Premium Essay

The Effects of Wealth Inequality in the U.S.

In: Social Issues

Submitted By anthonygio95
Words 1470
Pages 6
Anthony Giovenco
Political Science
Inequality Paper
12-18-14
The Effects of Wealth Inequality in the United States

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.
There is no doubt that wealth inequality in America has been escalating quickly; the portion of total income earned by the top one percent has doubled since the beginning of the 1970’s. The wealthy are the main beneficiaries regarding income inequality. In the latest consensus of wealth distribution, the top one percent of Americans owned thirty five percent of the nations private wealth, and the top ten percent took home about fifty percent of all income in 2012. This figure is greater than the bottom 90 percent combined. The question commonly asked concerning this matter: How and why is this becoming so quickly unequal is to be examined. First, we must explain what is meant by the term “wealth.” Wealth is the collection of the assets people own. This includes homes, stocks, savings for pension, and bank accounts, minus all existing debts.

The main issue regarding wealth inequality is income inequality. Income equality has grown increasingly in the past 30 years. The top one percent of the nation earns almost twenty five percent of the pre-tax income versus fewer than 10 percent from 1950 to 1975. The wealthiest one percent of households increased their net income by nearly 275 percent from the years 1980 to 2007. This increase trumps the forty percent gain for low to middle class Americans. Corporations are often to blame for putting profits ahead of

Similar Documents

Free Essay

Income Inequality in the Us

...29, 2012 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" Bernard Sanders (1997). What's really going on with the economy? - Unequal distribution of wealth and income. [ONLINE] Available at: www.usatoday.com. [Last Accessed 04/27/2012].   Society defines this social issue as the disparity between the few at the very top of the income ladder, and the many at the bottom. Recently, the Occupy Movement has defined this problem has fight between the 1% and the 99%. The social classes that are most impacted by this disparity pretty much cover the spectrum as we are all affected. The most latent effects are probably found in the poor, in single-mothers, and in the minority classes. Those are the classes that have the least amount of economic and social power at the onset.   A persons clothing, housing and educational opportunities usually depend on their class, but that is a direct reflection of their income.   A person does not gain any class or power without their income being taken into consideration.   The only problem is, is that there is also class inequality, which further prohibits people to earn an equal income. Income inequalities in a society are a source of a variety of social problems in...

Words: 1166 - Pages: 5

Premium Essay

Income Inequality

...Introduction In America, the wealth gap between the rich and the poor has undoubtedly increased over the years. Most Americans do not doubt the presence of this gap, but not all believe it is an issue that impairs our economy. Scholars from the Intelligence Squared U.S. debate argue over whether the American dream of upward mobility is hindered by our economy’s disproportionate income distribution. Based on statistical evidence and facts from the arguments, it is clear that income inequality does, in fact, impair the American dream of upward mobility. Analysis According to a census performed in 2015 by the U.S. Census Bureau, America has experienced economic growth in regards to national income. Though this sounds like a factor that would...

Words: 863 - Pages: 4

Premium Essay

Supply and Demand Globally

...Supply and Demand Globally Shirley Leo Argosy University This discussion will include the definition and how it is used to determine the demand for labor. The factors used to determine the supply of labor market will be discussed. This will include the factors that have changed the supply of labor market over the last twenty years. Price and quantity of labor determination over a period of will be explained. Income inequalities will also be determined, if there are any. The way that income inequalities are measured, and how they have changed from 1980 to the present will be discussed. What role does the government play in the terms of inequality? There will also reasons for this and against this provided. Next, nations trading will be discussed. The concept of “Comparative Advantage” will be discussed. If a nation had an isolation policy would they be better off economically will also be answered. Then the trade balance of the United States will be discussed. The problems with having a negative trade balance, and how it can be corrected will be included in this discussion. The last thing that will be discussed is the exchange rates. The significance of currency devaluations concerning the United States, as well as other countries will be the last thing discussed. Now, to discuss derived demand. Derived demand is the product that is produced...

