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Income Inequality in America, Essay Example

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Income Inequality in America. Is it a problem and how can it be fixed?

The fact that income inequality is a problem in the United States is undeniable. Claims of the widened income gap between rich Americans and poor Americans, in addition to the diminishing middle class, is a cause for concern (Yates 1). The income inequality is one of the worse political and economic problems the United States faces (Piketty and Saez 1-3). It causes significant problems to social and political stability. It is also an indicator of national decline. Indeed, it is based on this premise that, this essay examines whether income inequality in America is a problem, as well as how it can be fixed.

Income inequality leads to political change. As Saez and Zucman (1-6) explain, loss of income by the middle class compared to the top-earners leads to political change. During the 2000s, many businesses emerged seeking political offices, as they catered for nearly 30 times more employees than the trade unions. Between the year 2000 and 2010, business interest groups spent $492 million on labor, and nearly $28.6 billion on sponsoring activism. This led to the rise of political setting the business groups dominated (Smith 3-5).

Income inequality has adverse effects on democracy. Some scholars have considered that income inequality is not compatible with real democracy (Milanovic 1). This is since creating a disparity between wealthy and poor is historically the main cause of most revolution. Indeed, it is commented that the political system in the United States faces serious threats of drifting towards a kind of oligarchy by influencing the affluent, corporations, and special interest groups. Even though, income inequality may not have impact on economic growth, the action by the government may reduce the current levels. This raises tax rates on the wealthy. It may also cause political dispute or friction – between the poor and the rich.

Income inequality contributes to national poverty. Greater income inequality is likely to encourage greater rates of poverty, as under such situations, income shifts from those in the lower income bracket to those in the upper-income bracket. Saez and Zucman (1-6) argue that when wealth remains in upper income bracket, it may lead to political revolutions and policy reforms to offset the impacts that induce poverty. This has been the trend over the decade (Economist 1). The gap in earnings has also increased over the past five years. Current statistics from the U.S. Census shows that in 2010, the wealthiest 20 percent of entire households was allocated 50.2 percent of the sum household-income, compared to the poorest 20 percent, which received 3.3 percent. In the 1980s, the income shares of the richest households received 44.1 percent. The poorest got 4.2 percent. This shows rising inequality and poverty. Further statistics indicates that individuals in the least-affluent households lost nearly 21.4 percent of their income share. On the other hand, the most-affluent households witnessed an income rise of nearly 13.8 percent. Conversely, the remaining two poorest quintiles lost income (Economist 1).

Income inequality leads to political polarization. As Political Research Quarterly establishes, income inequality is connected to the current political polarization in the United States. In its 2013 study, Political Research Quarterly established that officials who were elected tended respond to the whims of the officials within the upper-income bracket, as a result ignoring the needs of people within the lower income group. The analysis provided by Martin and Harris (1) show that, income inequality is connected to the extent to which the House of Representatives polarization has always voted.

Income inequality also leads to social stratification. Martin and Harris (1) show that class divisions have mainly resulted due to income inequality. This has led to class warfare where the rich rally around the rich and the poor rally around the poor to gain political emancipation. Hence, the rich tend to create an own virtual country, which in their perception should be a self-contained world that is complete with first-rate social services, separate economy, and infrastructure. Indeed, the gap between poor and the rich is widening more in the United States than most advanced country. A growing consensus, for that reason, is that Americans have placed emphasis on pursuing economic growth instead of income redistribution. This argument is supported by current economists, such as Corak (2013) in his analysis of theorist Alan Krueger’s “Great Gatsby Curve.” In his review, Corak (2013) indicates that nations with greater income inequalities also tend to have a greater proportion of economic advantages and disadvantages. The trend is passed on from parents to their offspring.

On the other hand, some political theorists have argued that income inequality is not a problem, and that the problems have been overstated.

