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Income Inequality in America, Essay Example

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Income Inequality in America. Is it a problem and how can it be fixed?

The fact that income inequality is a problem in the United States is undeniable. Claims of the widened income gap between rich Americans and poor Americans, in addition to the diminishing middle class, is a cause for concern (Yates 1). The income inequality is one of the worse political and economic problems the United States faces (Piketty and Saez 1-3). It causes significant problems to social and political stability. It is also an indicator of national decline. Indeed, it is based on this premise that, this essay examines whether income inequality in America is a problem, as well as how it can be fixed.

Income inequality leads to political change. As Saez and Zucman (1-6) explain, loss of income by the middle class compared to the top-earners leads to political change. During the 2000s, many businesses emerged seeking political offices, as they catered for nearly 30 times more employees than the trade unions. Between the year 2000 and 2010, business interest groups spent $492 million on labor, and nearly $28.6 billion on sponsoring activism. This led to the rise of political setting the business groups dominated (Smith 3-5).

Income inequality has adverse effects on democracy. Some scholars have considered that income inequality is not compatible with real democracy (Milanovic 1). This is since creating a disparity between wealthy and poor is historically the main cause of most revolution. Indeed, it is commented that the political system in the United States faces serious threats of drifting towards a kind of oligarchy by influencing the affluent, corporations, and special interest groups. Even though, income inequality may not have impact on economic growth, the action by the government may reduce the current levels. This raises tax rates on the wealthy. It may also cause political dispute or friction – between the poor and the rich.

Income inequality contributes to national poverty. Greater income inequality is likely to encourage greater rates of poverty, as under such situations, income shifts from those in the lower income bracket to those in the upper-income bracket. Saez and Zucman (1-6) argue that when wealth remains in upper income bracket, it may lead to political revolutions and policy reforms to offset the impacts that induce poverty. This has been the trend over the decade (Economist 1). The gap in earnings has also increased over the past five years. Current statistics from the U.S. Census shows that in 2010, the wealthiest 20 percent of entire households was allocated 50.2 percent of the sum household-income, compared to the poorest 20 percent, which received 3.3 percent. In the 1980s, the income shares of the richest households received 44.1 percent. The poorest got 4.2 percent. This shows rising inequality and poverty. Further statistics indicates that individuals in the least-affluent households lost nearly 21.4 percent of their income share. On the other hand, the most-affluent households witnessed an income rise of nearly 13.8 percent. Conversely, the remaining two poorest quintiles lost income (Economist 1).

Income inequality leads to political polarization. As Political Research Quarterly establishes, income inequality is connected to the current political polarization in the United States. In its 2013 study, Political Research Quarterly established that officials who were elected tended respond to the whims of the officials within the upper-income bracket, as a result ignoring the needs of people within the lower income group. The analysis provided by Martin and Harris (1) show that, income inequality is connected to the extent to which the House of Representatives polarization has always voted.

Income inequality also leads to social stratification. Martin and Harris (1) show that class divisions have mainly resulted due to income inequality. This has led to class warfare where the rich rally around the rich and the poor rally around the poor to gain political emancipation. Hence, the rich tend to create an own virtual country, which in their perception should be a self-contained world that is complete with first-rate social services, separate economy, and infrastructure. Indeed, the gap between poor and the rich is widening more in the United States than most advanced country. A growing consensus, for that reason, is that Americans have placed emphasis on pursuing economic growth instead of income redistribution. This argument is supported by current economists, such as Corak (2013) in his analysis of theorist Alan Krueger’s “Great Gatsby Curve.” In his review, Corak (2013) indicates that nations with greater income inequalities also tend to have a greater proportion of economic advantages and disadvantages. The trend is passed on from parents to their offspring.

On the other hand, some political theorists have argued that income inequality is not a problem, and that the problems have been overstated.

Indeed, Saez and Zucman (1-6) perceive that despite the existence of income inequality, economic growth and equality in terms of getting opportunities should be what matters. Some commentators have also expressed that despite being an American problem, it is also a global problem. As a result, it should not trigger significant policy reforms. Others have also expressed that income inequality has some underlying advantages, leading to a well-functioning and competition-driven economy. Additionally, significant policy reforms to cut out income inequality may lead to policies that lessen the welfare of the more affluent individuals.

A section of researchers also argues that there is no basis in the argument that income inequality slows economic and socio-political growth. Responding to claims that income inequality slows economic and socio-political growth, Petryni (1) argues that inequality is healthy within a free market economy, as it promotes greater competition for economic and political opportunities.

At the same time, wealth inequalities tend to compensate for themselves where an extensive increase in wealth occurs. This also implies that since the income inequalities do not pose significant political or economic problems, forced wealth transfers through taxation may obliterate the income pools needed to create new ventures, leading to further political discord between the poor and the wealthy in the society. Indeed, some recent studies have established a link between high marginal tax rates on high-income earners and greater growth in employment (Petryni 1).

Some political and social theorists also perceived income inequality as valuable and natural characteristic of US economy. The American Enterprise Institute sees the growth of income inequality gap as linked to the growth of opportunities—including the motivation and desire to seek political and social emancipation.

Smith (1) further contends that inequality emanates from the growth of economic prosperity and leads to an improved standard of living of the entire US population. Such incomes, Milanovic (1) argues, are a way of rewarding certain actors in the economy for their maximal investment efforts in the future. Towards this end, therefore, suppressing inequality discourages output and pursuit of political emancipation.

Conclusion and recommendations

Largely, income inequality is a problem in the United States. Income inequality contributes to national poverty. It also has adverse effects on democracy. Further, it leads to political change. Income inequality also leads to political polarization and stratification.

Hence, there is a need for more advanced tax and transfer policies that can align the United States with the other developed nations. This requires tax reforms, such as enacting tax incidence adjustments, subsidizing healthcare and increasing the social security, heavy investment in infrastructure, fortifying labor influence and providing higher education at low costs.

Making education available to more Americans through policies that subsidize cost of education will mean that more Americans have an opportunity for better income. This is since individuals with high education qualification report lower unemployment rate. However, equal job opportunities are also crucial. Public expenditure on welfare should be increased to ensure social and economic security, where the government provides subsidized healthcare. The more affluent members of the society should also be taxed higher than, the poor Americans.

Works Cited

Corak, Miles. “Income Inequality, Equality of Opportunity, and Intergenerational Mobility.” Journal of Economic Perspectives 27.3(2013): 79–102

Economist, The. “The rich, the poor and the growing gap between them,” 2006. 11 April 2015, <http://www.economist.com/node/7055911>

Kenworthy, Lane. “Does More Equality Mean Less Economic Growth?” 2007, <http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/>

Martin, Jonathan and Harris, John. “President Obama, Republicans fight the class war.” Politico, 2012. <http://www.politico.com/story/2013/04/barack-obama-class-warrior-90052.html>

Milanovic, Branko. “More or Less.” International Monetary Fund, 2011.

Petryni, Matt. “Advantages & Disadvantages to Income Inequality.” n.d. 11 April 2015, <http://www.ehow.com/info_11415987_advantages-disadvantages-income-inequality.html>

Piketty, Thomas and Saez, Emmanuel. “Income Inequality In The United States, 1913–1998.” The Quarterly Journal Of Economics 28.1 (2003): 1-39

Saez, Emmanuel and Zucman, Gabriel. “Wealth and Inequality in the United States Since 1913: Evidence from Capitalised Income Tax Data.” National Bureau of Economic Research: Cambridge: 2013

Smith, Hedrick. “Who Stole the American Dream.” Random House: New York, 2012. < http://newshare.com/ruleschange/book-notes.pdf>

Todd, Michael. “The Benefits of Wealth Inequality (and Why We Should Not Fear It).” Pacific Standard , 2013. <http://www.psmag.com/business-economics/benefits-wealth-inequality-now-fear-67567>

Yates, Michael. “The Great Inequality.” Monthly Review 63.10 (2012)

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Home — Essay Samples — Economics — Economic Issues — Income Inequality

Essays on Income Inequality

Income inequality is a pressing issue that affects societies globally. As such, it is an important topic for academic discussion and analysis. When selecting an income inequality essay topic, it is crucial to choose a subject that is both relevant and interesting. The chosen topic should also allow for in-depth research and analysis. This will ensure that the essay is engaging, informative, and thought-provoking.

Income inequality is a multifaceted issue that has far-reaching implications for individuals and society as a whole. By selecting the right essay topic, students can explore various aspects of income inequality and its impact on different facets of life, such as education, healthcare, and social mobility. This allows for a comprehensive understanding of the issue and encourages critical thinking and discussion.