Words: 3036 - Pages: 13

Premium Essay

Income Equality and Well Being

...Income Inequality and Economic Well Being Income inequality is prevalent in the entire economic global economy with its effects clearly visible in form of differences in pay scales, distribution per household etc. The economic well-being is not measured in the terms of income alone, but also by other factors such as satisfaction levels, education standards, quality of life etc contribute towards well-being. The causes of the income inequality broadly fall into two categories: the market forces and the institutional forces. The market forces includes the technological advances and the increased trade, making the highly educated and more skill work force more productive thus increasing their wages whereas the institutional forces like deregulation leading to decline of unions and stagnation in the minimum wage in the recent years. Despite the fact that the level of income distribution has become skewed over the decade, the quality of life, due to various advancements has improved. Better quality products can be purchased at lower prices, which in-turn has improved the standard of living over the past decade. It is a common fact that the richer are happier than the poor. But well being is a matter of perception as well. People asses their well being by comparing their past and current circumstances, and by comparing their current standard with that of others. The Easterlin Paradox, which was developed by Richard Easterlin,, states that “although at some point in time richer...

Words: 1670 - Pages: 7

Free Essay

Inequality for All

...Inequality for All is a 2013 documentary film directed by Jacob Kornbluth. The film examines widening income inequality in the United States. The film is presented by American economist, author and professor Robert Reich.[1] The film premiered at the 2013 Sundance Film Festival in the Documentary Competition section,[2] and won a U.S. Documentary Special Jury Award for Achievement in Filmmaking.[3][4] Reich distills the story through the lens of widening income inequality—currently at historic highs—and explores what effects this increasing gap has not only on the U.S. economy but also American democracy itself. At the heart of the film is a simple question: What is a good society and what role does the widening income gap play in the deterioration of the nation's economic health? The film was distributed by RADiUS-TWC in Fall 2013. In the wake of the 2007–08 financial crisis and the rise of the Occupy movement, the issue of income inequality has gained public awareness. Over the last thirty years, before the latest recession, the U.S. economy doubled. But, according to this documentary, these gains went to a very few: the top 1% of earners now take in more than 20% of all income—three times what they did in 1970. Inequality is even more extreme at the very top. The 400 richest Americans now own more wealth than the bottom 150 million combined. While this level of inequality poses a serious risk to all Americans, regardless of income level, much of the rhetoric on this subject...

Words: 395 - Pages: 2

Premium Essay

Income Inequality in the U.S.a

...Income Inequality in America is a problem that’s been going on for decades, and many feel that it hardly exists, the many people that feel that way are highly uneducated, and seem to not really care about this tremendous problem that in one’s eyes really has no end in the near future, in fact it has been gradually rising and one feels that it’s just not fair. Unfortunately, there’s not much that can be done, only of course if the poor class of people decide to actually educate themselves and get a higher education. One says poor class, simply because that’s how they’re classified. There are five types of levels that Americans are classified as, and they are: 1. Upper Class, 2. Upper Middle Class, 3. Middle Class, 4. Working Class, 5. Poor. The highest percentage of Americans fall in the Poor department, and it has been that way for decades, and will continue to be that way for decades to come. It’s as if it has been programmed to be that way. The explanation of the Distribution of Wealth, Distribution of Income, Poverty and other topics that have to do with this saddening subject will be argued and clearly clarified for the reader. Income- money, or other benefit, periodically received; the amount so received. Inequality- differences between groups in wealth, status, or power. “Why are some men rich and others poor? The question has baffled philosophers for centuries, and modern economics has not taken us very far towards an answer either “(Jencks, Christopher). Still, we have...

Words: 1943 - Pages: 8

Premium Essay

New Deal And Trickle Down Effects: An Economic Analysis

...In this paper, I will evaluate the inequality of the New Deal and Trickle Down theory and effects.. The massive economic gap between the rich and poor has grown overtime in the US. This is due to President Reagan's economic policy in the 1980s, it was known as Reaganomics. Or sometimes called the trickle down economics. An economic theory that provide benefits such as tax cuts on businesses, high-income earners, capital gains, and dividends for the wealthy. This led Multi-national corporations, Wall Street bankers, and the wealthy aristocrat gaining an enormous increase of wealth, while many Americans have experienced stagnant wages. President Lyndon Johnson has once said about trickle down effect, "Republicans [...] simply don't know...