Indeed, Saez and Zucman (1-6) perceive that despite the existence of income inequality, economic growth and equality in terms of getting opportunities should be what matters. Some commentators have also expressed that despite being an American problem, it is also a global problem. As a result, it should not trigger significant policy reforms. Others have also expressed that income inequality has some underlying advantages, leading to a well-functioning and competition-driven economy. Additionally, significant policy reforms to cut out income inequality may lead to policies that lessen the welfare of the more affluent individuals.

A section of researchers also argues that there is no basis in the argument that income inequality slows economic and socio-political growth. Responding to claims that income inequality slows economic and socio-political growth, Petryni (1) argues that inequality is healthy within a free market economy, as it promotes greater competition for economic and political opportunities.

At the same time, wealth inequalities tend to compensate for themselves where an extensive increase in wealth occurs. This also implies that since the income inequalities do not pose significant political or economic problems, forced wealth transfers through taxation may obliterate the income pools needed to create new ventures, leading to further political discord between the poor and the wealthy in the society. Indeed, some recent studies have established a link between high marginal tax rates on high-income earners and greater growth in employment (Petryni 1).

Some political and social theorists also perceived income inequality as valuable and natural characteristic of US economy. The American Enterprise Institute sees the growth of income inequality gap as linked to the growth of opportunities—including the motivation and desire to seek political and social emancipation.

Smith (1) further contends that inequality emanates from the growth of economic prosperity and leads to an improved standard of living of the entire US population. Such incomes, Milanovic (1) argues, are a way of rewarding certain actors in the economy for their maximal investment efforts in the future. Towards this end, therefore, suppressing inequality discourages output and pursuit of political emancipation.

Conclusion and recommendations

Largely, income inequality is a problem in the United States. Income inequality contributes to national poverty. It also has adverse effects on democracy. Further, it leads to political change. Income inequality also leads to political polarization and stratification.

Hence, there is a need for more advanced tax and transfer policies that can align the United States with the other developed nations. This requires tax reforms, such as enacting tax incidence adjustments, subsidizing healthcare and increasing the social security, heavy investment in infrastructure, fortifying labor influence and providing higher education at low costs.

Making education available to more Americans through policies that subsidize cost of education will mean that more Americans have an opportunity for better income. This is since individuals with high education qualification report lower unemployment rate. However, equal job opportunities are also crucial. Public expenditure on welfare should be increased to ensure social and economic security, where the government provides subsidized healthcare. The more affluent members of the society should also be taxed higher than, the poor Americans.

Works Cited

Corak, Miles. “Income Inequality, Equality of Opportunity, and Intergenerational Mobility.” Journal of Economic Perspectives 27.3(2013): 79–102

Economist, The. “The rich, the poor and the growing gap between them,” 2006. 11 April 2015, <http://www.economist.com/node/7055911>

Kenworthy, Lane. “Does More Equality Mean Less Economic Growth?” 2007, <http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/>

Martin, Jonathan and Harris, John. “President Obama, Republicans fight the class war.” Politico, 2012. <http://www.politico.com/story/2013/04/barack-obama-class-warrior-90052.html>

Milanovic, Branko. “More or Less.” International Monetary Fund, 2011.

Petryni, Matt. “Advantages & Disadvantages to Income Inequality.” n.d. 11 April 2015, <http://www.ehow.com/info_11415987_advantages-disadvantages-income-inequality.html>

Piketty, Thomas and Saez, Emmanuel. “Income Inequality In The United States, 1913–1998.” The Quarterly Journal Of Economics 28.1 (2003): 1-39

Saez, Emmanuel and Zucman, Gabriel. “Wealth and Inequality in the United States Since 1913: Evidence from Capitalised Income Tax Data.” National Bureau of Economic Research: Cambridge: 2013

Smith, Hedrick. “Who Stole the American Dream.” Random House: New York, 2012. < http://newshare.com/ruleschange/book-notes.pdf>

Todd, Michael. “The Benefits of Wealth Inequality (and Why We Should Not Fear It).” Pacific Standard , 2013. <http://www.psmag.com/business-economics/benefits-wealth-inequality-now-fear-67567>

Yates, Michael. “The Great Inequality.” Monthly Review 63.10 (2012)

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Human Rights Careers

Income Inequality 101: Causes, Facts, Examples, Ways to Take Action

Billionaires are increasing their fortunes by $2.7 billion every day . Meanwhile, at least 1.7 billion workers live in areas where inflation is higher than wages. Income inequality is a global problem. It has several consequences, including financial crises, fragile economies, high inflation, poorer health outcomes, and violence. In this article, we’ll explore what causes income inequality, what it looks like, the most important facts everyone should know, and how to address it.