When selecting an income inequality essay topic, it is important to consider the student's interests, the availability of research material, and the potential for original analysis. Students should also consider the relevance of the topic to current societal and economic trends. Additionally, choosing a topic that allows for the exploration of different perspectives and potential solutions can lead to a more engaging and impactful essay.

Recommended Income Inequality Essay Topics

Income inequality is a prominent issue in society, and writing an essay on this topic can help to raise awareness and spark important discussions. Here is a list of income inequality essay topics to consider:

Economic Impact

• The relationship between income inequality and economic growth
• The impact of income inequality on consumer spending
• Income inequality and its effect on poverty rates
• The role of income inequality in financial crises
• Globalization and its impact on income inequality

Social Impact

• Income inequality and access to quality education
• The effects of income inequality on healthcare disparities
• Income inequality and its influence on crime rates
• The relationship between income inequality and social mobility
• Income inequality and its impact on mental health

Policy and Solutions

• Strategies to reduce income inequality through tax reform
• The role of minimum wage policies in addressing income inequality
• Universal basic income as a solution to income inequality
• The impact of social welfare programs on income inequality
• The role of education and skill development in reducing income inequality

Gender and Income Inequality

• The gender wage gap and its contribution to income inequality
• Income inequality and women's access to leadership positions
• The intersection of race, gender, and income inequality
• Gender-based discrimination and its impact on income inequality
• Policies and initiatives to address gender-based income disparities

Geographical Disparities

• Rural vs. urban income inequality: A comparative analysis
• The impact of income inequality on regional economic development
• Income inequality and access to resources in developing countries
• Income inequality in specific regions (e.g., Appalachia, the Rust Belt)
• The role of infrastructure and public services in addressing geographical income disparities

By choosing a topic from the above list, students can delve into various aspects of income inequality and contribute to the ongoing dialogue on this critical issue. Each topic provides ample opportunities for in-depth research, analysis, and the exploration of potential solutions.

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Inequality in Society: Conflict and Functionalism Theories Essay

Introduction, conflict and functionalism theories, challenge to social equality.

There is no question that inequality is prevalent in all sorts of human society. No matter the level of human development, inequality seems to be existent. It is even present in simple cultures where there is minimal variation in wealth.

Some individuals in such cultures may have privilege because of their prowess in certain skills such as hunting, medicine or access to ancestral power. In modern societies, inequality manifests in social and economic classes, power, income, access to health facilities, academic, gender and other forms. Social economical classes are the most common in most societies and have attracted attention from many sociologists. Many societies try to address the class issue but with little success.

Even socialist and communist governments that try to eliminate social economic classes fail to achieve equality. In Canada today, inequality is evident in various forms. Social economic classes, income variation, health, academic, ethnic, gender and other forms of inequality are obvious in the country. In the essay, I will join other sociologists in trying to address the persistent question “why inequality exist?”

Inequality, also referred to as social stratification, has been a core subject to sociologists for many years (Macionis and Linda 2010). Sociologists try to understand, explain and prescribe solutions to the issue of inequality. Despite of major sociologists such as Max Weber, Karl Marx and others trying to prescribe solution to inequality, the issue continues to persist. Marx was critical of capitalism and accused it of existence of social classes.

On the other hand, Weber agreed with Marx that economic interests led to social classes but viewed social stratification in terms of class, prestige and power. There are mainly two schools of thought to the issue of inequality: conflict and functional theories. To understand why inequality exists, it is helpful to review the divergent positions presented by the two theories and try to come up with a reconciling position.

Conflict and functionalism theories are the main theories trying to provide answers to why inequality exists in the society. The two theories take fundamentally different approaches to explain the issue. Functionalism theory views inequality as unavoidable and important to the society while conflict theory considers inequality to result from conflict and coercion in the social system (Andersen and Taylor 2006).

To functionalism sociologists, society is a system of parts with each part having useful contribution to the system. According to the theory, society can be compared to human body where various parts such as lungs, hands, heart, and eyes contribute to functionality of the body as a whole.

The way the social system maintains itself is of more interest to functionalist sociologists than specific interactions between the different parts of the system. To functionalists, inequality is unavoidable and leads to some good to the society. The theory assumes that any pattern in social system has its good purposes. Considering occupations, functionalists justify inequality in rewards by asserting that the rewards reflect the importance of the different occupations to the system.

For instance, functionalists would explain the high rewards and respect given to some occupations such as doctors, scientists and judges as compared to other occupations such farming and garbage collections, by saying that the former occupations are more important to the society as a whole. In addition, they would claim that such occupations require much talent, effort and education. Therefore, the high reward is meant to encourage individuals to take the pain to occupy such important positions.

Conflict theory provides the other extreme explanation to inequality in society. Unlike functionalism theory, conflict theory compares society to war. Conflict theory sociologists consider the society to be held together by conflict and coercion among members of the society.

According to Ridney (2001), conflict theory likens society to battlefield where members compete for control of limited resources and power. Unlike functionalists that stratify the society to functional parts that cooperate for the good of the society, conflict theory views society as consisting of competing parts (Rigney 2001).

The theorists, led by Karl Marx, consider social classes to result from blocked opportunities rather than talent and effort. While functionalists justify unequal rewards for different occupations as a way to utilize important talents and abilities, conflict theorists consider stratification in the society to limit utilization of talents from lower class. To conflict theorists, stratification in the society does not have positive contribution to the society.

Conflict and functionality theories on inequality shed light into causes of social stratification but do not completely explain the situation. The society can be viewed both as functional parts and as competing parts. Doctors, lawyers, scientists, carpenters, farmers, garbage collectors, cooks and other occupations are important to the society.

As functionalists argue, some occupations such as medicine require more effort and many years of preparation. It is therefore reasonable to reward doctors, judges and other such occupations highly to motivate individuals to occupy them. It is also natural to give respect and honor to individuals with unique and important skills. For instance, if a country has a single neurosurgeon, the surgeon would be valued and respected without asking for it.

However, it should be appreciated that other occupations that are considered less important, such as farming, are vital to sustainability of a society. Functionalism therefore makes sense when the society is considered as a system without deep consideration of individual members of the system. For instance, the theory cannot provide a convincing explanation to why some individual strive for wealth and power, since amassing wealth and power is not always good for the society.

Conflict theory provides a more practical explanation to inequality. Competition is a central thing in the society. Individuals compete for scarce resource, recognition, power and prestige (Macionis 2001). Considering scenario of a school, students compete for attention from their teacher, to be included in their school’s base-ball team, to top their class academically, to win scholarship for high education and many other things.

At individual lever, a student chooses an occupation mostly not by its contribution to the society but by reward and prestige that would come with it. In business, an individual is mostly motivated by the power and prestige that go along with wealth rather than importance of their service to the society. Conflict theory can explain competition in school, business, politics, and other occupation and social stratification that result. Bottom-line to stratified society, in fact, is the human propensity to gain dominion over others.

Attaining social equality is a major objective for human right bodies across the globe. However, that objective is not easy to achieve considering various manifestation of inequality in the world. In Canada, despite of various steps taken to ensure equality in various forms, inequality persists.

Social equality implies all people in a society having equal status. At minimum social equality implies equal rights to all individual in a society. The state however is not easy to achieve mostly because of historic inequality that already exist. For instance, although Canadian constitution guarantees equal rights to quality health and education, there is evident inequality in health and education.

Individuals in upper social economic classes have resources to access high standard of health services and afford quality education for themselves and for their children. Limited interaction between individuals from different social class makes it hard to achieve equality.

Individuals in upper social class tend to relate more with individuals in the same social class while individuals in other social classes do the same. Therefore, there is little chance for an individual to cross over from on social class to another (Horowitz 1997). In addition, individuals in privileged social class have resources, power and influence to maintain the status quo of inequality.

Division of labor has high contribution to inequality. Different occupations attract varying rewards and therefore contribute to inequality. Occupations such as medicine, engineering and law tend to attract high rewards as compared to other occupations as gardening. Even in occupations requiring relatively equal years of training, rewards seem to vary (Loseke 1999).

For example, despite of going through almost equal years of training, a teacher is likely to earn less as compared to an engineer. In addition, division of labor leads to some occupations being considered superior to others therefore promoting social stratification.

Individuals from different social economic classes may understand inequality differently. A wealthy individual can consider social inequality proportional to creativity and effort that an individual exerts in his endeavors. The rich may consider their fortune to result from their hard work and consider poverty to result from laziness and lack of initiative. On the other hand, a poor person can view social stratification to result from social injustice.