Words: 623 - Pages: 3

Premium Essay

Business Aspect

...AVI-YONAHFINAL.DOC FEBRUARY 26, 2002 2/26/02 5:38 PM Book Review Why Tax the Rich? Efficiency, Equity, and Progressive Taxation Reuven S. Avi-Yonah† Does Atlas Shrug? The Economic Consequences of Taxing the Rich. Edited by Joel B. Slemrod.∗ Cambridge: Harvard University Press, 2000. Pp. 524. $57.95. In Greek mythology, Atlas was a giant who carried the world on his shoulders. In Ayn Rand’s 1957 novel Atlas Shrugged, Atlas represents the “ prime movers” —the talented few who bear the weight of the world’s economy.1 In the novel, the prime movers go on strike against the oppressive burden of excessive regulation and taxation, leaving the world in disarray and demonstrating how indispensable they are to the rest of us (the “ second handers” ). Rand wrote in a world in which the top marginal federal income tax rate in the United States was 91% (beginning at taxable income of $400,000).2 This is an unimaginably high rate by today’s standards, when the dominant view in Washington is that a marginal rate of 39.6% (the top † Irwin I. Cohn Professor of Law, University of Michigan. I would like to thank Yossi Edrey, Allen Graubard, David Hasen, Judy Herman, Don Herzog, Jim Hines, Bob Kuttner, Doron Lamm, Jeff Lehman, Kyle Logue, Dan Shaviro, Joel Slemrod, Dennis Ventry, and Larry Zelenak for their extremely helpful suggestions. All errors are mine. * Paul W. McCracken Collegiate Professor of Business Economics and Public Policy, University of Michigan. 1. AYN RAND, ATLAS...

Words: 13482 - Pages: 54

Premium Essay

Sociology Basics

...Social stratification- is systematic inequalities among groups of people 1. Wealth and income (social class) 2. Racial inequality 3. Gender inequality. Equality/inequality -Ontological equality -Equality of opportunity -Equality of condition -Equality of outcome Why inequality exists? Inequality in wealth and access to resources is generated by three processes: 1.) Unequal division of labor and/or low mobility across occupations. 2.) Surplus or abundance of resources 3.) The desire to accumulate wealth and assets Types of social mobility: mobility refers to movement between different position within a system of social stratification 1. Horizontal 2. Vertical 3. Structural 4. Exchange Why the class structure is changing -Massive growth in inequality between the rich and the poor. Called the “Great U-Turn” -Shrinking of the working class, with some growth in middle class and working poor. -Growth of poverty and the “underclass” -Rate of poverty is increasing twice as fast as population growth Why income inequality is increasing -Largely due to the increasing concentration of wealth at the very top of the income distribution. consequences of income inequality -High levels of income inequality reduces social cohesion, overall health, overall wealth, and education -Increases crime, debt, and political polarization Social construction of race -Instead, social scientists argue that “race” is socially constructed. Racial...

Words: 2093 - Pages: 9

Premium Essay

Geography for Growth Patterns

...Don’t blame geography for growth patterns There is a well-known economic growth debate whether geography affects growth patterns directly or merely through an indirect channel affecting the choice of economic policy and institutions. The view that geography is at the center of the story in shaping the rhythms of economic development dates back to Montesquieu and has been recently revived by Jared Diamond in his book “Guns, germs and steel: The fates of human societies.” This perspective was applied to explain long term patterns of economic growth by Jeffrey Sachs, who argues that growth is related to geographic variables like climate, disease ecology and distance from the coast (Sachs 2003). On the other hand, economists like Acemoglu, Johnson and Robinson, and Engerman and Sokoloff argue against simple geographic hypothesis and illustrate that geography can only affect patterns of growth through the choice of institutions that influence economic performance. Looking at the current situation, one can observe tremendous differences in living standards between developed and developing countries. There is a variety of explanations why economic performances have diverged so extremely. However, the two main candidates to explain the causes of the big divergence are geography and institutions. The geography hypothesis emphasizes nature forces and geography as the main factors determining economic performance. Acemoglu, Johnson and Robinson (2002), however refute this hypothesis...

Words: 1689 - Pages: 7

Free Essay

Economic

...Introduction Income inequality means that the income is distributed in an uneven manner among a population. It generally refers to a society which the income gap between individuals or groups and also the international wealth gap. The percentage of income to a population is often presented by income inequality. It’s also considered as the gap between the rich and others and has been obviously growing for recently years. There have measures for income inequality. It’s important to view this data sets and measures as it can show the differences of a country, especially the advantages and disadvantages. Income inequality should have a clearer data or picture to explain the differences and can be also obtained by using those measures. The “Gini Coefficient” can measure income inequality. Gini Coefficient is the way to measure the distribution of nation residents’ income. Corrado Gini (Italian statistician and sociologist) is the person who developed and published it. The among values of distribution will be measured by Gini coefficient such as income levels. If everyone has the same income, it will be shown as Zero (perfect equality) in the Gini coefficient. Conversely, if Gini coefficient shows one mean that only got one person have the income, as know as perfect inequality. In the United States, there has been growing obviously for income inequality and the gap between rich and others. According to the report of Gini coefficient, united States have the high income inequality and continuously...