Income inequality is a global issue with several causes, including historical racism, unequal land distribution, high inflation, and stagnant wages. As gaps increase thanks to crises like COVID-19, the world needs to take action in education, labor market policies, tax reforms, and higher wages.

What is income inequality?

When some people in society earn significantly more than others, it creates inequality. Inequality is more than just about the paychecks we take home, however. There’s also wealth inequality, which refers to uneven distributions of wealth. This includes the value of assets and possessions like stocks, property, boats, and so on. Someone may earn a lower income than a neighbor, but because they own stocks and land, they’re wealthier.

Income inequality is measured with factors like gender, ethnicity, location, historical income, and occupation. When identifying a country’s income inequality, there are measurements like the Gini index , which is also called the Gini coefficient. A score of 0 on the index means there’s no deviation; everyone is perfectly equal. A score of 100 means total inequality; a single person has all the country’s wealth. The index isn’t perfect . As Amanda Shendruck points out, Greece, Israel, Thailand, and the UK got the same score in 2015. However, poverty in these countries looks very different. The World Inequality Database avoids the index altogether. On its own, the Gini index may not be especially useful, but it can provide a quick snapshot that encourages more investigation.

The causes of income inequality: two case studies

There are global and country-specific factors that drive income inequality. To get a clearer idea of the causes, let’s look at two countries as examples: South Africa and the United States.

South Africa: The long shadow of apartheid and land ownership

Based on the Gini index, South Africa has the world’s highest income inequality at 63.0 . Apartheid is a big reason why. For almost 50 years, this formalized racial segregation restricted the activities and movements of Black South Africans, who made up most of the population. Black Africans couldn’t marry white people, travel without passbooks, or start businesses in white areas. Society was structured to uplift white people while trampling Black South Africans. When apartheid ended in the 1990s, inequality remained baked into the country’s foundation. South Africa has struggled to make progress on ending inequality. According to a 2022 World Bank report , the top 10% of South Africa’s population holds 71% of all income. Living in or near cities increases job opportunities, but South Africa’s growth has stalled and failed to create enough jobs. High unemployment is a significant driver of inequality, especially for young people.

Gender, race, and land ownership are three other main causes. In South Africa, women earn 38% less than men even when they have similar education levels. When race gets added to inequality analyses, it contributes 41% to income inequality. The World Bank report also studied land ownership, which is vital for addressing inequality among poor people in rural areas. Because of apartheid, there’s a long history of unequal land distribution which hasn’t been remedied yet. COVID-19 made all these factors worse.

The United States: The legacy of slavery and stagnant wages

The United States isn’t among the top most unequal countries in the world, but it has a much higher Gini coefficient when compared to similar economies. According to Statista , the top 10% of earners in the United States (in the third quarter of 2022) held 68% of the country’s total wealth. The lowest 50% held just 3.3.%. Like South Africa, the United States’ history of racial segregation plays a big role. Slavery made it impossible for Black people to build wealth, but even after emancipation, Jim Crow laws severely restricted economic opportunities. The effects resonate to this day. A 2018 analysis of incomes and wealth found that over the past 70 years, there’s been no progress in reducing income and wealth inequalities between Black and white households.

Inequality is also driven by the fact that wages haven’t kept pace with inflation. In June 2022, consumer prices hit 9.1% higher than the year before. This made it the largest annual increase since 1981. Wages have been going up, but they’ve been consistently at 4.5%. The federal minimum wage hasn’t increased since 2009: it’s just $7.25. A study found that in 91% of U.S. counties, a full-time minimum wage worker doesn’t make enough to afford a one-bedroom apartment rental.