In conclusion, there is no obvious answer to why inequality exists in society. Inequality continues to exist even in countries with high level of human development as Canada. Functionalism and conflict theories can however help understand social stratification. To functionalists, social stratification is not necessarily evil but serves an important function in the society. On the other hand, conflict theory explains inequality to result from competition in society.

Without regard to how inequality comes about, it is obvious that high level of inequality is dehumanizing and can lead to social evils such as crime. It is therefore important to minimize inequality as much as possible. To promote social equality, an enabling environment that exposes all individuals to equal opportunities is necessary.

Andersen, Margaret and Howard Taylor. 2006. Sociology: the essentials . New York: Cengage Learning.

Horowitz, Ruth.1997. “Barriers and Bridges to Class Mobility and Formation: Ethnographies of Stratification”. Sociological Methods and Research 25 (1):495-538.

Loseke, Donileen. 1999. Thinking about Social Problems: An Introduction to Constructionist Perspectives . New York: Aldine de Gruyter.

Macionis, John and Linda Gerber. 2010. Sociology, 7 th Canadian edition. Toronto: Pearson Education Canada.

Macionis, John. 2001. Sociology , 8 th edition. Upper Saddle River, NJ: Prentice-Hall.

Rigney, Daniel. 2001. The Metaphorical Society: An Invitation to Social Theory . Lanham, MD: Rowman & Littlefield.

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Essay on Income Inequality

Students are often asked to write an essay on Income Inequality in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on Income Inequality

Understanding income inequality.

Income inequality is about how money is not shared equally among people. Imagine if ten friends had 100 cookies, but one friend had 90 cookies while the others shared the remaining 10. That’s not fair, right? This is what happens when a few people have most of the money, and many others have very little.

Causes of Income Inequality

Many things cause income inequality. Some people get paid a lot because they have rare skills or lead big companies. Others might not earn much because their jobs are common or don’t need special training. Also, sometimes where you live or your family background can affect how much money you can make.

Effects of Income Inequality

When income inequality is high, it can lead to problems. People with less money might not be able to buy healthy food, live in safe homes, or go to a good school. This can make it hard for them to get better jobs in the future. Also, when a few people have a lot of money, they can have too much power over things that affect everyone.

Reducing Income Inequality

To make things more equal, governments can create laws to help. They can make sure that people are paid fairly for their work and help those who earn less through programs and benefits. Also, providing good education for everyone gives people a better chance to earn a decent living in the future.

250 Words Essay on Income Inequality

What is income inequality.

Income inequality is about how money is not shared equally among people. Imagine if you had 100 cookies to give out to a class of 20 students. If one student got 50 cookies and the rest were shared by the others, that would be unfair. That’s what happens with money in our world. Some people have a lot of it, and many others have very little.

Why Does It Happen?

This unfairness happens for many reasons. Some people are born into families with lots of money, while others are not. Some places have better schools and jobs, which helps people earn more. Other times, rules made by leaders can make it easier for rich people to get richer and harder for poor people to catch up.

Problems It Causes

When income is not shared fairly, it can cause big problems. People with less money might not be able to buy enough food, get a good education, or live in a safe home. This can make them sad or sick. It can also make it hard for them to help their children have a better life.

What Can We Do?

To fix this, we can make sure everyone has a fair chance to go to good schools and get good jobs. Leaders can change rules so that everyone pays fair taxes and gets help when they need it. By working together, we can make sure the cookies — I mean money — is shared in a way that is fair for everyone.

500 Words Essay on Income Inequality

What is income inequality.

Income inequality is a term that describes how money is not shared equally among people in a country or the world. Imagine if we had 100 cookies and 100 people in a room. If everyone got one cookie, that would be equal. But if one person took half of the cookies and left the other half for the 99 people to share, that would be unequal. This is what happens with money: some people have a lot of it while others have very little.

Why Does Income Inequality Happen?

There are many reasons why income is not shared equally. Some people have jobs that pay a lot of money, like doctors or company bosses, while others have jobs that pay less, like waiters or cleaners. Also, some people are born into families with a lot of money, giving them a head start in life. Others might not get good education or live in places with fewer job chances, making it harder for them to earn more money.

When income inequality is high, it can cause problems. People with less money might not be able to afford good food, a nice place to live, or doctor visits when they are sick. They might feel left out or unhappy, which can lead to bigger problems in society, like crime or people not trusting each other. Kids might not get the same chances in life if their families don’t have much money, which can make income inequality last even longer.

What Can Be Done?

To make income more equal, governments can do things like create laws that make sure workers get fair pay. They can also spend money on schools and training so that everyone has a chance to get a good job. Taxes are important too. People with more money can pay more in taxes, which the government can then use to help those with less.

Income Inequality Around the World

Income inequality is not just a problem in one place; it happens all over the world. In some countries, it is very big, while in others, it is smaller. Countries that have less income inequality often have laws that help share money more fairly and provide good public services like healthcare and education for everyone.

Income inequality is about how money is not shared the same way between people. It can cause problems like poor health, lack of education, and unhappiness. But there are ways to fix it, like fair pay, taxes, and spending on public services. By understanding income inequality, we can work towards a world where everyone has a fair chance and enough cookies to share.

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Universal Basic Income - Student Essay

Last updated 13 Jan 2019

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Here is an answer to the question: "Assess the view that the UK Government should use fiscal policy to provide a guaranteed minimum income as a strategy to reduce inequality."

Tim Harford goes bouldering with Rutger Bregman, the provocative thinker whose bestselling book argues for a universal basic income https://t.co/bckPeLuAkm — Financial Times (@FinancialTimes) March 10, 2018

In recent years talk of a guaranteed minimum income, more commonly known as a Universal Basic Income (UBI), has risen enormously. In the wake of the Global Financial Crisis, many now look to our struggling welfare systems and unpopular austerity measures in despair. Drastic measures are now being called for. Indeed a guaranteed minimum income is one of those, and yet it has supporters such as Mark Zuckerberg, Stephen Hawking and Bernie Sanders as some of its many advocates. The idea is exactly as it sounds: each and every citizen will gain a certain income per week or month, with no strings attached.

In addition to the financial crisis, the cry for a universal basic income has largely grown due to the ‘hollowing out’ effect of technology that has propelled inequality to unprecedented heights. Primarily, middle-income jobs that are more administrative have been eroded, while the more physically-demanding, lower-income tasks are by and large yet to be automated. And it is why proponents of UBI believe a cash injection into the poorest sections of society could do so much for overall living standards. For one it could stimulate entrepreneurship, because workers will finally have enough in their pocket to make proper investment. Another possibility could be more volunteering in local communities, where workers won’t have to balance three jobs at once with no time for anything else. In an age of consumerism gone mad, there seems few other options but to provide everyone with a small sum on the side in an attempt to temper aggregate demand. It might allow the average gig economy worker to not work late evenings anymore so he can see his children, or the new mother to take a few more weeks leave before rushing back to work.

UBI has in fact already been tested. In January 2017, Finland launched a two-year pilot scheme where 2,000 unemployed people have been given 560 euros (around £475) per month. One lucky beneficiary, Juha Jarvinen, 39, spoke to the BBC about how it transformed his life: “I feel like a free man. I got out of jail and slavery … I felt I am back in society and I have my humanity back”. His situation had been desperate after all. He was running a small business making wooden window frames before it went bust in the 2008 financial crash, and since then he’d hardly recovered. Now though, he’s started up a new business making drums, and it brings in around 1000 euros a month, on top of his UBI. Indeed proponents of UBI will insist for the vast majority that’s how the money is really used.

The argument for UBI is also based upon what society would look like in years to come should it not go ahead. In ten to twenty years, the number of workers being displaced by automation looks set to increase. Their redundant skills with an underfunded benefits system unable to retrain them will then increase brain drain and hysteresis. With GDP growth then suffering, capital investment will dwindle yet further, and tragedies such as the fire at Grenfell Tower last June where cheap materials proved vastly inadequate will only occur more often. But with UBI, the burden on our existing welfare state will be greatly relieved, as families will no longer drain our health care and range of benefits like before. The estimated cost of UBI will therefore have to be contextualised on two counts – not only through it relieving public services but also through the lack of maintenance costs that the benefits system still endures. A world of UBI might seem impossible right now. In fact the same was said before the minimum wage, and even the NHS – where it seemed ridiculous to give the rich something they could already afford. Doubters of UBI should not get too confident.

