Income inequality not only harms us fiscally, but also affects our mental and physical wellbeing; therefore, it is important to identify the right ways to control wealth distribution among people.
Income inequality in the United States has increased and decreased throughout history, but in the recent years, the widening gap has become a serious issue. Income inequality is usually measured by Gini coefficient. According to this method coefficient varies between 0 and 100; while 0 represents complete equality (income is distributed equally among all the population of the country), 100 represents complete inequality (only one person receives all the country’s income, while the rest of the population receives nothing). According to
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U.S. companies have to compete with lower-priced Chinese and Indian companies who pay less to their workers. Due to this fact, the U.S. has lost 20% of its factory, traditionally higher-paying union jobs since 2000. In addition to that, service occupations have increased, but workers get paid less. During the 1990s, companies went public to gain more funds to invest on growth. In order to satisfy stockholders, managers are forced to increase profits. Payroll led to less full-time employees and more contract or temporary employees. Recent government tax policies have helped investors more than low wage earners. Since there have been cuts in government regulatory agencies, there are fewer investigations of labor disputes. In addition to that, minimum wage remained the same until 2007. Since inflation increases price on basket of goods and services, lack of wage increase contributes to income inequality due to the value of their money that is decreased over the time. Technological growth also contributes to income inequality. Due to technological progress a lot of factory workers lost their jobs but those who got trained in technology was able to get higher paying jobs. In addition, sensitivity analyses have shown 18 percent of the increase in inequality from 1983 to 2002 was due to changes in only three occupations: managers, secretaries, and computer system