Words: 1589 - Pages: 7

Premium Essay

Top-Down Approach Vs Bottom-Up Approach

...conservatives and liberals vary between two different approaches: a top-down approach versus a bottom-up approach. The liberal view of income inequality holds that the public sector needs to be expanded through several measures of a more active government; these include raising taxes, raising government spending on contracts, and higher regulation of business. Liberals, or the left wing, have used the inequality issue to call for bigger government and strengthening of the lower and middle class. A solution put into effect by the Democrats was raising the minimum wage; according to Forbes “At least half of the minimum wage earners are not in the lowest household-income bracket, and even fewer are their household’s primary earner. So raising the minimum wage is not a great way for lifting up the incomes of the poorest households in America.”...

Words: 425 - Pages: 2

Free Essay

Education’s Effect on the “Wage Gap”

...Education’s Effect on the “Wage Gap”                A hot-topic that continues to be a point of emphasis across not only the United States economy but the world economy as a whole is the ever-increasing gap between the upper-class and lower-class. The recent recession in the United States has intensified the subject seeing the top one percent of incomes in the country rise 20% in 2012 as opposed to some other lower-class incomes falling as much as 18% throughout that same timeframe. Other countries have seen similar issues between the two classes and the path toward extinction for the “middle-class.” In-order to combat this trend, some countries have instituted economic policy changes specifically around education. The following will explain how education and the wage gap are related, what the situation is currently in the United States, and what other countries are doing to combat the wage gap which the U.S. can learn from.                In order to understand how education has an effect on the wage gap, it is first important to understand the labor market and how wages are determined. “The Marginal Productivity of Labor” is the additional output produced by the addition of one more labor worker holding all other inputs fixed. “The Law of Diminishing Marginal Productivity of Labor” says that the more workers there are (again, holding all things constant) the lower the total productivity per worker will be. This is comparable to having a factory with only one machine. If more...

Words: 3236 - Pages: 13

Free Essay

U.S Economy

...Kevin December 11, 2007 Field Guide to the U.S. economy Chapter one from Field Guide to the U.S. Economy analyzes the distribution of wealth between the family and the structures of corporate power. The idea that the wealthy, usually become wealthier is stressed in this chapter. Most of the United States income is distributed to the wealthy; “The richest ten percent of all households own eighty percent of the financial wealth in America (1)”. Average families have most of their wealth invested in their homes. As for the wealthiest, most of their wealth is invested in the form of business equity, real estate, stocks, bonds, mutual funds, and trusts. This chapter also stresses that wealth does not only create a higher standard of living, but that wealth influences political outcomes. The economic power of the United States is held in large corporations with single corporate owners. Chapter two expands on the information given in chapter one and expands on welfare and education. The main point of the chapter is poverty hurts kids. I will be expanding on the ideas in the two chapters to show that the gap between the wealthy and poverty is extreme and how it effects households, welfare, and education. Section 1.1 concentrates on who owns how much in America, showing the difference between the worker and owner income. “The rich are different from you and me (3)” said F Scott Fitzgerald. The richest ten percent of U.S households own eighty percent of the countries financial...

Words: 2242 - Pages: 9

Premium Essay

Income Inequality

...Income inequality Name Date Abstract In any given population, there is a difference between what people within the population earn. The uneven distribution of income in any given population is income inequality. In order for there to be income, there has to be several sources of income. These sources of income may be combinational or independent per person receiving the income. Income may result from wages, rent, bank account interests, salaries or even profits made in business transactions ( Stiglitz, 2012). In his hypothesis, Karl Marx foresaw income inequality in a capitalistic as a major problem that would lead to an economic evolution. The main reason he foresaw an evolution was due to the recurrent nature of income inequality. In an income inequality situation, the richer keep getting richer due to a better income, while the poor keep getting poorer. The gap between the top earners and the low-income earners keeps widening in an income inequality situation. In America, almost 95% of the national wealth is under 5% ownership; this situation leaves 95% of the population to scrounge for the limited 5% wealth (DeNavas et. Al, 2005). Introduction In order to understand the complexities of economic inequality, the best specimen to use for the study is a family. In the study, the family’s income is under analysis, and then the family members ranked from the lowest income earner to the highest income earner. After the ranking, the incomes aid in establishing a Lorenz...

Words: 3040 - Pages: 13