Indeed they shouldn’t – the pace of economic progress and political upheaval suggests exactly that. But it might also suggest that an argument that floated around for decades might just have passed its sell-by date, because the labour market is not as it was. Only around fifty years ago, the workplace was a male-dominated arena, workers had one job for life and technology was still in its early stages. With all the complexities we therefore face, the notion that we must wipe the slate clean with a universal basic income that caters equally for such diverse circumstances is too simplistic. Already, despite its rigorous means-testing that one would hope should send the money where it’s most in need, we have a failing benefits system that’s desperately underfunded. Thus to provide equally for the families with elderly relatives or young children and those without would only seek to widen inequality by diluting whatever help available to the most deserving. Billionaires would even get a little more.

On the most discounted rate of £75 a week per citizen in the UK, the policy would total to £120 billion, 5% of GDP and to balance the books experts say the marginal rate of income tax would have to hit 75% - far exceeding the next highest tax rate of 60.2% in Denmark. Granted, the current benefits system has its inefficiencies: each year according to the National Audit Office around £230m is spent on sanctioning that saves an estimated £130m, leaving around £100m of government money wasted. But by comparison to UBI the scale of current funding worries are next to nothing. The incentives to work with UBI in place would be almost non-existent, and the long term effects of dependency and emigration of skilful labour could take generations to recover again.

The social benefits claimed by UBI proponents are also misguided. While cutting working hours or even becoming redundant might sound liberating, income won’t be the only loss. People also gain purpose, status, skills, networks and friendships through work. Delinking both income and work, while rewarding people for staying at home is simply a catalyst for social decay. With high unemployment, crime, drugs and broken families will continue to grow and with it so too will pressure on public services. Politically, the idea is also quite a dangerous one. UBI as a utopian thought-experiment sounds so awe-inspiring that real discussion about the future of jobs could well be postponed. The growing clamour in more populous countries with larger inequality could also take on a more populist stance, where leaders on the left will sell it as if it’s a flawless cure for all ills.

To say that UBI is not the answer is not to reject the legitimate concerns of vulnerable workers though. Other solutions must instead be looked at, such as higher marginal rates of taxation. Inevitably, the question is always whether the rich will tolerate it, and on the scale that’s required the answer seems not. In Canada, where UBI was trialled, the majority of respondents in a poll of 1,500 who were open to UBI still were unwilling to pay higher tax to finance the program. The cut from 50 to 45% income taxation in the UK in 2013 after the HMRC estimated the former would probably raise no more revenue also suggests returning to that figure or even beyond would be unwise – equally so if it is used to fund UBI. Bumping the 40% rate to 45% for £46k+ earners is a safer bet but also runs the risk of the same unintended consequences, stifling entrepreneurship that UBI sought to improve and potentially teasing the rich to venture abroad for lower rates.

A rise in VAT tax from 25 to 30% has also been discussed as an alternative, to reduce aggregate demand slightly and help reign in the UK’s long-hours culture – in fact research shows Britons work on average 43.6 hours a week, above the European average of 40.3 and France’s limit of just 35. Alternatively, the government could put greater emphasis on demerit goods such as fast food and sugary drinks, in an attempt to contain the obesity epidemic, thereby at least providing some social benefit.

Complications also arise here, as the inelastic demand for many of these goods would call for a greater level of tax and with that greater potential for backlash. More importantly, much of the consumption of these goods is because they are cheap, and taxing them would be regressive, thus widening inequality rather than reducing it. The same goes for a VAT tax, since the poor spend a higher proportion of their income than the rich.

Other possibilities must be considered, perhaps looking at one of the root causes of growing inequality: technology. With conglomerates such as the ‘FAANG’s (Facebook, Amazon, Apple, Netflix and Google) concentrating such a large section of wealth, and start-ups in general locating in cities because of higher multiplier effects, the government could launch training schemes specifically for entrepreneurship in rural areas, for example. Collaborating with the tech firms that are based rurally could help springboard that project. The patent box initiative, allowing lower rates of corporation tax for certain inventions, could also reserve rights to part of the wealth should the firm become the next tech giant.

Another step towards reducing inequality could be introducing what’s known as Universal Basic Assets (UBA), which identifies a fundamental set of resources every citizen should have access to – such as financial security, housing, health care and education – in order to achieve economic prosperity. When divided into three categories: private, public and open, it’s clear that public assets such as public education and health care are hugely important, and through encouraging more capital flows through distributive initiatives, such as cooperatives and employee-stock-owned companies, greater funding can be put aside. The Government could also give people ownership of their data, so they can use it as an asset which they – not Facebook or Google, for example – can leverage, and capture economic value. Critics might say it will discourage entrepreneurship, but ultimately it merely seeks to redistribute new assets to the workers who are fulfilling these firms, and not the original asset holders.

In many ways, the great debate about Universal Basic Income and its alternatives, and its powers to reduce inequality is a worthwhile one whatever stance one takes. As inequality reaches new heights though, the hype around UBI and other suggestions like it have received precious little rigorous examination. Finland’s small-scale experiment of 2,000 unemployed citizens answers few questions, and nor does a similar trial in Ontario, Canada. Nevertheless the number and scale of pilots is starting to see an uptick. Y Combinator’s 5-year trial for 3,000 Americans and Scotland’s investment of over £250m into projects in Edinburgh and Glasgow are just some showing promise.

So perhaps the verdict on whether UBI really does work still awaits us. But lessons can also be learnt from what we know now. The first is that there is much reform still to be done with the benefits system – be it improving conditionality, sanctioning, providing support for people re-skill, or schemes to improve less-affluent workers’ capabilities with technology. Indeed the labour market as a whole could do with better regulation over zero-hours contracts and greater job security, perhaps by handing incentives to employers to minimise turnover. Whatever the solution to reduce inequality and poverty might be, it mustn’t be oversimplified, as is the danger with shouts for a UBI like it’s a silver bullet. But neither must it be ignored.

Suggestions for further reading on this issue

Why Basic Income alone will not be a panacea to social insecurity https://t.co/lr7FSm7YKg — LSE British Politics and Policy (@LSEpoliticsblog) October 22, 2018

Yes, Universal Basic Income can help #endukpoverty , says @anthonypainter https://t.co/LJTukg9W0K — The RSA (@theRSAorg) May 1, 2018

A lack of ambition ended Finland's experiment with a universal basic income https://t.co/AL6bwCDk2F pic.twitter.com/hX0dj7y51G — Bloomberg Opinion (@opinion) April 29, 2018

The ending of the experiment in Finland has drawn media attention for the wrong reasons https://t.co/4WRaeizWSk — The Economist (@TheEconomist) May 1, 2018

Here's how a universal basic income could work pic.twitter.com/hbhT9T5HdJ — Business Insider (@BusinessInsider) May 10, 2018

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Writing About Income Inequality

Academic writing

Essay paper writing

As former students, we know perfectly well that sometimes, you need a gentle push and a little help when it comes to successfully coping with writing tasks. If you need to write a research paper or essay on income inequality, this article is our “gentle push” for you. Here, you will not only find a variety of topics to choose from but also get useful writing tips that will allow you to finish your assignment pretty quickly. Without further ado, let’s dive in! 

Income inequality essay topics

Here is our top pick of ideas for essays on income inequality:

• Effects of income inequality essay
• How to solve the problem of income inequality in the country of your choice?
• Income inequality in the household essay
• Income inequality is too big to ignore essay
• Essay on income inequality and happiness
• The upside of income inequality essay
• History of income inequality essay
• Essay on wealth and poverty in the US
• Effects of income inequality in America essay
• Income inequality exploratory essay
• “How income inequality affects the American dream?” Essay
• My solutions to income inequality
• Essay on economic growth and income inequality in America in the 90’s vs now
• Student essay about US income inequality affecting educational opportunities
• Income inequality and poverty essay
• Argumentative essay on income inequality is rooted in discrimination
• “How income inequality is affecting the poor?” essay
• Income inequality in education essay
• Poverty vs wealth essay: Why company’s CEOs make so much more than regular workers?
• Gender income inequality essay
• Immigration, poverty and inequality essay
• Health effects of economic inequality essay
• Global elite and income inequality essay
• “Cause of income inequality in the United States” essay
• Political reasons for income inequality essay
• Essay on inequality in society and how it changed throughout the years
• Disability and income inequality in America essay
• Rich vs poor essay: Why is there such a gap?
• Income inequality cause and effect essay
• High income inequality essay: The case of South Africa
• Wealth and income inequality essay
• No matter how much we try, we cannot fight income inequality argumentative essay
• Effects of income inequality essay in America vs Canada
• Essay on economic inequality in developed countries
• Crime rates and wealth inequality essay

Income inequality essay outline

Here is a brief example of a good outline:

• How to start an essay on income inequality? You can write some shocking fact or statistics which will hook your readers and encourage them to keep reading.
• Next, provide your audience with the necessary background information to understand the topic under review. Make sure it is brief and justifies your choice of the topic.
• Finish with a thesis statement, which is a sentence that conveys the main idea of the whole paper. It may state what it is in general or include certain points that you are going to discuss in the next sections.

