Introduction
It has been boldly predicted that the rise of income inequality in the United States of America will become one of the most complicated issues to resolve over the next ten to twenty years. According to the article by Sean McElwee, “the income share accruing to the top one percent increased from 9 percent in 1976 to 20 percent in 2011” (par. 2).
While in 1979 the top richest 0.1 of US citizens controlled seven percent of the wealth in the country; in 2012 the same percentage of wealthy citizens controlled 22 percent of the wealth. These figures speak for themselves when it comes to answering the question of whether income inequality is increasing in the United States. Wealth and income inequality are directly connected, which means that as the highest incomes are preserved in their positions, pushing up the concentration of wealth without accounting for the lowest income, the gap between the two extremes increases.
Analysis
While many may argue that the increase in inequality was caused by the skill-biased change in the global economy as well as the ‘winner takes all’ mentality, this opinion is far from being true. The real answer was associated with the public policies that encouraged the rise of finance, the decline of unions, and most importantly, favored the richest layers of the population (Gross). This means that the decline in income inequality can be achieved through imposing taxes on wealth and high income.
Despite the fact that the conservatives claimed that imposing taxes on wealth would negatively affect the country’s economic growth, the research conducted by Piketty, Saez, and Stantcheva contradicted this opinion by stating that there was no connection between tax cuts and the economic growth. This means that the highest tax rates can be increased up to eighty percent of income, although the wealthy will never allow for this to occur.
When discussing wages in the US (taking into account inflation), it is important to mention that they have remained stagnant since the 1980s. Workers that are paid the lowest wage in the country did not experience any significant growth in their income, as shown in the diagram below (Figure 1):
Conclusion
While the annual minimum wage remained the same, the worker’s productivity was consistently increasing since the 1590s. Therefore, there has been no balance between the performance of the workers and the compensation for their work. This answers the question of whether income inequality is an issue. Income, as well as wealth inequality, will continue to grow if the public and economic policies remain the same as they have been previously.
While the solutions to the problem are varied, the key advice given by many specialists is reducing the turnout gap that exists between the richest and the poorest layers of the population. Studies have presented evidence for states with increased low-income turnout having higher minimum wages as well as good welfare benefits (McElwee), which are indicative of a high standard of living in the region. Therefore, the battle against inequality will be a long and tedious process that requires drastic measures from the government, which, in turn, should not aim to please those already at the top but try to bring those at the bottom to the appropriate level income and high standards of living.
Works Cited
Gross, Neil. The Decline of Unions and the Rise of Trump. 2016. Web.
McElwee, Sean. Why Income Inequality is America’s Biggest (and Most Difficult) Problem. 2014. Web.
Piketty, Thomas, Emmanuel Saez, and Stephanie Stantcheva. Taxing the 1%: Why the Top Tax Rate Could Be Over 80%. 2011. Web.
“U.S. Annual Wages, 1979-2014” 2015. Web.