Economic Inequality and Poverty in the United States essay

Abstract

Economic inequality in the US has been widening at an alarming rate. Data from the past indicate that the trend has been on the rise from one administration to the other except in rare occasions.  In 1928, for example, the top 1% had 23.9% of all the pretax income while the bottom 90% took home 50.7%. However, the Second World War and the Depression heavily affected the balance. The 1944 reports show that the top 1% share was 11.3% while the bottom 90% was 67.5%. This pattern remained undisturbed for almost three decades. In American history, strange economic inequality began in 1970. The income of the top tiers started to increase while those of the bottom 90% began to decline. The top 1% showed a sharp downtrend during the Great Recession and the dot.com crash, but only for a short time. The top 1% received almost 22.5% of the pretax income while the bottom 90% pockets less than 50%. Despite the appalling gaps, many citizens are unaware of the trends. Politically, these data have been utilized many times in the Republic and Democrat wars. The impact of these inequalities on poverty level, have also received minimal documentation.  This paper analyzes the level of economic inequalities and poverty in the United States and its impact on the citizens.

Introduction

Economic inequality refers to the uneven distribution of income within a population. In other words, it is the measure of the income gap between the affluent and poor. One of the possible causes of inequality is varied individual performance. Individuals with great talent in most cases earn more in comparison to the less skilled. However, this is not always the case. Research indicates that there are other factors contributing to inequality other than individual performance. Some of the top listed factors include varied incentives at work, physical barriers, and barriers to human capital accumulation. Although a global phenomenon, economic inequality differs among states. However, in The United States, the trend is shocking as well as pathetic. Each year, thousands upon thousands become poor as a few individuals become wealthy.  The past two decades recorded the largest inequality due to industrialization, which demands skills rather than manual dexterities.

Problem Rationale

Research rates poverty as one the prime factors affecting GDP. Scholars are of the view that the US has a high probability of distancing itself from its close economic rival China should it address the poverty. Though eradicating poverty is quite intricate, statistics from the past denote possibility. The effects of economic inequality are deleterious. Consequently, the US government needs to devote itself to developing mitigation strategies. One of its principal goals should be finding ways to allocate resources fairly beside handling aspects such as unemployment and remunerations.

Research Methodology

This research entirely relied on literature sources to make its assertions and conclusions. Sources utilized were analytical examined to ascertain their trustworthiness as well as authenticity. To present a reliable piece, sources from diverse institutions including scholarly works were included. This study adopted a two-way mode of research, namely- case study research and empirical research study.  The case study was invaluable in examining documents that demanded a clinical examination while empirical research was useful in assessing all information presented by the diverse literature.

Study scope

The focus of this paper is economic inequality in the US. It will introduce the subject, discuss it, and provide evidence to support its claims. More precisely, it will examine one of the effects of inequality, that is, poverty. Apart from giving insightful data about poverty, it will reveal shocking yet factual information about the same. Moreover, it will disclose the effects of poverty in the country. On the same note, the subject of gender and race will be included. It will also present emerging issues on the subject of focus. In other words, it will reveal the hidden topics embedded in the matter. It will conclude by offering recommendations to reducing poverty and economic inequality.

Research Limitations

Compiling this paper was not without the manifold and diverse challenges. Aspects such as economic inequality or poverty are not constant. In other words, present-day data may be completely different from that of tomorrow. For that reason, it may be possible for one to challenge a research of this nature. Another major problem in this study was the conflicting data in terms of percentages. For instance, in this case, there were varying data on poverty percentage along racial and gender lines. Most sources presented conflicting information to that of the government. However, the margin was not very wide, so it was possible to figure out the reality.

It is undeniable that economic inequality is a variable. For that reason, the information presented may not be a perfect representation of the present data. However, it provides a basis for appreciating the fact that inequality is on the rise. Data inconsistency was a proverbial occurrence in this study. Accordingly, in instances of contradictions, government data was preferred.

The limitations stated in this section are quite sophisticated to solve. Specifically, it is challenging to ascertain the actual rate of economic inequality at a particular time since most findings are just a mirror of the reality. However, one can use that data to predict the situation. In cases of conflicting data more so on issues such as demographics, it is wise to rely on government data. 

 

Literature Review

Several methods have been adopted to measure poverty. In the 1960s, economists became concerned with the level of poverty in the United States. Accordingly, they came up with several strategies to measure it. The first approach was undertaken in 1963 by multiplying the cost of the minimum diet by three (statistics had shown that Americans spend a third of their income on food). Although other expenses such as energy, health care, and childcare toady, consume a significant proportion of the learning, the basic formulae of calculating poverty has not changed. Additionally, the poverty line has failed to recognize regional diversities. As a result, the measurement of poverty faces much criticism with many people expressing lacks of faith in its results. Many analysts believe that the available statistics are inadequate to determine the level of poverty in the United States accurately.

There is an annual adjustment of the poverty line. The adjustment accounts for inflation and population increase. Economic analysts have come up with a frill budget that is suitable for families in meeting their basic needs. The budget is, normally, twice the poverty line. Families in the United States, which have their falling between the line, and twice the poverty line, hardly meet their needs. However, such families are not considered poor.    

 Who is poor in the United States? According to the U.S. Census Bureau, about 40 million Americans are poor (13.2%). Although the report indicated a decline of the 1990s, it showed an increase to those of 1960s.The United States is currently showing higher poverty trends following the implementation of various policies in the healthcare and security sector.