The main section of the essay typically includes 3-5 paragraphs with the arguments and examples supporting the thesis. This is the part where you need to present the results of your research on economic inequality. All the information you find will serve as evidence to your claims, so make sure that it is taken from trustworthy sources.

• Economic inequality essay conclusion.

In this final section, you have to briefly restate your thesis and main ideas. Make sure to rephrase them instead of just copying them from the previous parts of your work. Your main in your income inequality essay conclusion is not only to synthesize the information but also leave your readers with something to think about further. Therefore, finish with a reinforcing statement, a rhetorical question, or a call to action.

How to write income inequality essay? 

• Stay original. An original idea is a real key to success. Your professor will read a lot of essays throughout the year, and the easiest way to stand out would be choosing a non-cliché topic and doing a good research on it.
• Be clear. Your paper should be easy to read. Sentences should be logical and understandable and, of course, spelling and grammar must be impeccable.
• Do not be afraid to express your opinion. It will show that you are not hiding behind the ideas of other people and have your own point of view that can be supported by information from reputable sources.
• Show your competence by using citations and references properly. This will demonstrate not only your organization skills but also the number of works that were reviewed when you were working on the assignment.
• Find some good income inequality essay examples for inspiration. They might give you a few ideas on how to structure the paper, what to discuss, and what kind of arguments to use. For example, a sample cause and effect essay on income inequality will help you understand how to discuss causality, where to use factual information, and when to add your own analysis to it. However, make sure you do not copy anything from an example as it will raise the plagiarism levels in your work.

Income inequality research paper topics

• What are the ways of measuring income inequality?
• Which immigrant policies lead to wage disparity?
• The influence globalization has on income inequality
• Fiscal policy and inequality
• What explains the divide between rich and poor?
• Pros and cons of universal basic income
• How did Iceland lower the pay gap?
• How does the wage gap influence homelessness?
• Income inequality in any country of choice
• Human capital inequality
• Affordable housing and income inequality
• How do employment trends influence wage disparity?
• What are the causes of discrimination that leads to wage inequality?

Income inequality research paper outline

• Introductory (hook) phrase
• Relevant background
• Justification of the topic choice
• Thesis statement
• Methodology
• Literature review
• Results and discussion of findings
• Limitations and ethical considerations if any
• Restated thesis
• Overview of main points
• Ideas for further research

How to write income inequality research paper?

• Choose the topic. The topic that you pick should be relevant to your course and match your academic level. The more advanced you are in your studies, the more complex the issue you are reviewing should be. And, of course, it should be interesting and exciting for you to research.
• Work in Google Docs. If you do not want to lose your paper due to technical issues with your computer or a failed attempt to save the work, it is best to store it on your Google Disk. Besides, you will be able to see the history of changes and move back if you changed your mind about deleting certain sections.
• Be clear and precise. Avoid unnecessary explanations, redundant statements, as well as jargon and slang words. While vague statements might help you hit the necessary word count, your work will look unprofessional if you use them.
• Avoid plagiarism. Research paper writing requires using a lot of sources and referring to the ideas of scholars, but it doesn’t mean that you can just copy the information. Rewrite every fact or idea with your own words, cite them properly, and build your arguments and conclusions on them.
• Do not forget about formatting. Always carefully read the guidelines for formatting style because the requirements of each style are completely different. Pay special attention to formatting references for journals and books, things that should be capitalized, bolded, italicized, centered, left-aligned, etc.
• Revise your paper. Reread it several times and, if possible, ask someone else to do it and comments on your text. Once you receive the feedback or review the work yourself, make the necessary corrections and rewrite the parts that you believe do not look good.

Facts for income inequality paper

Income inequality is perhaps one of the most topical issues nowadays. That is why it is important to raise awareness of it, referring to shocking facts and statistics. We have collected the most interesting ones for you to use in your paper;

• Over the last 30 years, wage inequality in the US has increased dramatically. The rate is the highest since the Great Depression.
• The presence in the family of at least one person with higher education reduces the risk of poverty by 2.3. However, the problem is that families with low incomes invest less in education, and thus have even fewer chances in the labor market, which requires highly qualified personnel.
• French economist Tomas Piquetti claims that income inequality has increased in almost all regions of the world in recent decades.
• The world’s richest 1% have more than twice as much wealth as 6.9 billion people.
• 1 out 5 children cannot go to school because of low-income level of their families.
• 735 million people live in extreme poverty.
• Men own 50% more of the world’s wealth than women.

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Free Essay On Income Inequality in the United States

Type of paper: Essay

Topic: Taxes , Income , Inequality , Social Issues , United States , Politics , Business , Economics

Words: 1100

Published: 07/09/2021

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Social and political movements, such as Occupy Wall Street, have drawn increased attention to income inequality in the United States. The assertions these movements build platforms on include the notion the income of the top socioeconomic groups continues to grow at a faster rate than the income of the middle and lower socioeconomic groups. If a small group already possesses a disproportionate amount of the nation’s financial resources, it is understandable why lower socioeconomic groups would react emotionally to the idea that said group is continuing to gain more. Compounding the problem is the evidence that states that the income of the lower socioeconomic groups is on the decline.

While the data supports the assertion that income inequality in America is on the rise, the real question is why income inequality is a pressing issue. Does the presence of income inequality lead to further problems, such as social unrest, stalled macroeconomic growth, and the need for government intervention? Is there a way to ensure that income inequality is minimized or even eliminated? Researchers seem to agree on the fact that growing income inequality can lead to both social unrest and stalled macroeconomic growth. What researchers tend to disagree on is whether income inequality can be reduced and eliminated through government intervention.

Given the fact that the United States’ economy primarily operates under the principles of capitalism, it is highly doubtful that a capitalistic market structure is optimal for the minimization of income inequality. Government intervention can accomplish some degree of income redistribution as long as both political parties compromise – a feat that has been more than difficult with increasing political polarization. In order to fully address and solve the problem of income inequality, the United States government and the country’s citizens need to reevaluate the effectiveness of capitalism.

A study on the prevalence of income inequality in the United States found that the average real income of the top one percent of tax filers increased from $534,264 in 1991 to $857,477 in 2010. The proportion of total income in the United States that the top one percent of earners held rose from 7.7 percent in 1973 to 18.3 percent in 2007. The share of household income for the top one percent from 42.6 percent to 50.2 percent between 1968 to 2001. In contrast, the share of household income for the bottom percent decreased from 4.2 percent to 3.2 percent during the same period (Jongsung and Tebaldi 1). These figures clearly illustrate the fact that the rich are becoming richer at the expense of the poor. Income inequality in the United States is simply not a theory; it is a clear fact. Those in the lower socioeconomic classes not only feel as though they are being exploited, but that the promise of the American Dream is a fraud.

Income data collected in each state in American revealed that income inequality was greater for nominal income versus real income. Nominal income represents income in current prices, while real income adjusts for price differentials between states (Ram 131). In other words, real income takes into account cost of living adjustments. For instance, it is well-known that housing costs substantially more in California and New York than in Nebraska or Wyoming. An annual income of $40,000 in Florida can be equivalent to an annual income of $100,000 in New York due to price differentials.

The data also reveals that nominal income inequality is less in 2010 than it was in 1989 between states, even though total income inequality in the country has been increasing since 1977 (Ram 132). What the data seems to be saying is that income inequality amongst the states is slowing or decreasing, while overall income inequality is on the rise. Soon the exact amount that an individual makes in the state of Nebraska will equal the amount that an individual makes in the state of California. The income one makes will not necessarily be adjusted for the cost of living differential between the two states, thereby increasing the real income inequity. Since it costs more to live in California, only those within the top socioeconomic tiers will be able to afford to live in the state.

Some economic experts propose a global wealth tax to help reduce income inequality, while others call for new economic policies under the current capitalistic structure. Increases in the amounts charged for rent on land and other assets has largely been responsible for the rise in income inequality, along with tax laws, education, monetary regulations, and increasing market dominance, according to economic experts (Diamond 390).

