Microeconomics : Income And The United States

Inequality exists around us. One of the inequalities is the income received by a person or member of a family. This income includes wages, salaries, pensions, and interest derived from assets. Income inequality refers to the various income within a given population. This inequality is especially high in the United States.

Income Inequality is best defined as an unequal distribution of household or individual income across various people in an economy. It is often presented as the percentage of income to a percentage of the population. In New York City, whether people want to admit it or not, there are still social classes in which everyone gets paid differently depending on where you live. Depending on the type of income an individual or family receives determines the kind of environment they live in. It is all based on what people can afford. Unfortunately, those who are living in poor neighborhoods receive low-income cause a lot of health problems.

Income inequality describes the extent to which income is distributed unevenly among residents of an area. High levels of inequality indicate that a small number of people receive most of the total income, and that most people receive only a small share of the total. There are many advantages and disadvantages associated with the inequitable distribution of income.

The view that the rich get richer and the poor get poorer has been heard repeatedly in reference to America’s income inequality. Though ironic, it comes as no surprise that America, a continent that easily trumps other countries in terms of wealth would be affected by the issue of poverty at such high levels. While much has said regarding the poverty levels, many economists, educators and scholars feel that the income inequality in America may be the reason why it is difficult to live and maintain a middle class lifestyle or to rise out of poverty into the middle class in the current economic state. With this in mind, the only way America, has a chance of lessening or eliminating poverty altogether is by understanding how it exists.

The issue of income inequality in the United States is complicated and does not have a definite answer. Income inequality can be measured in a few different ways. The first measurement for the income inequality in a country is to look at the percentages on households and group them into income categories, called distribution by income category. The second measurement for income inequality is called distribution by quintiles or fifths. This is when you divide the total number of people, households, families into five groups called quintiles to examine the percentage of total before tax income received by each quintile. Each quintile would then be ordered by income and households in the category.

From 1938-1969, in America was in a period called the great compression, a time where the difference between the richest and poorest Americans was very small and economic growth was explosive. Due to past and current economic policies and events, income inequality has exploded in America, which is why in 2015 America had the highest level of wealth inequality in the world at 80.56 gini[1] . In the future this inequality will slow down economic growth, increase debt for middle income Americans, make America less democratic, and reduce economic mobility. This problem, however, does have solutions and this paper will lay out some of the solutions and the effect they will have on the economy, but first I will explain the history of income inequality in the US.

Income and wealth inequality refers to the degree to which income is unevenly distributed among people in an economy. The share of total income received by different groups measures inequality, this visually represented in the Lorenz curve. The line of perfect equality bisects the graph with the percentage of income

The issue of income inequality is a reoccurring theme in Maria Konnikova’s article “America’s Surprising Views on Income Inequality” as well as Barbara Ehrenreich’s memoir Nickel and Dimed. To commence, Konnikova writes about the rapid growing gap between the rich and the poor. In particular, she elucidates, “Income inequality has grown by record amounts since the 2008 recession: between 2009 and 2012, incomes for the top one per cent of the population rose by more than thirty per cent, while those for the rest of the country-the bottom ninety-nine per cent-increased by less than half of one per cent” (Konnikova 1). Clearly, it is difficult for low-class individuals to make enough money to support themselves and their families. Furthermore,

The United States is often viewed as a wealthy and stable country, but as shown in 2011, “the richest fifth of American households received about 51.1 percent of total income, while the poorest fifth received about 3.2 percent” (McConnell). There are many sources of income inequality that effect poverty in the United States and the role that discrimination plays in reducing and increasing wages for different people and how the people of the United States are affected by it.

42% of kids born in poverty will not get out. Today, more Americans are falling below the poverty line and are struggling trying to find a way to get out. The Inequality gap in America has increased for the past few decades. Resulting from Economic Inequality in America, 400 Americans share more than 50% of America’s total wealth. These 400 Americans are the Top 1%. While the Top 1% are living luxurious lives, the Bottom 99% is struggling to make ends meet. Inequality is nothing new to the United States. In fact, it is a serious problem for America’s Economy, Democracy and the Middle Class.

Income inequality is defined as “Income inequality is the extent to which income is distributed unevenly in a country. It is an important indicator of equity in an economy, and has implications for other social outcomes such as crime and life satisfaction(Conference Board)." Therefore income inequality can also be defined as the concentration of wealth in the hands of a few, rather than an equal distribution of prosperity among citizens. In Canada, the unequal distribution of wealth has increased over the past twenty years. Though compared to the United States, Canada is in a much better position with greater social mobility. The fact remains that compared to

The highest earning fifth of U.S. families earned 59.1% of all income, while the richest earned 88.9% of all wealth. A big gap between the rich and poor is often associated with low social mobility, which contradicts the American ideal of equal opportunity. Levels of income inequality are higher than they have been in almost a century, the top one percent has a share of the national income of over 20 percent (Wilhelm). There are a variety of factors that influence income inequality, a few of which will be discussed in this paper. Rising income inequality is caused by differences in life expectancy, rapidly increases in the incomes of the top 5 percent, social trends, and shifts in the global economy.

Income inequality has affected American citizens ever since the American Dream came to existence. The American Dream is centered around the concept of working hard and earning enough money to support a family, own a home, send children to college, and invest for retirement. Economic gains in income are one of the only possible ways to achieve enough wealth to fulfill the dream. Unfortunately, many people cannot achieve this dream due to low income. Income inequality refers to the uneven distribution of income and wealth between the social classes of American citizens. The United States has often experienced a rise in inequality as the rich become richer and the poor become poorer, increasing the unstable gap between the two classes. The

What is the definition of income inequality? Merriam Webster defines “income: as a gain or recurrent benefit usually measured in money that derives from capital or labor”. Merriam Webster also defines “inequality: as the quality of being unequal or uneven, disparity of distribution or opportunity, or the condition of being variable”. Combining these two definitions, income inequality may also be defined as the gap between what the CEO earns and the average worker earns working for the same company, the wage difference between a woman employee or a male employee, or the variance in wages of that of a white individual or a black individual.

A major social problem in America today is its inequality of the distribution of income. "Income inequality refers to the gap between the rich and the poor. The United States has the most unequal income distribution in the industrialized world, and it is growing at a faster rate than any other industrialized country" (Eitzen & Leedham, pg. 37). The main reason as to why income is distributed so unequally is because of the gap between social classes.