Term Paper On The Income Inequality In The United States Of America

Sommeiller and Price states that “due to great recession, all levels of income growth get dropped and uneven, however recovery took stand in the year 2009” Moreover, the statistics of year 2012 indicates that there were large gaps embracing on inequality in New York and Connecticut (3).
United States is facing significant inequality in the last few decades, and there is no statistics to reverse it back. There was a vast tendency of uneven income disparity in the year of 1979 to 2007. According to the study of economists, out of total income, 95 percent of the income was captured by 1 percent of top states such as New York, Florida, Virginia, Carolina, etc. between the years 2009 to 2012. And this scenario results in the increase of inequality which affects and reduces income flexibility; the richer become richer, and poor going to be poorer.
Additionally, this severe level would not only hinder opportunities for equality but also affect the social integrity and ethical justice that results in the mutilation of economy and egalitarianism of America. Likewise, today’s inequality brings to mind the high inequality figure generated by Great Depression.
According to studies, middle-class families in developed countries are relaxing because of increment in their wages; however in America, middle-class have fewer opportunities to grow from the last three eras. Fewer opportunities towards growth makes people migrate thus, America is also facing and losing distinction among Canadian and European citizens because people wants to spend their lives in countries having sound economy that provides them educational benefits, health facilities, and retirement welfares.
Therefore, if America loses middle-class families, there would further slip in the economy. In addition, low remuneration rate is the main reason that hinders the standard of living of middle-class citizens of America.
Furthermore, technical advancement and globalization play a key role in increasing income inequality, and reduction in job opportunities as a human mechanism and labor works are replaced by machines. In these consequences, people do not slow their consumption needs but increase their ingesting of taking loans that possess more pressure on financial sectors, and there is the threat of bankruptcy and economic failure in the long run.
And so, the growth in income disproportion among the majority of U.S citizens brings weaker demand with feebler productivity. Likewise, people suffering from inequality are not capable to provide better education to their children thus; income inequality may create an environment of biases and affect the equilibrium in educational prospects and development of human resources.
Looking back towards 1970s, people who earn more and people whose earnings were least set apart to different sides. And this discernment created a gap that was not good for U.S culture as well as for the economy. The main reason of this happening was U.S had accompanied some significant variations; these changes and variations were beneficial for skilled and smart labors, but not good for workers having less educational backgrounds.
Since then, income inequality took arise as people with good education getting a relatively good job and earning high as compared to people with fewer educations who are performing long hours tiring jobs. There should be the better tactic of paying more to lower jobs because these labors endure more time towards work. Moreover, social justice and income equality lead an economy towards productivity and development.
Additionally, the negative association of income stagnation among middle-class people working as white or blue collar jobs could be stated as part of third world antagonism. On the other hand, Schwartz indicated that “under the frame of secular economy, income stagnation relates to poverty, but poverty in the world is reducing Thus, ratio of income inequality is also shrinking” (1).
Studies indicated that most of the low-grade workers such as cashier, waiters, nurses, etc. are earning below 10 dollars, and this income is below the level of Federal Poverty. However, the statistics of year 2012 showed that; 55 percent of the income was taken by top 12 percent wage earner. Likewise, during 2000 to 2006; there was an increased ratio up to 16 percent in U.S poverty and millions of workers were paid only 10 dollars for an hour which is inadequate wage even for a small family. Thus, these low-salary employees do not grant any health facilities, wellbeing benefits, and no proper pensions.
On the other hand, rich is growing and becoming more richer as they had to pay fewer taxes and receiving whole income in terms of security benefits, wellbeing and welfare facilities. The main felon of these unfair income circumstances is a high level of corporations who earn profits by under-pressuring their employees.
Hence, the U.S economy is losing their corporate markets because many other firms are outsourcing and settling their plants and technical sources into other countries. Subsequently, U.S loses its corporate market up to 25 percent after the year 2000 because these service employments pay less to their employees.
Similarly, looking at the example of largest business, ‘Walmart’ where approximately 1.5 million employees are engaged in work; have set up new approachable and organized standards but unfortunately the tactics are not favorable for employees because the approaches are engaged by cutting employees’ fringe benefits and salaries. Moreover, U.S made its governmental tax policies flexible for investors but these policies are rigid for low-paid workers. Consequently, there is no positive change for low-paid workers and wages remains stay constant at a minimal level.
Globally, there are also certain causes that possess stagnation towards income in U.S. Emergence of new business and market competitors for instance; China, India hinder the economy of America by expanding its market and paying better wages to their workers. In other words, these markets are gaining a competitive edge because the employees are satisfied and so, they are working efficiently which enhance productivity.