What are the five main facts everyone should know about income equality?

There’s a lot to sift through when it comes to income and wealth inequality, but here are five of the most important facts to know:

#1. Inequalities within countries are getting worse

While global inequalities between countries are lowering, the gaps within countries are increasing. According to the World Inequality Database’s 2022 report , the gap between the average incomes of the bottom 50% and the top 10% of individuals has nearly doubled in the past two decades. The World Inequality Database frames it this way: “global inequalities seem to be about as great today as they were at the peak of Western imperialism in the early 20th century.”

#2. COVID-19 is erasing progress

According to groups like the IMF , COVID-19 is worsening inequalities within countries (the poor were hit harder than the rich), but also between countries. Wealthier countries had more resources to deal with the pandemic and could recover faster. According to the World Bank , progress was set back by about a decade.

#3. Inequality hits already-disenfranchised people the hardest

Income inequality is an intersectional issue. It affects disenfranchised groups like women, young people, informal industry workers, the elderly, and disabled people the most. As income inequality worsened in the UK , the disposable income for the poorest â…• of the population dropped by 3.8%. The average income for retired households also went down from ÂŁ26,300 to ÂŁ25,900.

#4. Over the last decade, the world’s richest 1% have gotten 54% of new wealth – and they’re getting richer

According to an Oxfam report , the world’s richest 1% captured $42 trillion of the new wealth created between December 2019-December 2021. $16 trillion got distributed to the bottom 99%. While the pandemic hit the poor the hardest, the world’s richest actually gained wealth. There was a slight dip in 2022, but in 2023, their wealth is increasing yet again.

#5. Income inequality is linked to climate change

Every year, humans emit around 6.6 tonnes of carbon dioxide equivalent per capita. However, the top 10% of emitters are releasing around 50% of all emissions. The bottom 50% are producing just 12%. Why does this matter to income inequality? The world’s biggest emitters are rich. While many of the world’s poorest countries emit significantly less CO2 , they’re enduring the worst climate change effects. Even within rich countries, the poorest half of the population have already met (or are close to meeting) the 2030 climate targets set by their nations. It’s the rich who need to change.

How to take action on income inequality

Income inequality is a deeply-entrenched, global problem that will take lots of work. Here are three ways countries can take action:

#1. Pay a living wage

Many countries are raising wages, but they’re not raising them enough to close income gaps. That’s why minimum wages need to be higher. In an article on the World Economic Forum about fair wages , the global director of human rights at Unilver emphasized the need for living wages. These are calculated based on what it takes to afford a decent standard of living. Currently, minimum wages in many countries don’t reflect reality. The United States is an example as its minimum wage won’t cover rent on a one-bedroom apartment.

#2. Invest in good public education

Study after study shows the positive impact of good public education. According to a report from Oxfam , a good education can reduce poverty, increase opportunities, and encourage a more democratic society. Education also improves gender equality, which is key to closing income inequality gaps. To successfully address income inequality, education must be universal, free, and public. If it isn’t, education can make inequalities worse as it divides students by traits like race, gender, and wealth.

#3. Make tax systems more redistributive

According to the IMF , addressing inequality more redistributive tax systems. What is a redistributive tax system ? It’s a system where high-income people pay higher taxes (positive taxes) and lower-income people receive more subsidies. In places like the United States, where legislation has designed tax codes to benefit corporations and the wealthiest individuals , wider inequality has followed. The rich are also allowed to get away with more. In 2014-2016, the IRS – which is famously underfunded – didn’t pursue over 300,000 high-income individuals who failed to file tax returns. If countries want to tackle inequality, their tax systems should be designed to help rather than make things worse. That includes spending more on social sectors like education, health, and social protection.