What these experts are failing to acknowledge is that the increase in income inequality is largely driven by greed. Those at the top are not satisfied with the percentage of income they have and therefore feel justified in charging more for the use of the resources they own. Unfortunately, the increase in prices and stagnation of wages has resulted in the economic exploitation of the middle and lower classes. Past government regulation has supported the efforts of the top earners and has compounded the problem.

The middle and lower classes have been unable to gain enough political influence to be able to stand up against the political lobbying groups arguing in favor of the private business sector. Rewriting the tax laws for the top socioeconomic classes and the business sector is only a start. The business sector needs to be educated on the long-term effects economic exploitation and inequality has. Without adequate discretionary income flowing through the middle and lower socioeconomic classes, the top classes and the business sector will not be able to be sustainable. While they can choose to horde more resources at the top, a balance between socialism and capitalism is needed to fix the United States’ income inequality issue.

Works Cited

Diamond, John. "Forum: Income And Wealth Inequality." National Tax Journal 68.2 (2015): 389-391. Business Source Alumni Edition. Web. 20 July 2015. <http://search.ebscohost.com/login.aspx?direct=true&db=bah&AN=103130621&site=ehost-live> Jongsung, Kim, and Edinaldo Tebaldi. "Trends And Sources Of Income Inequality In The United States." Journal Of Business & Economic Studies 19.2 (2013): 1-13. Business Source Alumni Edition. Web. 20 July 2015. <http://search.ebscohost.com/login.aspx?direct=true&db=bah&AN=99389508&site=ehost-live> Ram, Rati. "Real And Nominal Interstate Income Inequality In The United States: Further Evidence." International Advances In Economic Research 21.1 (2015): 131-132. Business Source Alumni Edition. Web. 20 July 2015. <http://search.ebscohost.com/login.aspx?direct=true&db=bah&AN=101149030&site=ehost-live >

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Income inequality

Updated 27 April 2023

Subject Learning

Downloads 34

Category Culture ,  Social Issues

Topic Inequality ,  Study ,  Wealth

For many years, income inequality has been a source of concern in the United States of America. Income includes revenue streams from salaries, wages, and dividends from stock shares, as well as interest from savings accounts and any other sources of money. Income inequality refers to the degree to which income and wealth are allocated unequally among citizens. Various studies on the growth of economic inequality show that inequality has risen dramatically over the last three decades. The gap between the rich and the poor has widened in the previous thirty years and is predicted to widen further if nothing is done. The issue is taken seriously in the US because it is affecting all sectors of economy as well as the politics of the country. So fundamental is the matter in America that politicians have been using as a campaign promise to win the votes of the low class citizens because they are the most affected by the issue. In 2013 general election, President Barack Obama pledged to do everything possible to reduce the level of inequality in the US. Despite the many promises by politicians, the issue is still a major issue of discussion by economists because the gap between the poor and the rich will expand radically in the coming decade. The point of interest in relation to the current economic inequality in the US is that the nation has the highest level of inequality among all developed economies. There is need to put in place right measures to curb the ever growing inequality in the country. An assertion that economic inequality is growing at a threatening rate does not sound like a surprise among the American citizens because it is evident everywhere in the country. People of all economic and social status can attest to the fact that the rich are getting richer while the poor are getting poorer. The Americans mostly with low earnings are saddened by the reality that more than 40% of the American wealth is owned by 1% of the American citizens. The share of income earned by the top 1 percent of the population has grown by double digits, the share going to the top 0.1% has markedly gone up and has increased to nearly three times by 2013. The economic recession that hit America in the recent years has been attributed with making the situation worse. The ordinary Americans were the hard hit because majority of them lost their employment opportunities and some lost their houses. Prior to the occurrence of the recession, the concerns about the inequality had already raised fears about the fate of the ordinary members of the population. Some economic experts argued that the severity of the recession was augmented by the inequality that was already on the ground. In fact, some scholars were convinced that inequality in the economy contributed greatly in the occurrence of the recession (Stiglitz 426). Even announcing the end of the recession, the poor are not yet convinced because majority of them have never recovered. Their situations were worsened by the economic challenge and it might take more than a century to recover fully. After the recession, America has been referred to by economists within and outside America as a failed economy because it is unable to create benefits for most of its populace members. The consequences of the recession on the inequality of wealth were more devastating because the median wealth sank down to levels that had been experienced more than two decades ago. The impacts were so significant to the country because the wealth median went down by 40 percent compared to the period before the slump. The recovery from recession was marked by shooting up of property values, an occurrence that favored the rich as the stock market has surged over 230% since 2009 when it bottomed out (Nichols 08). Among all the advanced economies across the globe, America experiences the highest level of inequality. It has also been noted that the level of equality of opportunities is at the lowest level in the US. When compared to nations like England and Germany, United States of America is characterized by extreme range of economic stability among the citizens. Research shows that if the trend is left to go on, the American citizens will be categorized in two groups; the rich and the poor. Unlike the US, the gap between the poor and the rich in the UK is not too wide. The United Kingdom has social classes categorized according to their incomes and what they own and has monetary value. Studies in the other developed countries have also revealed that it is easy to climb the economic and social ladder in countries like Germany and England than in the US. The case is unique in the US because the rich have remained at the top as they continue to amass more wealth. On the other hand, the poor continue to retain the position in the society as they continue to become poorer. The American dream was based on the hopes that America will have a society with a balanced distribution of wealth (Stiglitz 428). According to the American dream, there is supposed to be a very thin line between the rich and the poor. Basing on what is happening in the US in regard to distribution of wealth and equality in opportunities, the American Dream is basically a fairytale. The environment is not conducive for the achievement of the dream. Instead of promoting equality in income, wealth, and opportunities as it is required, what is happening is the contrary of what is supposed to happen. Instead reducing the gap through formulation of policies that will help in creation of wealth for all people, the gap is getting wider. The American situation in relation to realization of the American Dream is more complicated by the fact that the chances and future of the American young people is entirely dependent on the education and income of their parents. The dependence level on the economic status of parents to determine the future among the youths is high among American young persons as compared to other developed economies in the world. In the other developed nations, all persons have equal opportunities to rise from the bottom to the top and it is important for economic development of a country. Before the past three decades, America was seen by most of the developed countries in Europe as a country with great opportunities for its citizens. Countries like Germany, England, and France no longer recognize the economic power that America had more than three decades ago. The American situation is largely caused by the policies that were formulated by the political class. The strength of America was centered on a strong middle class. The increased inequality has come as a result of shrinking the middle class by the increased income at the top and reduced opportunities among the low class people. Since 1970, the incomes for the top 1 percent has augmented by 170%. The increase is associated with the increased productivity among American workers but their incomes have remained constant even with the increased cost of living. America has a chance of reversing its high level of income inequality and go back to the levels they were more than three decades ago. The reverse in some policies will help to change the situation. There have been several proposals by economists to assist in the efforts to reverse the level of inequality in the US and bring it to same level as other developed nations within Europe. It seems the chances of reversing the situation are very low because the disparity keeps getting uglier. If the current trend and policies are anything to go by, the probability of changing the inequality levels is very low. Comparison of the contemporary degree of income disparity and that of the 1980s is a clear indication of how the future of low income earners in the US is uncertain. As it was mentioned earlier, the top 1 percent earn averagely $1.3 million annually. The figure is more than three times of what the rich people earned in the 1980s. In the past three decades, the rich earned an average of $428,000. As it is at the moment, the income for the richest faction of the population will increase further. The persons born within last thirty years only have a coin toss chance of having a higher income that what their parents had. The situation was not always that way particularly in the 1940s because every individual in America grew up to be better off financially as compared to their parents. Despite that money is not the only description of success in America, more wealth is responsible for improving the living conditions of people for instance affording a better house as well as increasing the opportunities to advance. It might reach a level when the probability of the young Americans to get higher incomes than their parents will no longer be 50%. The young faction of the US population have tougher days ahead because even earning as their parents did will be very hard for them. Over the past half century, the American Dream of children earning more than their parents has dropped by 40%. Initially, the possibilities stood at 90% and the figure has fallen to 50% (Attanasio, et al. 112). An interesting fact is that America has similar economic policies as other European nations with comparable economies but what happens in America in relation to inequality is not experienced in the other countries. The policy analysis by the Luxembourg Income Study (LIS) between America and other countries like Canada, Belgium, United Kingdom, Italy, and the Netherlands suggest that the nations have similar economic guidelines and that most of the countries copied from the US. In spite of the countries having analogous economic principles, the degree of inequality in the US is not comparable to any of the other states (Smeeding 70). As countries like Belgium are nearing their target of closing the gap between the rich and the poor by strengthening the middle class, America is still experiencing the contrary. The analysis suggests that the economic policy makers are not to blame for the disparities in the country because the problem lies with the implementers of the policies. The implementation of economic plans has been interfered with by the politics of the country. The political class have introduced some changes in the policy implementation process that has highly affected the efforts to close the ever widening gap. Most of the changes aim at increasing productivity from American workers but their earnings remain constant (Stiglitz 430). Many economists have attributed the growing inequality in the US to the decline of workers’ unions. The unions played a central role in ensuring better pays for workers. In the 1960s, more than a third of the US employees belonged to unions but the percentage is less than 10 in the present days. The lack of collective bargaining through is the single major factor suppressing wage growth amongst middle wage workers. Lack of income growth seem to be the main aspect for the growing disparities because as the rich continue to earn more money from their business organizations as a result of increased productivity by their employees who have been earning same wage for long. The main function of the trade unions was to address such issues through bargaining for improved payments for their members. The political involvement in the formation and operations of unions has completely sabotaged the efforts by unions to come up with proposals for payment formulas for workers. The lack of bargaining for improved incomes for US workers will continue to expand the income disparities in America (Yalnizyan 73). Inter-country comparison of inequality has been complicated by various factors for instance, lack of official measure of poverty. There are very few developed nations that have consistent official poverty sequences. Measures of poverty are the most reliable ways of comparing inequality between countries. It is only America and the United Kingdom that produce regular reports on poverty situations in their countries every year. Some countries like Canada only produce estimated number of people living below the poverty line but Australia does not do it on a regular basis as it is required. Most nations from the northern part of Europe do not calculate official levels of poverty or low income. The level of poverty can be determined through measuring the comparative terms by comparing to median income. The level can as well be measured in absolute terms by comparing to the purchasing of basic necessities. In comparisons between countries, poverty ought to be treated generally as a relative concept because in analyzing poverty in different countries that have dissimilar levels of per capita GDP, an absolute standard of poverty will either exceedingly low rates in some nations and high rates in some or both. Another problem encountered for inequality comparisons between countries is that countries lack standardized procedures of determining income inequality and comparing results produced by varied procedures is not possible (Smeeding 71). Income inequality in the United States of America is a critical issue that need to be addressed with seriousness. Inequality has been on the rise within the last three decades and the gap between the poor and the rich is expected to grow further if the same trend continues. America has the highest level of inequality compared to other European nations despite the countries having similar economic policies like the US. Reversing the level of inequality to achieve low levels experienced in other developed countries will be a major challenge for US. There will be need to change several aspects related to policy formation, as well as implementation of policies. The level of inequality in the US has turned the American Dream into a myth because the situation cannot permit the attainment of equal opportunities for all Americans. Works Cited Attanasio, Orazio, et al. "The Evolution of Income, Consumption, and Leisure Inequality in The US, 1980-2010." 2012. Nichols, Austin. "Income inequality, volatility, and mobility risk in China and the US." China Economic Review, vol. 21, 2010, pp. S3-S11. Smeeding, Timothy. "Poor People in Rich Nations: The United States in Comparative Perspective."Journal of Economic Perspectives, vol. 20, no. 1, 2006, pp. 69-90. Stiglitz, Joseph E. "The Origins of Inequality, and Policies to Contain It." National Tax Journal, vol. 68, no. 2, 2015, pp. 425-448. Yalnizyan, Armine. "8. How Growing Income Inequality Affects Us All." Democratic Equality, 2001.

