How Do Income Inequalities Hinder Americans?

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.

Wealth inequality in the United States has grown tremendously since 1970. The United States continuously reveals higher rates of inequality as a result of perpetual support for free market capitalism. The high rates of wealth inequality cause the growing financial crisis to persist, lower socio-economic mobility, increase national poverty, and have adverse effects on health and well being.

No matter which country you would look into whether it’s from wealthier to those less wealthy countries through the eyes of economics, there are bound to be types of inequity within their borders. Inequity is a very crucial problem in the United States, you would think that our economy here in the states is booming, and the citizens are living life easy or without worry. Life is the United States isn’t as it seems, in fact, Inequity is in fact a big problem even in the United States. Over the years, there has been millions of Americans that were considered to be in poor or in poverty line that are not able to provide for themselves and their families. We can sadly see those Americans on the streets, cars or shelters unable to keep-ends meet that are not able to keep a decent paying job. That is why throughout this paper I’ll be discussing why inequity is a big issue in the United States from how income is distributed through causes of income inequality, social status, and even how the government interventions is trying to alleviate income inequity.

Presently the United State 's income gap between the middle class and wealthy is undoubtedly significant. Some say that income inequality is

Americans today live in a distinctly unequal society. Inequality is now wider than it used to be in the last century, and the division in income, wages, and wealth are broader than they are in other developed economies of the world. Wealth inequality is the imbalance of wealth or income within a society, and it is one of the most vital economic challenge the US is facing today because the distribution of wealth is more dispersed, making the inequality in wealth distribution at its highest. While the matter has been discussed for many years, the actual income disparity in the U.S. has heightened and is now verging on an extreme gap that portends to impede long-term economic growth. The huge gap between the wealthy and poor is squeezing the U.S. economy, the wealth gap threatens economic growth by diminishing social mobility and producing a less-educated workforce who are not able to compete in the global economy. unrestrained level of income inequality causes political pressures, it discourages trade, investment, and hiring. The present level of income inequality in the U.S. is shrinking GDP growth, and the world's largest economy is struggling to recover from the Great Recession.

Classification of what causes inequality lies in two different classes in a broader sense, which are; individual causes, or external conditions leading to income inequality ( Rousseau, 1992). In simpler wording, the causes of inequality lie within endogenous causes and exogenous conditions.

Income inequality is one of the greatest problems facing the United States today. It is important for everyone to understand what this means and why this is a problem.

I do not believe the income inequality in the United States are a necessary "evil". I consider the cause of this problem to be due to a lack of government incentives. The 1% abusing their power to use loopholes to keep their money is unfair to the other 99%.

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.

resources, income, and other factors between different sectors in the society. Inequality can be defined

One of the social issues concerning power, status, and class in American society today is income inequality. The income gap between the social classes has increased drastically throughout the last few decades, creating a significant gap between the wealthy and the poor. This gap has become so large that the middle class has nearly diminished, creating a social class comprised of the rich and the poor. The significant gap between the two social classes is unhealthy for the economy because it provides too much power in the hands of those with high social status.

Income inequality is necessary for a capitalist society to thrive as it provides competition, hard work, and innovating ideas (Sutter).

Income inequality has been a major issue in American history. There are many different factors that contribute to inequality. These include education, wealth, discrimination, ability, and monopoly power.

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.

Income redistribution refers to the concept of transferring income from the wealthy individuals to the less wealthy individuals through social mechanisms such as monetary policies, charity, welfare, land reforms, and taxation among others. Income redistribution affects the entire economy rather than selected groups of individuals. The concept of income redistribution emanates from the existence of income inequalities within an economy. Income inequality depicts a gap between the highest and the lowest income earners in an economy (Tullock 13). Income inequality is sometimes considered appropriate in societies since it acts as an incentive in free market economies, whereby in the absence of inequality, elements of economic stagnation and lack of enterprise would emerge. Conversely, income inequality is criticized on the basis of introducing contributing towards the development of key problems in the society, including progression of poverty levels. This paper seeks to explore the concept of income redistribution and its key pros and cons.