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The Impact of Economic Inequality: 4 Best Essay Examples to Inspire Your Writing

Economic inequality, a fundamental issue affecting societies globally, resonates profoundly across various academic fields and public discourses. Understanding and addressing this problem is crucial for a brighter, more equitable future. If you're set to write an essay on this compelling topic, you're in the right place. We’ll explore how to craft a well-researched, cogent essay on economic inequality by presenting four exemplary essays, shedding light on the topic's complexity and significance.

  • What is Economic Inequality?

Economic inequality refers to the uneven distribution of wealth and income among individuals and groups within a society. This disparity can manifest in numerous ways, including wage gaps, access to education and healthcare, and overall living standards. Understanding these facets is essential for any essay exploring the topic's breadth and impact.

Causes of Economic Inequality

  • Educational Disparities : Access to quality education can vary drastically, influencing individuals' earning potential and job opportunities.
  • Technological Advancements : Automation and the digital revolution have displaced numerous jobs, creating a divide between high-skill, high-wage tech jobs and low-skill, low-wage jobs.
  • Globalization : While globalization offers economic benefits, it also exacerbates income disparities through unequal wealth distribution.
  • Government Policies : Taxation and welfare policies can either mitigate or exacerbate income inequality.
  • How to Structure Your Essay on Economic Inequality

Before diving into our examples, let’s cover some core guidelines on structuring your essay:

  • Introduction : Grab the reader's attention with a compelling hook. Briefly introduce economic inequality and its relevance.
  • Thesis Statement : Clearly state your essay's main argument or purpose.
  • Body Paragraphs : Each paragraph should discuss a specific aspect of economic inequality. Use evidence and data to support your claims.
  • Conclusion : Summarize your main points and reinforce your thesis. Propose potential solutions or future research directions.
  • 1. Example: Analytical Essay on Income Disparity

Introduction

Economic inequality remains a pressing issue globally, undermining social cohesion and economic growth. This essay analyzes the critical factors contributing to income disparity, focusing on educational inequalities, technological advancements, and globalization.

Body Paragraphs

Educational inequalities.

Education plays a pivotal role in determining individuals' income levels. Societies with unequal access to quality education witness broader income gaps. According to a study by the OECD, children from affluent families are more likely to access higher education, leading to better job opportunities and wages. Addressing these educational disparities is key to mitigating income inequality.

Technological Advancements

The advent of automation and artificial intelligence has disproportionately affected low-skill workers, widening the income gap. While high-skill professionals in technology sectors reap considerable benefits, low-skill workers face job displacement and stagnant wages. Policymakers must address these technological impacts to foster equitable economic growth.

Globalization

Globalization has created wealth but also deepened income disparities. Wealth is often concentrated among multinational corporations and high-income individuals, while low-income workers in developing nations face exploitation and poor wages. Implementing fair trade practices and robust labor rights can help bridge this gap.

Economic inequality is a multifaceted issue requiring comprehensive policy responses. By addressing educational disparities, technological impacts, and globalization's uneven effects, societies can strive for a fairer distribution of income and wealth.

  • 2. Example: Persuasive Essay on Taxation and Inequality

Income inequality jeopardizes societal stability and economic growth. This persuasive essay argues that progressive taxation policies are essential for reducing income disparity and fostering social justice.

Progressive Taxation's Role

Progressive taxation, where higher income earners pay a larger percentage of their income, can significantly reduce income inequality. Research by the IMF indicates that countries with progressive tax systems experience lower income disparities. Governments should implement and strengthen such tax policies to promote equity.

Redistribution of Wealth

Redistribution of wealth through social welfare programs can bridge the income gap. Countries like Sweden and Denmark, known for their robust welfare systems, exhibit lower levels of income inequality. Policies focusing on healthcare, education, and social services are crucial in this regard.

Addressing Corporate Tax Evasion

Corporate tax evasion undermines efforts to reduce income inequality. Multinational corporations often exploit tax havens, depriving governments of crucial revenue needed for public services. Closing taxation loopholes and enforcing stricter regulations can bolster equity.

Progressive taxation and robust welfare systems are pivotal in combating income inequality. Governments must commit to these policies to ensure a fair and just society for all citizens.

