Income & Wealth Distribution in the United States

Subject: Finance
Pages: 2
Words: 549
Reading time:
2 min

Income inequality in the United States has become more and more considerable. The richest 20% of Americans receive about 50% of all income in the U.S., whereas the poorest 20% of Americans receive about 4%. While the incomes of an average family decrease due to recession, the wealth of the rich increases dramatically. Thus, the United States has the highest overall level of inequality between people who are on the top and those who are on the bottom. It is rather surprising, but there are some reasons for it.

The gap between the haves and the have-nots in the U.S. has been growing wider for over 25 years. Short-sighted government policy, exploitation, hidden economy, and politically corrupted business are far from all causes of inequality. Tax breaks remain a questionable matter nowadays. At least, companies with tax breaks should pay higher wages. Reduction of taxes on profits derived from assets contributes to further enrichment. The rich pay even less.

Nowadays, labor earnings are not always the main source of income. Income from profits and assets is higher beyond any comparison with earned wages. An increase in work productivity does not mean an increase in wages. Production costs diminish; prices remain stable; wages increase is not considerable. This is a prerequisite to super-profits. During the recession of the early nineties, inequality became even more marked. Accumulating their wealth, the wealthy become unattainable and unpunished due to corruption.

At the end of the twentieth century, the United States experienced the most prosperous period. Along with the economic growth rate, the gap between the rich and poor rose. The rich obtained super-profits, while the poor lost their jobs or became underpaid as unskilled workers. Immigrants from developing countries constitute a considerable low-wage sector. Part-time working and contract labor are among the reasons for low wages and gap widening.

Historically, few employed people earn high salaries, and there are not many jobs, which are well-paid. The top executives of the largest corporations in the United States make 400 times the income of their average workers. Surely, drastic differences in lifestyle cause tension and conflicts. Antiglobalists argue that globalization bears the responsibility for widening the income gap.

The industrialized economy has brought inequality along with progress in science, medicine, social support, and assistance to the poor. The paradox of developed countries is that the rich become wealthier and the poor become underprivileged. Thus, our society has confronted the necessity of lessening the abyss between the rich and poor.

Inequality is associated with a gap in health care, education, living standards, resources, social status, opportunities for a successful career, the necessity to provide for a living till death, and life expectancy. Reduction of the gap is necessary not only because of moral or ethics or humanism. The large disparity in income brings unequal opportunities for education. In the chain, a labor force is less well educated, and economic performance decreases. Increasing crime and violence also belong to ramifications of inequality.

Strengthening economic recovery and the rule of law, improvement in middle-class incomes, and reduction of corruption and tax benefits for the rich will bring to narrowing the gap.