Skilled labors become more elegant; managers and CEOs are managing effectively in a sophisticated manner . Thus, U.S is losing its wealth as it is shifted towards developed nations.
In other words, the wealth is redistributed from U.S to other developed regions. Therefore, U.S should concerned towards these inequality measures by making flexible changes in tax dogmas for low-wage employees, the equal standard of education for every individual and by providing fair service trainings.
According to the study of CBO – Congressional Budget Office, during 1979 to 2007; the major culprit of increasing inequality is the swift growth in the earnings of domestic market as there were top 1 percent folks receiving premier income and these statistics became doubled for about 10 to 20 percent. This was not the only reason for increased inequality but researches stated that taxes rates from government side, technological innovations, and materialism, changing in firm’s structure, and remuneration strategies and increment in financing segments also play a role in growing income stagnation.
The analysis of CBO specified that this income dispersion is long term and hinder U.S economy. Likewise, after tax income also get dispersed due to the dispersal of household income and distribution of wealth. The statistics of Census Bureau also associate with the study of CBO as it displays the rise of income stagnation and states the small extent of inequality and ratio of the increment in it with the passage of time.
Moreover, according to the Gini index that shows the association of income shares and population shares, and it ranges from zero to one: here ‘zero’ indicates ample equality for instance; if each percent of population received 1 percent of income while ‘one’ specifies ample inequality for instance; if respective household consumes over all income. Consequently, the Gini index indicates that as the income of household increases so, inequality also took arise over time. The index shows that in 1979, the tax on income was 0.4, however; in 2007 it rose to 0.46 percent, approximately a percentage increase of 14 percent.
In addition, the main focus of certain studies states the issues and factors of inequality towards manual labor income. There are multiple aspects that interact with the dispersion of inequality among labors. As labor income is in terms of cash, in other words, wage or salary thus, this factor contributed largely towards income inequality. These workers work for long hours but do not get their wages on time.
In accordance with CBO analysis, during the era from 1979 to 2009; the growth of unequal distribution of hourly salaries was high both for men and women workers. Researches explore that during the period of 1990 to 2000, the requirement of educated and skilled labors was increased due to the development of technical advancements and change in organizational structures.
Since then, the wealth started dispensed from low-wage workers to skilled labors. Moreover, in U.S bias environment in education systems lead to less achievement of educational skills, as richer got more opportunities as compared to the poor child. As a result, children grew in fewer opportunities also lacks in skills. Therefore, people with fewer skills stay behind with fewer wage that promotes an atmosphere of biases and income inequality.
Likewise, studies specify that the dispersion of remuneration rates also get affected by the trade and immigration developments. In recent periods, there seen an increased ratio of foreign trading and immigration activities in U.S. It is said that U.S citizens are now getting more attracted towards foreign goods and increased their consumption of the international products. Thus, according to empirical researches; there arises a competition between U.S domestic products and foreign goods. However, neglecting domestic goods and consuming foreign products heavily affected the wages rates for local labors and harm the U.S economy in the long run.
According to Economic Adviser, Tyson “since the past several years, the ratio of stagnation in income rise ominously in U.S and forecast displays that this ratio could be overturned to normal. Likewise, a high degree of inequality could be a serious intimidation towards the progress of U.S economy and could hinder cultural norms in terms of violation of justice for layman” (1).
The majority of citizens in U.S relates to middle-class families and for these households income has been flattening to bottom from past several decades. This means that these workers are hired to do long hours tiring jobs but pay very less as compare to executives who work in air-condition and earn the most.
The higher rates of taxes also possess severe pressure on middle-class families and due to which people tend to rely on taking debts and loans. The major factor of increasing inequality is the slower growth in employees’ stipend. 1980s statistics displays that, there was 1 percent increase in hourly salaries on an annual basis, and gain in wages became more uneven as the top 12 percent executives claimed the most increased income.
Moreover, the new trend of adopting technical and mechanical machines instead of manual human resources also plays a part in increasing inequality. Participation of low-skilled labor stays behind and so; their wages also stuck to a minimal value. Likewise, according to various statistics data, there is only few portion of the population that enjoys growing share of wealth. Due to fewer salaries, people tends to take debts to fulfill their needs. However, it is not good for financial sectors. Therefore, on the other hand, the trend of taking a loan also gets increased in U.S due to unequal distribution of wealth.
Additionally, the crisis of monetary and accommodation happened in 2000s has no effect on U.S economy, and there was not any recovery for middle and poor in their wealth. 90 percent of middle household families received same wages and wealth as the poor received in 1986. However, the wealth of top 10 percent increased to triple during 1980s to 2012. Consequently, 90 percent middle-class families are unable to save any cash for their future while the 10 percent top executives save up to 37 percent of their income.