  • 3. Example: Comparative Essay on Economic Inequality in Developed vs. Developing Nations

Economic inequality manifests differently across developed and developing nations, influenced by unique socio-economic and political contexts. This essay compares the drivers and manifestations of income disparity in these settings.

Developed Nations

In developed nations, economic inequality often stems from technological advancements and globalization. High-skill, high-wage jobs dominate the tech industry, benefiting those with higher education. However, low-skill workers face job displacement and wage stagnation, exacerbating income disparities.

Developing Nations

In developing nations, economic inequality is primarily driven by limited access to education, healthcare, and employment opportunities. Corruption and inadequate government policies further exacerbate these issues, hindering efforts to bridge the income gap.

Comparative Analysis

While both developed and developing nations grapple with income disparity, the underlying causes and potential solutions differ. Developed nations must focus on managing technological impacts and ensuring inclusive globalization, while developing nations need to prioritize educational access and robust governance.

Addressing economic inequality requires tailored approaches that consider each nation's unique challenges. By understanding these differences, policymakers can implement effective strategies to reduce income disparity on a global scale.

  • 4. Example: Cause and Effect Essay on Economic Inequality and Social Unrest

Economic inequality does not only affect financial stability but also social cohesion. This essay explores how income disparity fuels social unrest and proposes solutions to mitigate these effects.

Link Between Inequality and Social Unrest

High levels of economic inequality often lead to social unrest. Societies with vast income disparities experience increased crime rates, political instability, and public dissatisfaction. Historical examples, such as the French Revolution, highlight how inequality can trigger profound societal changes.

Psychological Impact

Economic inequality adversely affects mental health and social well-being. Individuals in highly unequal societies report higher stress levels, lower life satisfaction, and increased instances of mental health issues. Addressing income disparity can improve overall social well-being.

Solutions to Mitigate Social Unrest

Effective solutions include implementing progressive taxation, improving access to education and healthcare, and fostering inclusive economic policies. By addressing the root causes of economic inequality, societies can reduce the risks of social unrest and build more cohesive communities.

Economic inequality poses significant risks to social stability. By understanding and addressing its causes and effects, policymakers can create fairer societies that foster social harmony and economic prosperity.

Writing an essay on economic inequality requires a deep understanding of its multifaceted nature and impacts. From examining educational disparities to assessing globalization's role, we've showcased four robust essay examples to guide your writing. Remember to structure your essay clearly, use credible data, and present a balanced view. With these tools, you're well-equipped to create a compelling essay that resonates with readers and sheds light on one of today's most pressing issues.

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Home — Essay Samples — Economics — Economic Inequality — Poverty and Economic Inequality

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Poverty and Economic Inequality

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Published: Jan 31, 2024

Words: 618 | Page: 1 | 4 min read

Table of contents

Definition and causes of poverty, economic inequality and its effects, government policies and interventions, global perspectives on poverty and economic inequality, solutions to poverty and economic inequality.

  • World Bank. (2021). Poverty Overview. https://www.worldbank.org/en/topic/poverty/overview

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U.S. Income Inequality

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Throughout the history of capitalism, income inequalities between the upper and lower classes have caused many debates even revolutions in Russia, France, China, and others. The mass workers are subjected to the dominant ideology of elites, so the top ten percent earn a large amount of money while the lower class barely survives. The middle class came about which filled some of the disparity in income between the two classes. However, the middle-class today is losing some ground as job opportunities go overseas, and the requirement of college degrees for jobs increases. Need a custom essay on the same topic? Give us your paper requirements, choose a writer and we’ll deliver the highest-quality essay! Order now

In today’s society, education and a person’s social and economic background greatly influences his or her income. Income inequality also varies among different ethnic groups especially among Asians who have a one to ten ratio between the lower and upper classes. Also, female workers sometimes face lower incomes compared to male workers of the same position because of discrimination or a glass ceiling at work. In addition, the federal tax system to some people is a way to increase the income inequality among Americans, and Democrats and Republicans greatly vary in their views about the fairness of the tax system. Income inequality occurs in many societies, so it is an important to explore and find the reasons why it happens in different groups.

