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Inequality is not uncommon in any society as it is commonly stated “we are all equal, but unequal. It means that having a society where all people are even is a rare phenomenon. Inequalities are experienced financially and socially. Although it is not surprising to experience such inequalities in societies, it becomes worrying when they become extreme. In most developed countries the levels of inequalities are relatively lower compared to developed countries, therefore, the United States being a first world country it is expected that it would have minimal inequality. However, despite the efforts that had been put in place to end inequality in American society, in recent times, America is becoming more unequal. Unlike in the past where inequality was mainly due to institutionalized discrimination, today, the inequality is being driven by economic and demographical changes.
The United States has been reported to be the most unequal country among the developed countries. Compared with Western Europe countries, in 2018 the US had relatively higher Gini index indicating that there is an unequal distribution of wealth. The Gini index is a measure of a population’s wealth distribution with 0 indicating even distribution and 1 strongly unequal distribution. The US had a score of 0.485 while European countries had a maximum of 0.38. Moreover, four decades ago the US had a score of 0.397 (Telford n.p). Besides, today the top 1% in America control about 15% of the country’s wealth compared to 10% four decades back (Travers n.p). This indicates that the US is not only unequal compared to other developed countries but the inequality is increasing with time
Major American companies have shifted their production operations to other countries hence denying a proportion of Americans jobs, which has led to more income inequality. Companies are seeking cheap labor in countries such as China and India in order to remain competitive globally and maintain good profit margins. In so doing, the lower level Americans are denied those job opportunities. At the same time, it is the high-income earners who benefit as they are either owners or shareholders of these companies. The result is that the gap between the wealthy and the working class increases as the rich make more profits while the lower class miss the well-paying job opportunities in the manufacturing sector.
In the US income is becoming more dependent on educational qualification, which disfavors those who have not been able to acquire higher levels of education. It may seem obvious that the higher the education one has the higher his or her income, but this should not lead to wide income inequalities. However, in the US with demand for skilled employment in service industries, especially those related with innovation and technology rising, those with high levels of education are favored while those with lower education have a likelihood of being unemployed or working in areas that only pay a living wage. One factor that can be blamed for this is the moving of manufacturing companies from the US to other “cheaper” countries. In the manufacturing sector, one does not require a lot of theoretical education qualifications to earn good wages but rather technical skills that are enhanced through apprenticeship and hands-on experience. Therefore, as manufacturing sector opportunities dwindle, educational qualifications are used to discriminate individuals in other sectors, which eventually results in increased income inequality.
The income of the top-ranking workers has been on the rise while that of ordinary employees has either stagnated or increased marginally. It is noted that American organization are concerned with the performance of their to managers and thus tend to “motivate” them by offering them handsome salaries and packages, while the normal worker is averagely paid a living wage. Compared with 1965, the ratio of CEO-to-worker pay has significantly risen as in 2017, from 20-1 to 312 to 1 (Travers n.p). It indicates that the increasing focus in making profits has made organizations to over-pay top managers intending to retain them while the common workers are not given similar considerations, which heightens the inequality in America. Though not based on statistics it can be argued that corporates behave this way due to the availability of cheaper labour from immigrants, outsourcing to “cheap” labour countries, or dwindling unionization of workers.
Changes in marital status in the American a populations is contributing to the inequality. Nowadays there is a high number of single-adult households as more people are marrying late while the divorce rate is also high. For the wealthy, this is not more of a problem but for the poor, it is a significant problem because it means raising children as single-parents or sustaining life needs “single-handedly” which is strains their already little income. Furthermore, it is much easier for individuals from wealthy backgrounds or high-income earners to sustain a single life but for the poor especially women, it is critical to living as couples to pool incomes that can sustain life adequately or drive out of poverty. It implies that a general increase in divorce rates and single living is somehow causing inequality by “downsizing” the incomes of poor households.
Despite the efforts to revive the US economy, the inequality in the country is rising as indicated in the latest statistics. The changes in economic and demographical factors partly contribute to the increasing inequality. The inequality problem can be solved through legislation by developing laws on increasing minimum wage and making it mandatory, disclosing the earnings of top managers, giving American organizations subsidies to concentrate their operations in the country, and having robust social programs to enable poor households to get out of poverty despite the changing family dynamics.
Telford, Taylor. “Income Inequality In America Is The Highest It’S Been Since Census
Bureau Started Tracking It, Data Shows”. Washingtonpost, 2019, https://www.washingtonpost.com/business/2019/09/26/income-inequality-america-highest-its-been-since-census-started-tracking-it-data-show/. Accessed 26 Oct 2019.
Travers, Mark. “What Does America’s Top 5% Think About Income Inequality?”.
Forbes.Com, 2019, https://www.forbes.com/sites/traversmark/2019/07/23/what-does-americas-top-5-think-about-income-inequality/#4f4e2ca31b68.