Many studies articulate that people breathing in U.S are living in an unequal state. As compared to last century, inequality in U.S has been increased greatly and there exist wider gaps in employees’ salaries, earnings, and affluence. There are various factors that contribute to widening these gaps and enhancing income stagnation. The Increase in adopting high-tech equipment and machineries, high cos of education, the rise in finance segments, reduced tax rates for wealthy citizens and high taxes for poor play a role in boosting inequality in America. According to Piketty “wealth, is determined by unimpeded capitalism as the ratio of capital returned usually go beyond the ratio of labor wage.
Critiques over inequality and income stagnation highlights that people living under uneven regulations undergo the trauma of unemployment, instability in social life, lack of proper investment, financial stress, higher extent of separation cases, and long-term expeditions to another developed countries. Moreover, the economy has a threat of financial collapse and bankruptcy.
Likewise, the higher the rate of inequality, the lower is the mobility. Therefore, proper measures should be taken by U.S government to narrow down the income stagnation rate. This could include an increase in the wages of low-paid workers, imposing a tax on the affluent community to aid poor by building wealth; savings should be encouraged among middle-class households.

Conclusion

When income is distributed unequally in a society, it is referred as income inequality. America – being the most developed country; displays highest income inequality rate. Since last four decades, income inequality took a rise in U.S.
According to the study of CBO, the top 1 percent of households gained 275 percent whereas the bottom 20 percent showed an increase of only 20 percent. Mostly middle-class and poor households are suffering from this inequality trauma. Moreover, Wages are the primary source of disposable income for most Americans, which they turn into consumption spending.
However, since 1980, the middle-class simply does not get enough opportunities to prosper because there was only 1 percent growth in hourly salaries. One-third of the poor or middle-class employees are serving as clerk, waiters, cashiers, but these are low-paid employees and earning less than 10 dollars per hour.
On the other hand, the top 10 percent of earners take home more than 50% of all income according to the statistics of 2012. Moreover, the top percent took home 20 percent of the income, according to a study by economists Emmanuel Saez and Thomas Piketty. In addition, according to the “Pull Apart” study, the income inequality has grown in Connecticut since the late 1990’s.The richest 5 percent of households have average incomes 14 times as large as the bottom 20 percent of households and about five times as large as the middle 20 percent of households.
Out of 141 countries, the U.S. has the 4th highest wealth inequality in the world, trailing only Russia, Ukraine, and Lebanon.Likewise, today’s inequality brings to mind the high inequality figure generated by Great Depression.There was a vast tendency of uneven income disparity in the year of 1979 to 2007.United States is facing significant inequality in the last few decades, and there is no statistics to reverse it back.
According to the study of economists, between the years 2009 to 2012; out of total income, 95 percent income was captured by 1 percent of top states such as New York, Florida, Virginia, Carolina, etc.Moreover, U.S made its governmental tax policies flexible for investors but these policies are rigid for low-paid workers.
Thus, there is no positive change for low-paid workers and wages remains stay constant at a minimal level. And this severe level would hinder not only opportunities for equality but also affect the social integrity and ethical justice that results in the mutilation of economy and egalitarianism of America.
The main reason for this income inequality was; U.S had accompanied some significant variations; these changes and variations were beneficial for skilled and smart labors, but not good for workers having less educational backgrounds.Additionally, technical advancement and globalization play a key role in increasing income inequality, and reduction in job opportunities as a human mechanism and labor works are replaced by machines. As a result, the rich become wealthier while poor remains worse.
America is fronting diverse response from people due to increased income inequality. America is also facing and losing distinction among Canadian and European citizens because less opportunity towards growth provokes people to migrate to other developed countries. When peoples’ needs do not get satisfied, they move towards financial sectors.
People do not slow their consumption needs but increase their ingesting of taking loans that possess more pressure on financial sectors, and there is the threat of bankruptcy and economic failure in the long run. Moreover, U.S economy is losing their corporate markets because many other firms are outsourcing and settling their plants and technical sources into other countries. After the year 2000, U.S loses its corporate market up to 25 percent because the service employments pay less to their employees.
Economically, U.S have a threat of bankruptcy and fiscal failure, in the long run, therefore, U.S government should tale serious measures to diminish income stagnation at a minimal level. And increasing wages for low-paid workers and middles class household would be the foremost step towards growth. Moreover, opportunities for equality should be provided to promote social integrity and ethical justice that displays the egalitarianism of America.