-income fifth saw a decrease in real income.
Source: “Income Inequality.” (n.d.)
Between 2009 and 2012, income gains by the top one percent increased by over 30 percent, while for the rest income went up by less than half a percent.
Competition with other countries, corporate greed, tax policies, and technological growth are the primary causes of income inequality.
U.S. companies have to compete with lower-priced Chinese and Indian companies who pay less to their workers. Due to this fact, the U.S. has lost 20% of its factory, traditionally higher-paying union jobs since 2000. In addition to that, service occupations have increased, but workers get paid less. During the 1990s, companies went public to gain more funds to invest on growth. In order to satisfy stockholders, managers are forced to increase profits. Payroll led to less full-time employees and more contract or temporary employees. Recent government tax policies have helped investors more than low wage earners. Since there have been cuts in government regulatory agencies, there are fewer investigations of labor disputes. In addition to that, minimum wage remained the same until 2007. Since inflation increases price on basket of goods and services, lack of wage increase contributes to income inequality due to the value of their money that is decreased over the time. Technological growth also contributes to...

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