The American middle class is stable in size, but losing ground financially to upper-income families

[image: Share of adults living in middle-income households is unchanged since 2011]

https://www.pewresearch.org/fact-tank/2018/09/06/the-american-middle-class-is-stable-in-size-but-losing-ground-financially-to-upper-income-families/

According to the graph, the middle class is decreasing in size, while the upper and lower classes are increasing in size. In only forty-five years, the middle class has decreased by ten percent; however, the lower and upper classes grew four to five percent of the total adults in the workforce. Today, the middle class faces many issues that have caused its loss of size: disappearing opportunities for those with little education, global competition and rapid advance in technology, growing dependence on the temporary workforce, and the rise of growth industries and nonunion workplaces. Many middle-class jobs today require bachelor’s or higher degrees which limits the jobs available to those without college degrees. At the same time, companies send job opportunities overseas since foreign labors are much cheaper. Also, short term seasonal jobs do not have any retirement or health benefits, putting works with little financial security. Last of all, the fast-food industry is growing like never before; however, workers only earn minimal or low-level wages, which increases the number of people in the lower class. From the graph, the top class becomes richer as the lower class becomes poorer, reducing the middle class. One possible explanation is that the upper-middle class’ social network allows them to find higher level jobs since they have connections with CEOs and business owners. Their life chances, opportunities to provide material goods for themselves, are much higher than the lower class because they have successful families to support them in terms of money and education. On the other hand, people in the lower class may get trapped in their low-income status and not break free from their cycle of problems: the lack of education and financial security that passes on to the next generation. This chart shows the disparity between the upper and lower classes while the middle class loses ground.

For most U.S. worker, real wages have barely budged in decades

[image: Americans' paychecks are bigger than 40 years ago, but their purchasing power has hardly budged]

https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/

Another issue that the working class face today is that their average hourly pay adjusted for inflation has barely increased after fifty-four years. The value of their hourly pay in 1964 is about the same compared to today which means that their average pay has increased while the buying powering of their income has not changed. For example, the amount of grocery a person could buy with two dollars and fifty cents in 1964 is the same amount a person could buy for about twenty dollars in 2018. If adjusted for inflation, wages only changed about two dollars. The value of U.S. workers’ hourly pay has hardly changed much over the years, but the top ten percentile’s income has significantly increased over the years. According to the conflict theory, few possible reasons for this inequality is that the rich elites control the economy and strongly influences the government, limiting the reforms to help the poor, and stratification separates the social classes and allows the rich to dominate over the poor. The rich becomes richer, while U.S. workers’ hourly pay stays the same. In contrast to the children of the lower class, the children of the top ten percent have a much greater chance of higher education which likely results in high paying jobs. Unfortunately, income inequality is not decreasing but expanding. Companies are not willing to increase their workers’ pay except to compensate for inflation that causes the gap between the upper and lower classes. To conclude, this graph generally shows the lack of wage increase of U.S. workers over the years since their wages’ actual buying power has barely increased over the years.

Key findings on the rise in income inequality within America’s racial and ethnic groups

[image: https://assets.pewresearch.org/wp-content/uploads/sites/3/2018/07/06152441/PSDT.07.12_economic_inequality-00-00-.png]

https://www.pewresearch.org/fact-tank/2018/07/12/key-findings-on-the-rise-in-income-inequality-within-americas-racial-and-ethnic-groups/

