Money and Class: The Rise of Inequlaity in America

One of the social issues concerning power, status, and class in American society nowadays is economic inequality. Statistically speaking, the income gap between the social classes has increased dramatically since the 1960’s, 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 only the rich and the poor; the top wealthy one percent of America holds close to half of the nation’s wealth; not to mention, today, the richest one percent of Americans take home twenty-five percent of the nation’s income, comparing this to 1976 when they only took nine percent. When also considering investments such as stocks, funds, etc. the top 1 percent own 50 percent of the nation’s investments whereas 50 percent of Americans own only .5 percent. When being compared to countries that are similar to America, certain factors have given birth to this insane rise in inequality in America.

First and foremost, technology has called for an increase in demand for skills among hiring for employees. Technology has focused on the large wage premiums for workers with high levels of education and skills. This eliminates the jobs of less-skilled workers by providing a more productive, less “human,” alternative and forcing workers into lower-paying service jobs. To further demolish the everyday low income American, deindustrialization has greatly affected low-wage services and has changed the way the economy, firms, and employment relations are organized. Not to mention the fact that minimum wage has not kept up with inflation. Clearly, there is a clear widening between those who are benefiting and those who are being harmed by technology, and it is being reflected in increasing income inequality.

Globalization has also been a leading factor in economic inequality. Especially when the very production of goods and services has become international. For example, for the case of the iPhone, it is designed in Palo Alto, however it is physically manufactured in a range of countries, including China, Japan and Germany. Why and how these skills match between workers lies at the core of understanding why globalized production leads to an increase in inequality. More worryingly, this situation potentially has an impact on the wages the lower skill worker can command. Thus, the higher skilled worker, as a result of rising international demand for his or her skills, experiences a rise in wages. Corporations are often blamed for putting profits ahead of workers, and this can be true in certain cases, however, the corporation must also remain competitive. For example, American companies must compete with lower-priced Chinese and Indian companies who pay their workers much less.

Another leading cause of inequality is the government policies. Government policies in the United States haven’t done a good enough job in taxing the rich. The taxation laws in the united states have been a part of a progressive system. There are many tax loops that rich do in order to avoid paying high taxes. When the more fortunate don’t get taxed the proper amount they should, it leaves the government with less resources to help out the less fortunate, to help out schools in poor districts, and to help reduce poverty as well. The government has also kept treasury rates very low. The Federal government has created an asset bubble in stocks. This helped the top 10 percent, who own 91 percent of the wealth in stocks and bonds. Not to mention other investors who have been buying commodities, thus driving food prices up 40 percent since 2009. This hurts the bottom 90 percent, who spend a greater percentage of their income on food.

Inequality in America has not only affected this generation, but the next generation as well. This will shape the opportunities our children and young adults will have to maximize their potential. Our book has really aided us in our understanding of the inequality that has been perpetuated in the United States. These factors have, are, and will continue to affect us until the correct steps are taken. 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. And there is no easy answer to closing this gap. Inequality in the United States today is about as high as it has ever been since we started measuring, and poverty rates have remained persistently high. There is much complexity in the economic system of the United States, and efforts should be put in in order to fix these issues. Inequality of income is often one of the most significant reasons for the disparity within classes socially and one of the most important reasons that poverty is often intergenerational. Closing the gap in wealth is one of the most essential ways to ensure that inequality is addressed and that the other social issues surrounding this gap will be lessened until it hopefully eventually disappears.