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Income Inequality and Its History in the US Research Paper


Distribution of personal income is influenced by ability, gender, productivity, race, and work experience. Inheritance is also a cause. The history of the United States shows inconsistency in income distribution among people of different classes. The distribution has fluctuated between eighteen percent and twenty-four percent for the top earners since the early twentieth century when the statistics could be recorded.

From 1937 to 1947, the US saw a decline in income inequality. Factors that were attributed to this included the following. During the World War II, The National Labor Board reduced the income for the top earners while at the same time increasing the income for the poor and the working class. The strengthened trade unions and the New Deal on taxation that was highly progressive played a big role. This stability lasted up to 1970s. Political good will is one of the factors attributed to this growth. During this period, trade unions were very strong. There was a higher demand for workers and American manufacturing firms faced little competition. This trend kept the wages of workers high throughout the period (Rossi, Lipsey, Freeman, 2004).

Starting from the mid 1970s, income has been unequal, with an exception in 1990-1991, 2001, and 2007-2009, when the US experienced economic recession. The trend has been continuous with the gap widening. This period has seen the top income earners become the most beneficiaries of employment compensation. According to the 2007 statistics, their share of the total income has increased by 20.9 percent after income transfers and federal taxes. This is a report by the Congressional Budget Office. There was a decline in inequality during the Great Recession of 2007-2009 when the lowest American earned a wage with less that 11.6 percent increase. This was short-lived because inequality increased again among the bottom Americans by a 0.2 percent in income gains.

Disparities exist in the wage sector. This takes place irrespective of the fact that productivity has gone up. Those in the highest percentile have received an increase of above 30 percent. The increase has been high at the top. This group represents one percent of people found in the entertainment industry, investment, bankers, Chief Executives, and sports personalities who earn the highest salaries (Mobey, & Parker, 2002). Those in the lower level have had less than ten percent increase.

Income distribution is a subject that many scholars have explored. Statistics show a reduced gap between the two genders. It shows a stagnant wage structure among races, but an extreme distance among the poor, middle, and top earners. Disparities among states show that there are variations, with Texas having the highest while Maine has the lowest, with a Gini index of 0.3 percent. The good aspects of this topic also come from the way scholars differ in what they feel regarding the causes of inequality. Scholars differ greatly when it comes to the solutions proposed. Increase in demand for skilled labor and education are the causes stated by some scholars while t others point out that the topic is not well explored and the concept is misunderstood. The topic covers issues that affect people, municipalities, states, and the nation. It offers an opportunity to scholars to compare the statistics with the rest of the world. The topic is of interest to many researchers because it has serious gaps in research.

References

Mobey, A., & Parker, D. (2002). Risk evaluation and its importance to project implementation. Work Study, 51(4), 202‑206.

Rossi, P. H., Lipsey, M. W., Freeman, H. E., (2004). Evaluation A Systematic Approach (7th ed). Thousand Oaks, CA: SAGE Publications.

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IvyPanda. (2020, July 21). Income Inequality and Its History in the US. Retrieved from https://ivypanda.com/essays/income-inequality-and-its-history-in-the-us/

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"Income Inequality and Its History in the US." IvyPanda, 21 July 2020, ivypanda.com/essays/income-inequality-and-its-history-in-the-us/.

1. IvyPanda. "Income Inequality and Its History in the US." July 21, 2020. https://ivypanda.com/essays/income-inequality-and-its-history-in-the-us/.


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IvyPanda. "Income Inequality and Its History in the US." July 21, 2020. https://ivypanda.com/essays/income-inequality-and-its-history-in-the-us/.

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IvyPanda. 2020. "Income Inequality and Its History in the US." July 21, 2020. https://ivypanda.com/essays/income-inequality-and-its-history-in-the-us/.

References

IvyPanda. (2020) 'Income Inequality and Its History in the US'. 21 July.

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