Although income inequality is increasing between social classes, some ethnic groups in America have greater income inequalities compared to others. As seen from the graph, the income difference between the upper and lower classes of Asians has grown significantly, but the income inequalities for other ethnic groups did not change as much. For Asian Americans during the 1970s, the upper class earned only six times more than the bottom ten did, while in 2016, the difference grew to 10.7 times more. The income inequality between the upper and lower classes for Asian Americans was the least in 1970 compared to other ethnic groups; however, the income disparity among Asian Americans has recently increased to a point higher than all other ethnic groups. They went from the least to the greatest with respect to income inequality. The top ten percent of Asian Americans earn about one hundred and thirty thousand dollars, while the bottom ten percent of Asians Americans only earn about twelve thousand dollars a year. Few possible explanations to this are that some Asians who immigrated over to the United States also brought their social status and wealth or came here for higher education. According to Max Weber, some Asian Americans might have greater life chances, the opportunities to gain material wealth. First, they might have business ties with their mother country which gives them opportunities to increase their wealth faster. Another possibility is that some Asian Americans have achieved a higher status through education which usually results in upper-levels incomes. On the other hand, the Asian Americans in the bottom ten percent might have come over through America’s generous immigration policy, but they might not have established a business or came from a good economic background. They get stuck in the bottom quintile and rely on social welfare. In the end, this graph represents the huge disparity in income between the upper and lower-class Asian Americans, and this may have been influenced by multiple factors like education, social background, and business connections.

The narrowing, but persistent, gender gap in pay

[image: The gender pay gap is narrower among young adults than among workers overall]

https://www.pewresearch.org/fact-tank/2019/03/22/gender-pay-gap-facts/

In addition to the income inequalities in different ethnic groups, women overall usually get paid lower than men in their particular field. According to the graph, female workers only receive eighty-five percent of what men get paid, while women ages twenty-five to thirty-six have a higher percentage of what men earn: eighty-nine percent. If a guy earned one-hundred thousand dollars at a corporation, a female worker in the same position might only earn eighty-five to eighty-nine thousand dollars. These graphs take into account all full time and part-time employees. In 2010, female workers ages twenty-five to thirty-six almost earned the same amount as men. This income inequality between men and women has decreased over the years, but their difference has not been resolved. Few key issues in the past were the level of education of women and their roles in the family. Ladies usually did not have college degrees and took care of the house. Recently, women have entered the workforce, and the income gap is closing because of their gain in educational levels. Higher education tends to increase opportunities to upper-level jobs; however, at some businesses, there is an invisible barrier called glass ceiling that still prevents the promotion of certain people because of their gender or race. Discrimination occurs at a company when a manager denies a promotion because of that person’s ascribed status. Some workers do not have a good work ethic which might result in lower pay, but women sometimes still find discrimination or a glass ceiling at work. The graph shows that female workers’ incomes still lag behind male workers, but income inequality is improving as time goes on.

Growing Partisan Divide Over Fairness of the Nation’s Tax System

[image: Widest partisan gap in views of fairness of tax system in at least two decades]

https://www.people-press.org/2019/04/04/growing-partisan-divide-over-fairness-of-the-nations-tax-system/

Last of all, the views of the federal tax system greatly vary among political party members. This graph shows the significant polarization of the two parties’ position on the tax system. Republicans usually feel that the tax system is fair, while Democrats find the tax system as unfair. Overall, fifty-two percent of the Americans surveyed think that the tax system is unfair, and forty-six percent of the them feel that it is fair. However, in 2019, the number of Republicans that think the tax system is fair shot up to sixty-four percent, while the percentage of Democrats who thought the system is fair dropped to thirty-two percent. Some Americans might feel that corporations or the upper class are not paying enough taxes or that heavily taxing the rich is a way to redistribute wealth. Democrats tend to view the tax system as favoring the top quintile and putting the weight of taxes on the poor or middle class. Republicans, on the other hand, prefer the current tax laws since they may benefit from the tax cuts. From the conflict perspective, the tax system today increases the disparity between incomes because the rich uses their power to influence tax laws which in turn will help lower their taxes. The federal tax system becomes a conflict between the rich and the poor as each class’ net income depends on how much they are taxed. A possible reason is that more low-income families are Democrats while higher income classes are Republicans. However, more research is needed to see why Democrats and Republicans vary in their views about the tax system. To conclude, this graph shows the sharp difference between Democrats and Republicans’ views of the tax system which may depend on their family background and income.

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COMMENTS

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