Poverty can also be understood by considering episodic poverty. Episodic poverty is a state of experiencing poverty for at least two consecutive months. For example, between 2001 and 2003, at least a third of the United Stated population was poor for a minimum period of two months. The data represented about 90 million people. At international levels, households are utilized to determine poverty levels.

Who are poor in the United States?  The highest percentages of the poor people are the whites (non-Latino) (43%), contrary to the common belief that they are the richest. 27% are Latino, Blacks are 25%, and Asians 4%. Race and ethnicity, influences chances of being poor in the United States.  Only 8.2 of white (non-Latino) are poor, African American are 24.5%, 10.2 Asians, and 21.5% Latinos. African Americans and Latinos have higher chances of being poor (three times), as compared to the Whites. The figure below shows the racial composition of the poor in the United States.

United States Poverty Level by Race

 Economic Inequality and Poverty

Based on age, 18% of under 18 are poor (13.3 million in total). The figure is composed of 28.6% Latinos, and 33.5% African Americans. U.S. children record the highest poverty rates in the Western nations.The rates are 9 and 1.5 times those of Europe and Canada. Reports show that 9.7% of people above 65 years are poor. The figure represents 3.6 million people. In the United States general population, 36% of the poor are children while 10 percent of the poor are above 65 years old.

Poverty can be considered either a societal problem or an individual problem. The two main explanations for poverty are the functional theory, which is an extension of the individual theory. There is also conflict theory, which is a structural approach to the American Society. Based on the individual explanation, the poor have personal challenges or deficiencies, which makes them vulnerable to poverty. In the past, the poor were associated with biological challenges, which barred them from becoming reach, today they are considered as people who lack motivation and ambition in life. The notion hinders them from hard work. Most Americans believe that poverty originates from laziness among some groups of people.At an advanced level, the theory can be explained through the culture of poverty theory. Based on the theory, the poor are subject to poor cultural values, which subject them to unending poverty. The poor, for example, live presently and hardly save. The rich and the poor have diverse cultural values that explain the societal stratifications.

According to the structural explanation, the United States societal structures does not award equal opportunities to its members. The problems include racial, gender, ethnic, and age discrimination; lack a good education and healthcare; and structural changes that occur in the American society.The problems result in a vicious cycle of poverty with new generations inheriting poverty from their parents.

Findings and Analysis

In America, income rates vary greatly depending on gender. In most cases, men receive higher salaries than that of women. Though much has been achieved with handling gender disparities, it still exists in some percentage. According to sociologists, women are to be blamed in part since they have a varied preference when seeking employment. For instance, most women will reject a job that involves traveling or moving. Apart from being likely to accept low salaries, they delightfully major in courses that pay poorly. Women are rarely promoted at the workplace and thus they remain in low-salaried positions.

In the US, whites are the most favored in terms of employment. Additionally, they receive greater salaries than other races. For example, in 2012, the percentage of blacks unemployed in the US was 15.5 while that of the whites was 7.3. Moreover, the gap between whites and blacks keeps soaring each passing day, an aspect that continues to exercise the mind of intellectuals. 

Education is one of the prime causes of inequality income across America. Studies show that there is a strong relationship between educational attainment and income levels Individuals with better academic qualification have higher chances of being employed than those with fewer credentials. Further, the higher an individuals’ level of education, the greater the salary. Employers in America are increasingly becoming more interested in education than ever before. This change of focus means that the less educated have to struggle for the few available positions. It also suggests that they are more likely to be paid below average salaries.

Policies and regulations in force greatly affect the income distribution within a country. They also determine the impacts of technology as well as globalization on a nation. Some of the policies that can affect inequality include setting of wages, giving worker rights to bargain, and deregulation in product markets among others.

Summary and Conclusion

Income inequality can either enhance an economy or hurt it entirely. For instance, when the income rates of the affluent rise, their subsequent saving rate is usually tremendous. On the other hand, inequality may lead to increased crime, political conflicts, higher taxes, and increased poverty among others, which will hamper economic progress. Inequality is an issue that has attracted much attention among scholars and policy makers. The main concern has been how to reduce or if possible eradicate it fully.

America can end income inequality through enforcing a national living wage. They should make it their priority to ensure that all corporations whether domestic or foreign, comply with the set living wage. Furthermore, strict laws need to be enacted to curb any violations. All men deserve a right to fair treatment regardless of their age, gender, or race. It is therefore against nature if any individual is discriminated. Corporations should also on the other hand pay their employees rationally.

Education is the key to life. According to research, those with better education largely prosper in life. Education credentials also determine the income levels of an individual. It implies that the higher the qualifications, the better the pay. The world is also changing at a supersonic speed. Presently, most jobs require training, and so it is becoming practically impossible to secure employment without a skill. The government needs to ensure that quality education is accessible to all regardless of their race, gender, or social class.

One of the reasons why inequality persists is the apparent division between the wealthy and poor. Research shows that the poor tend to associate themselves with their contemporaries as opposed to the rich. On the other hand, the rich rarely associate themselves with the poor. The inclinations not a good inclination since it does not solve the issues at hand. As some have said, it deepens the existing division. The government needs to create ways to demolish this dividing wall.

Economic inequality is one the most debatable topics in the world. Although each nation has its own troubles, inequality remains a subject of great concern. In the US, it has taken a pattern never conceived. In fact, in comparison to other developed countries, like Germany, the US fairs poorly. It is good to state that economic inequality is surmountable provided the government devotes itself to ending it.

   

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Economic Inequality and Poverty in the United States essay

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