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15 ways financial leaders can help eliminate economic inequality.

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For many employees, the traditional pay cycle—typically monthly or biweekly—is sufficient to meet their financial obligations. However, those who are living paycheck-to-paycheck may be forced to spend beyond their means or rely on credit cards to pay for basic living expenses. This can trap them in a cycle of debt that's hard to escape.

Here, the members of Forbes Finance Council discuss how traditional pay cycles and the cycle of debt can contribute to financial inequality—and how financial leaders and institutions can be a part of the solution.

1. Use Underwriting Models With Real-Time Data

When consumers accrue more debt than they can repay, debt is more expensive because repayments are first directed to interest versus the principal balance, trapping them in a cycle. Underwriting models that use real-time data alleviate this by enabling lenders to offer the most competitive rate or term that reduces the cost of debt for borrowers, helping them take control of their finances faster. - Mit Shah , Method Financial

2. Advocate For Earned Wage Access And Other Cycle-Breaking Solutions

The traditional pay cycle makes inequality worse by increasing costs for those who live paycheck to paycheck. Bills are rarely due on payday and the rigid fixed pay cycle leads to late fees on bills and overdrafts. There are now solutions that break this cycle—like earned wage access—and financial leaders could better advocate for these to support consumers. - Ram Palaniappan , EarnIn

3. Provide Education On Debt Payoff Tools

The traditional pay cycle shouldn't contribute to financial inequality—you can change the payment date of your credit card and debt payments (call your servicer!). High-interest debt absolutely contributes, and as leaders, we need to educate on debt payoff tools (0% credit cards, the SAVE program and so on) and offer new innovative products that help everyday people get out of debt faster. - Crissi Cole , Penny Finance

First Images Of Helldivers 2’s Illuminate Alien Enemies Emerge

Bitcoin halving triggers unprecedented crypto chaos as price suddenly surges, a keanu reeves big budget dud is coming to netflix in may, 4. leverage decentralized finance solutions.

Since banks and other traditional financial systems often vet potential customers through discriminatory practices, decentralized finance solutions can help reduce financial inequality. Since decentralized finance solutions can be accessed by anyone with an internet connection and require no intermediaries to send payments, traditional banks can use these tactics to help reach underbanked groups. - Anthony Georgiades , Innovating Capital

5. Push For Systemwide Change

Financial services like banking and loans cost more for low-income people. This hinders their financial management. Financial executives and organizations can help this by offering flexible work schedules, lower banking rates and financial education, and pushing for fair laws and community investment. These actions can help people integrate into the financial system and reduce debt. - Neil Anders , Trusted Rate, Inc.

6. Ease Cash Flow Challenges To Reduce Reliance On Credit

Inequality is worsened by traditional pay cycles and debt, especially for low-income individuals. Flexible payment options can help financial leaders address this issue by easing cash flow challenges and reducing reliance on high-interest credit, fostering opportunity and breaking the debt cycle. - JD Morris , RHC 21 LLC (a SPE Fund) with family of Special Purpose Entities (SPE or SPV)

Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?

7. Offer Flexible Pay Cycles And Salary Advances

The traditional pay cycle and the cycle of debt can contribute to financial inequality by creating a mismatch between when people get paid and when they need to cover expenses. It can lead to financial stress and make it harder for individuals to get ahead. This can be addressed through flexible pay cycles and affordable financial products like salary advances. - Oluwatoyin Aralepo , Mastercard Foundation

8. Prioritize Financial Literacy

Living paycheck to paycheck leads to financial stress. Additionally, the debt cycle can trap people into borrowing to meet basic needs increasing their debts. Institutions could promote flexible pay schedules and financial education to avoid these hurdles. Financial literacy should be considered basic but is too often treated as a luxury. - Julio Gonzalez , Engineered Tax Services Inc.

