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The Causes, Consequences and Solutions of Income Inequality

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What is Income inequality? It’s the study of the percentage of the discrimination of a group and or section of people based on background. First, statistics show that the average income of a person usually depends on a few things. For example, in most work industries, the average male worker would be accumulating more than a female worker, this would be because most men work more than the average women. In the 1900s, most of women’s roles where stay-at-home housewives.

Moreover, income inequality mainly would begin to evolve by the overall type of job, and the amount of skill that an individual worker had. Without higher or a certain level of education, People who ranged from 20-30 typically had bachelor degrees and would also pick up a job through college, though depending on their field of study would determine their degree for life. However, it would be hard for someone in the workforce to achieve a stable income with a high school diploma, as it was the starter field for certain job requirement fields.

  • In 2010, the employment rate had stood at about 73% being those with an associate’s degree, then in 2017, rose to about 78% for those with a higher level of education.
  • Having high education would NOT always guarantee an increase in income.

Over the past years, Income Inequality has grown immense based usually on an individual’s background. For instance, compare the average income of both male and female. The average male accumulates more than the average woman; this is because there is a larger number of male workers in certain fields. Comparatively, studies show that about 95% of jobs involved males, and most job fields would typically be heavy construction, repair mechanics and computer repair. Most of these jobs would be for males typically because these would be dangerous jobs meant for upper class. Fact of the matter, most typical jobs are usually occupied by male workers. More or less, the most well-paying jobs for women often revolve around the practice of nurses and doctors, which often through the study of health and medical sciences. Following the wage gap for male and female workers. Woman who still would manage an income would still be less than the male average income. For example, a woman who had just graduated from college after 10 years would still accumulate less than a male who had finished in only six.

Under these circumstances, Income inequality can cause a decline in the amount of income that can be distributed to a group of people. Depending on the number of people or an entire family, it can be hard to generate the maximum amount of income especially if the family is not all employed but on a stable yet fixed/shared income. The real major consequences from income inequality usually is the form of distribution in income towards an individual.

For example, if a family where to have a household income percentage of about 40,000, then they need to accumulate 40,000 in order to achieve perfect equality. At any point in time, the family then could start to experience an increase in their income from 40000 to about 55000, but then say if their household would be 80,000. This is where the Lorenz curve and the Gini ratio comes into play, as the household percentage increases, the overall income has to be maintained at a certain percentage in order to avoid hitting the Lorenz curve.

Another major cause of income inequality is poverty, which is caused when an individual or a family does not meet the overall standpoint of sufficient funds for everyday use. But what can cause poverty toward income inequality? Workers in most business tend to have a huge profit by lowering wages as much as possible, which in turn can lead to foreclosure. For a perfect example of this, workers tend to quit after a while working a part time job at a local fast food restaurant after their salary gets cut. The average salary for a cashier to accumulate is $8-10. On Feb.22, 2019, 3 Sonic restaurants had lost a large amount of staff due to a massive wage gap cut restricted to about $4. Refer back to the Lorenz curve and the Gini ratio, the cashier would need to maintain their hourly salary to achieve about $21334.25. As the salary becomes lower it starts to become more unequal. Wage cuts can also lead to massive forms of poverty because the income received wouldn’t be enough to provide resources for an individual. For example, a factory worker who is on a fixed income and budget accumulates about only $20 a week wouldn’t be able to purchase products when needed.

Throughout the workforce, most employees in certain countries of the US have been discriminated against based between blacks and whites. A stable black household has a growing income of about 42 percent, lower than the average white household. In the year of 2000, Blacks made weekly earnings of about $1389 shared while Whites made a weekly earnings of about $1819. It is also very important to know that even though it was not equal pay for both black and whites, gender discrimination still caused a massive wage gap between races, even with a shared and/or combined income. Woman still do not earn the equal amount of men towards weekly earnings. For every dollar that men would earn, a woman would earn about 80 cents. Before the Civil Rights Act Of 1964, those of color, such as blacks, could only get so very little or a certain balance due to the fact that they didn’t have as many rights as whites did. They couldn’t work nor live the same as whites.

Immigration also plays a major role for income inequality, the reason being because most who are not born in the US, in most cases, would usually try to migrate to the US to earn massive benefits for their lives. However this can lead to an increase in liabilities like overpopulation and low wage pay to Americans. Over time, immigrants would start to invest or be given massive benefits and job opportunities for their everyday lives. Jobs for those born in the US would become low paying, thus increasing chances of leading towards poverty. Studies show that most foreigners, such as Asians and Hispanics, have one of the highest rates for migrating to the US seeking employment. However, a corporation hiring an immigrant possibly could deal with legal risk, this is become most immigrants don’t have proper identification when they go for employment. Another drawback besides overpopulation and poverty is that healthcare is always guaranteed to most immigrants, most would need to be educated in order to obtain benefits. To further explain, immigrants that move to us can be very beneficial to the everyday us lifestyle but it can also cause trouble, one last good point to note is that the longer immigrants remain in the us, the more of a need would be created for things such as food stamps and housing services.