9. Create Tailored Financial Products

Traditional pay cycles often mismatch income with expenses, pushing individuals towards high-interest credit and deepening financial inequality. Solutions include offering earned wage access, promoting financial literacy and creating tailored financial products to help bridge gaps and encourage savings, thus mitigating the cycle of debt and enhancing economic stability. - Magdy Hassan Fayed , Forex Gump SRL

10. Introduce Lending To Bridge Gaps Between Paychecks

The interest rates of payday loans really hurt those living paycheck-to-paycheck. They can never get ahead. Financial providers that offer low-cost temporary loans can help break this cycle. Employers with lots of low-wage earners can introduce legitimate lenders that can bridge the gap to the next paycheck, without exorbitant interest. The impact on low-income families can be transformative. - Todd Sixt , Strait & Sound Wealth Management LLC

11. Promote Affordable Credit Options, Flexibility And Education

Monthly pay cycles can cause cash flow problems for those living paycheck to paycheck, perpetuating financial struggles and high-interest debt. Finance leaders can promote flexible pay cycles, financial literacy programs and affordable credit options to foster economic equality and empower individuals. - Pankaj Vasani , Cube Highways InvIT

12. Encourage Employees To Put A Portion Of Pay Into Savings

Unfortunately, we tend to spend what hits our bank accounts. Providing employees options—even forced ones—that provide them a small reduction in take home and putting that into saving vehicles can make all the difference. One of the best times to do this is during any annual pay raise period. If an employee diverts a percentage of their increase into savings, they won't "feel" the loss. - Ken Hodgkins , Metro Testing & Engineering

13. Allow Flexibility On Loan Due Dates

Short waits between pay cycles can make debt management difficult for low-income families, especially if unexpected expenses arise. Financial institutions can help by allowing flexibility on a loan's due date to match customers’ pay cycles, preventing further late fees from accumulating. Providing multiple payment channels and free-of-charge recurring payments can also help with debt management. - Monique Johnson , Beneficial State Bank

14. Support Policies That Address Income Disparities

The traditional pay cycle, often monthly, can contribute to financial inequality by causing cash flow challenges for some individuals. Financial institutions can address this by advocating for flexible pay cycles, financial education and offering affordable credit alternatives. Additionally, supporting policies that address income disparities can contribute to a more equitable financial landscape. - Richard Polgar , CFG Merchant Solutions

15. Consider Weekly Paydays

The traditional pay cycle and cycle of debt worsens financial inequality for people who are in the low-income range and are living pay-to-paycheck, driven by forcing them to take loans just to pay debt on time, as their earned income hasn't been credited in the bank. Financial leaders should spread literacy on earned wage access, and institutions need to plan their payday weekly for these employees. - Raghavkumar Parmar , MMA Pan Asia Fund Management

The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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‘Aging in Place, or Stuck in Place?’

Homeownership is not the boon to older Americans that it once was.

By Paula Span

When it came to housing, Susan Apel and Keith Irwin thought they had planned adroitly for later life. They bought a four-bedroom house on two acres in Lebanon, N.H., 24 years ago, and “we made sure to pay off the mortgage before we retired,” said Ms. Apel, 71.

That way, the home equity they had built up — they estimate their house is now worth about $700,000 — would allow them to sell and downsize into smaller, more manageable quarters when they needed them.

That time has arrived. Ms. Apel, a retired law professor, is having trouble climbing stairs. Mr. Irwin, 71, previously an account manager for a local business, is wearying of yard work and snow shoveling, and finding workers to do those chores instead has become difficult.

“We’re seeing the writing on the wall,” Ms. Apel said. They have started shopping for “a nice two-bedroom condo with a little den, all on one floor.”

But they can’t find one. Local developers are putting up four-level townhouses with even more stairs. The few suitable one-floor homes available get instantly snapped up. City dwellers fleeing Covid helped pump up housing prices: One unit the couple saw recently cost $950,000 and needed work, Ms. Apel reported. Even “tiny shoeboxes” are selling for $600,000.

“We were very grateful to live in this lovely place and to have paid off our house,” Ms. Apel said. “It never occurred to us that it didn’t give us the ability to move out of it.”

About 80 percent of older adults live in homes they own. But the traditional notion that a house with a paid-off mortgage can serve as an A.T.M. to help fund retirement living is shifting, economists report. Homeownership no longer is an unqualified benefit for some seniors.

“Are they aging in place, or stuck in place?” asked Linna Zhu, a research economist at the Urban Institute. “Do we need to rethink this so-called American dream? It worked for previous generations, but does it still work today?”

The proportion of older adults with mortgage debt has been rising for decades. From 1989 to 2022, the share of homeowners aged 65 to 79 with mortgages climbed to 41 percent from 24, according to the Harvard Joint Center for Housing Studies. The amount they owed rose, too, to $110,000 from $21,000, adjusted for inflation.

David Turoff, 73, a veterinarian in Placerville, Calif., still carries a $180,000 mortgage on his two-bedroom home, for instance. He refinanced it to take out cash, a way to sustain his practice after the 2008 recession. “I’m glad I did it,” he said, but “it was definitely a risk.” Even among homeowners in their 80s, 31 percent have mortgages.

Larger mortgage balances and higher interest rates — along with higher property taxes, insurance and other costs — have helped make 43 percent of older homeowners with mortgages “cost burdened ,” defined as spending 30 percent or more of their income on housing and related costs.

Of course, median home equity has also risen, jumping by $80,000 in just three years, to $250,000 in 2022. That’s largely why the Center for Retirement Research at Boston College recently reduced its estimate of the proportion of American households at risk of being unable to maintain their standard of living after retirement.

The center’s retirement risk index dropped to 39 percent in 2022 from 47 percent in 2019, an unnerving figure but the lowest it has been since the center started tracking it 20 years ago.

The center bases its calculations on older homeowners tapping their home equity with reverse mortgages, as Bart Windrum and Deborah Fink did in 2020. Through the Federal Housing Administration, they received a reverse mortgage on their townhouse in Boulder, Colo., with a credit line of up to $382,000.

“The reason was to protect our retirement funds for as long as possible,” said Mr. Windrum, 71, an author and speaker.

The credit line allowed them to pay off their existing mortgage, afford cataract surgery and complicated dentistry (neither one was covered by Medicare, in this instance), replace a 22-year-old car and upgrade their plumbing, all while keeping their retirement savings intact.

“When we sell this place, I anticipate a third of its value, in round numbers, will go to pay off the reverse mortgage,” Mr. Windrum said. Because federal legislation in 2015 brought tightened government underwriting and consumer protections, “we felt comfortable and confident in using the program,” he said.

Dr. Zhu agreed, calling a federal reverse mortgage “a very effective way to tap home equity.”

But taking a reverse mortgage or otherwise extracting home equity is something very few older homeowners actually do.

Jennifer Molinsky, who directs research on housing and aging at the Harvard center, cites a “dual idea of homeownership,” in which accumulating housing wealth represents “a nest egg, a cushion for later life.”

“But at the same time, nobody wants to touch it,” she added. “They want to leave it to their children. They want to save it for an emergency.”

Besides, accessing home equity isn’t always simple or possible. With federally insured reverse mortgages — officially Home Equity Conversion Mortgages , or H.E.C.M.s — the upfront costs are high (topping $17,000 for Mr. Windrum and Ms. Fink) and the paperwork substantial. In 2022, only 64,500 older applicants received reverse mortgages through the federal program.

Other ways to access home equity have also grown more difficult as extremely low interest rates returned to more typical levels. Cash-out refinancing by homeowners over age 65 dropped to 600,000 in 2022 from 941,000 loans in 2021. “It’s not as easy to get or as cost-effective as it was,” Dr. Molinsky said.

Older borrowers are denied refinancing loans more often than younger ones, in part because lenders consider income as well as assets, and income usually declines as workers retire. Home equity lines of credit, or H.E.L.O.C.s, are also more frequently denied to seniors and less attractive at higher interest rates. And maintenance costs rise over time as houses age along with their owners.

Moreover, as Ms. Apel and Mr. Irwin discovered, a dearth of suitable, affordable homes for older adults makes downsizing challenging even for those with considerable housing wealth. “You can get locked in when you’d like to move on,” Dr. Molinsky said.

Older Black and Hispanic homeowners are in particularly precarious positions because so much of their wealth is tied up in their houses, said Anthony Webb, a senior fellow at the New School for Social Research.

“There’s nothing wrong with having a mortgage on the liability side of the balance sheet, if it’s matched by funds on the asset side,” like retirement savings, investments and pensions, he said.

But minority homeowners have far fewer liquid assets than white homeowners, partly because of lower lifetime earnings. “This is a story of widening inequality,” Dr. Webb said. Many Black and Hispanic homeowners “have this asset,” he said, but “it’s going to be a struggle to keep it.”

Policymakers could increase older adults’ options by improving and streamlining the federal H.E.C.M. program, broadening the criteria for refinancing and H.E.L.O.C. loans, and encouraging the development of more housing, including homes and apartments suitable for older buyers and tenants.

Experts agree that homeownership, a potent wealth generator, still makes sense overall. Even with mortgages, older homeowners have greater protection against rising housing costs than renters and are less likely to be cost burdened . Home equity can help fund long-term care, too.

But Ms. Apel and Mr. Irwin, as they continue their search, feel frustrated. They don’t want to leave the community where they’ve lived for decades, but they are ready to relinquish their house.

“This would be a wonderful family home,” Ms. Apel said. “But we can’t free it up, because where would we go?”

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