Before taxes had come into play, the US experienced most cases of income equality but would most times become susceptible to inflation because there would cases of the rich taking advantage of their savings. During The year of 1977, the average household income towards direct taxes had fallen from 21.4 to about 18.8. Overall, taxes can bring a decrease in income inequality, and since direct taxes became more coefficient, it would begin to make income equality fall. Certain earnings at a very high without proper taxing would lead to the increase for income inequality. In order to fix this, the government would need to start taxing the income of the households with higher income rates and then begin to start funding the households at lower rates. After this process takes place, the Lorenz Curve would slowly begin to close up, hitting the perfect equality line. If the household’s income mobility, then the government would need to get involved in order to get the funds towards the relocated household.

Lastly, wealth could differ in an individual background. The rich used and would their market power and invest more and more to earn production. Families who weren’t rich, but had a very stable build in income wouldn’t be exposed to the same amount of opportunities. Aside from the top 1% of households, the 99% at the bottom began to fade a major wealth drop. During the 1990s, family wealth had begun to increase at a fast but steady pace. In 1997, the wealth of the bottom 50% of households would grow by 85% due to low prices in the resources. The main focus for wealth was to calculate the amount that was going to cause an increase in profit but decline for nonprofit, such as educational institutions. The reason for this is because there is a huge wage gap for educational benefits, research shows that about 50-55 percent have low wealth graduating from school, but only about 15% enter college right afterwards.

From time to time, Healthcare then begins to start its role for income inequality. The way it is caused is when an individual or a group has become poorer health than their income they maintain. Back in the 1960s, he rich has sufficient access to Medicare, solely because they have the funds to pay for it, while those who lacked the funds ended up succumbing to poor health issues. Few years later, the poor, still lacking proper healthcare, would only get about a decent 14% of the rich had. The cause for the health inequality was based on the amount of money an individual or a family could accumulate, unfortunately, due to poor management, 30% of Americans would fall victim to death and/or disease because they lacked the proper care needed for survival. Further analysis shows that the rich and wealthy would mainly survive while the poor could live in poverty due to low wages.

To further summarize and conclude, Income inequality is a very difficult crisis to clear from society, immigrants and jobs can cause a massive lead towards poverty which can be hard for those who are poor. Most benefits like health care and Medicaid would only really be awarded to those who have the funds to afford it. Even during the workforce, jobs that pay less than the average annual salary would become susceptible to poverty. Depending on a person’s color would determine their usual salary and their gender. Most not from the us , but involved with the military would be exposed to a huge amount of benefits for their self and families, men still had more earnings than women depending on the job.

Works Cited

  1. “The Gender Wage Gap: 2018 Earnings Differences by Race and Ethnicity.” Institute for Women’s Policy Research, iwpr.org/publications/gender-wage-gap-2018/.
  2. “How Immigration Makes Income Inequality Worse in the US.” USAPP, 16 Oct. 2015, blogs.lse.ac.uk/usappblog/2015/10/14/how-immigration-makes-income-inequality-worse-i n-the-us/.
  3. “Immigration and Rising Income Inequality.” Federation for American Immigration Reform, www.fairus.org/issue/publications-resources/immigration-and-rising-income-inequality.
  4. “Mass Immigration and the Growth of Inequality • Social Europe.” Social Europe, 8 Jan. 2019, www.socialeurope.eu/mass-immigration-growth-inequality.
  5. McCarthy, Niall. “Income Inequality Between White And Black Americans Is Worse Today Than In 1979 [Infographic].” Forbes, Forbes Magazine, 21 Sept. 2016, www.forbes.com/sites/niallmccarthy/2016/09/21/income-inequality-between-white-black- americans-is-worse-today-than-in-1979-infographic/#53d81f223740.
  6. “The NCES Fast Facts Tool Provides Quick Answers to Many Education Questions (National Center for Education Statistics).” The National Center for Education Statistics (NCES) Home Page, a Part of the U.S. Department of Education, nces.ed.gov/fastfacts/display.asp?id=77.
  7. Rogoff, Kenneth, et al. “The Link between Immigration and Inequality.” The World Economic Forum, www.weforum.org/agenda/2015/05/the-link-between-immigration-and-inequality/.
  8. Sepúlveda, Magdalena. “Economic Inequality and Taxation Are Feminist Issues.”
  9. Common Dreams, 1 Mar. 2019, www.commondreams.org/views/2019/03/01/economic-inequality-and-taxation-are-femini st-issues.
  10. Shaer, Matthew. “The Archaeology of Wealth Inequality.” Smithsonian.com, Smithsonian Institution, 1 Mar. 2018, www.smithsonianmag.com/history/aracheology-wealth-inequality-180968072/.
  11. “Taxes, Inequality & Growth Archives.” Equitable Growth, equitablegrowth.org/issue/taxes-inequality-growth/.
  12. “The Distribution of Wealth in the United States and Implications for a Net Worth Tax.” Equitable Growth, 20 Mar. 2019, equitablegrowth.org/the-distribution-of-wealth-in-the-united-states-and-implications-for-a- net-worth-tax/.
  13. “The Effects of Taxes and Benefits on Income Inequality: 1977 to Financial Year Ending 2015.” Office for National Statistics, www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomea ndwealth/bulletins/theeffectsoftaxesandbenefitsonincomeinequality/1977tofinancialyearen ding2015.

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