Category: Income Inequality

In the United States (US), the household wealth of a median white family in 2019 was $147,000, while the median black family owns $3,600 – just over 2% of what the median white family owns (Collins, Asante-Muhammad, Hoxie, & Terry, 2019). The wealth gap between whites and blacks not only suggests that there is an inequality of outcomes, but also an inequality of opportunities. The economic opportunities provided by wealth range from security against disruptions in income to the ability to make investments in businesses, human capital development and housing. Because wealth can be transmitted across generations, the racial wealth gap is continually perpetuated and widened. If the trends of the past 3 decades continue, the median black family will own just over 0.3% of what the median white family owns by 2050 (Collins et al., 2019). In this paper, I demonstrate that the main factors behind this yawning racial wealth gap are disparities in home equity and college education attainment as well as the persistent labor income gap between whites and blacks.

For most American families, home equity is the single largest contributor to household wealth (Taylor, Kochar, Fry, Velasco, & Motel, 2011). However, homeownership rates are heavily skewed towards whites. In 2019, 73.2% of whites own a home while the proportion of blacks who own a home is only 41.8% (U.S. Census Bureau, 2020). A reason for this disparity in homeownership rates is that blacks are less likely to afford homes as compared to whites due to the existing income and wealth gap. The median black family could afford only 55.3% of all homes listed for sale in the US in 2017 while the median white family could afford 77.6% of listed homes (Mikhitarian, 2018). Another reason for the disparity in homeownership rates is that blacks have lower access to credit due to discriminatory lending. Black borrowers pay an average of 29 basis points more on their mortgage interest rates than white borrowers with comparable credit risk (Cheng, Lin, & Liu, 2014). An analysis by Berkeley researchers Bartlett, Morse, Stanton and Wallace (2017) found that between 2008 and 2015, lenders rejected 1.3 million creditworthy black and Latino mortgage applicants between 2008 and 2015. When the researchers deleted the race identifiers of these rejected applications, the mortgage application was accepted. In addition to a disparity in homeownership rates, there is also a disparity in the home values of whites and blacks. In 2008, the home of a median white family is worth $85,800 while the home of a median black family is $50,000 (Traub, et al., 2016). Other than the fact that blacks have lower purchasing power, the disparity in home values is also due to neighborhood effects: neighborhoods consisting mostly of blacks are found to have low home values due to declining infrastructure and high poverty rates (Krysan, 2008). Since home equity makes up the largest part of American household wealth, disparities between homeownership rates and home values are significant contributors to the racial wealth gap.

A college degree is essential for individuals to succeed in the labor market and build wealth. However, there are disparities in educational attainment between whites and blacks. Despite rising college attendance rates among blacks, the college attainment gap between whites and blacks have been widening. In 2016, 35% of whites completed a four-year college degree, compared to just 21% of blacks (de Brey, et al., 2019). One cause of this disparity is residential segregation, which keeps black families in neighborhoods with low-quality schools. As a result, black students are less academically prepared for college and are more likely to drop out. In a report by the National Assessment of Educational Progress (2012), it was found that high schools with a predominantly black and Latino student population have less access to high-rigor courses. For instance, 3% of high schools with a large proportion of minorities offer calculus, compared with 48% of high schools nationwide and 56% of predominantly white high schools. Another barrier to degree completion for black students is financial hardship. Rapid growth in college costs over recent years have led many blacks to drop out of college for economic reasons (Traub et al., 2016). Urban Institute researchers Blom and Monarrez (2020) performed the Oaxaca decomposition to explain the graduation gap between white and black students at colleges and universities in Virginia and Connecticut. They found that 45% of the gap is due to the difference in student preparedness while 16% of the gap is due to financial circumstances. A large unexplained component of 39% hints at the possibility of institutional racism, although there may also be other unobservable characteristics not accounted for. In short, disparities in college graduation rates between whites and blacks which can be attributed to residential segregation, financial circumstance or institutional racism results in differences in labour income which feeds the racial wealth gap.

The labor income gap between whites and blacks has contributed to about 20% of the growth in the racial wealth gap over the past few decades (Shapiro, Meschede, & Osoro, 2013). Other than differences in college graduation rates, this income gap can be attributed to discrimination (or racial differences in unobserved worker characteristics) and growing income inequality in general (Wilson & Rodgers, 2016). While blacks have been occupying higher ranks in the income distribution, this progress had been offset by a shift in overall income distribution. Over the last few decades, the share of income going to those at the upper end of the distribution had been dramatically increasing while everyone else continued receiving the same share of income. This shift had harmed blacks disproportionately as they are overrepresented in the lower end of the income distribution. As a result, the racial income gap stagnated over the past 50 years despite efforts to close it (Manduca, 2018). In 1968, the median family income of blacks was 57% that of whites. Fast forward to 2016, the median family income of blacks was 56% that of whites. In a study that employed statistical adjustment to control for this shift in income distribution, it was estimated that without the rise in general income inequality, the racial income gap would have declined to a greater extent (Smith, 1993). While most researchers have asserted that the racial wealth gap was too large to be explained by the racial income gap, Aliprantis, Carrol and Young (2019) demonstrated through the dynamics of wealth accumulation over time that the racial income gap is the dominant force driving the racial wealth gap.

Other than the negative impacts on the economic security and mobility for the black population, the racial wealth gap also stifles the US economy as a whole due to its dampening effect on consumption and investment (Noel, Pinder, Stewart, & Wright, 2019). Simulations by Weller, Maxwell and Solomon (2019) have shown that providing American children with seed capital in the form of a national baby bonds program would have the single largest effect on the racial wealth gap. In this program, an initial sum of money would be deposited into savings account for each American newborn. Additional progressive contributions would be made each year based on parental wealth. Once 18, beneficiaries can use the funds for asset-building purposes such as buying a home or paying for college, thus increasing access to homeownership and college education. This program, however, is no panacea. More can be done to tackle issues associated with discrimination, residential and school segregation, and the general rising income inequality.

References

1. Bartlett, R. P., Morse, A., Stanton, R., & Wallace, N. (2017). Consumer Lending Discrimination in the FinTech Era. SSRN Electronic Journal. doi: 10.2139/ssrn.3063448.
2. Aliprantis, D., Carrol, D., & Young, E. R. (2019). The Dynamics of the Racial Wealth Gap. SSRN Electronic Journal. doi: 10.2139/ssrn.3467718
3. Blom, E., & Monarrez, T. (2020). Understanding Equity Gaps in College Graduation. Urban Institute.
4. Cheng, P., Lin, Z., & Liu, Y. (2014). Racial Discrepancy in Mortgage Interest Rates. The Journal of Real Estate Finance and Economics, 51(1), 101–120. doi: 10.1007/s11146-014-9473-0.
5. Collins, C., Asante-Muhammad, D., Hoxie, J., & Terry, S. (2019). Dreams Deferred: How Enriching the 1 Percent Widens the Racial Wealth Divide. Institute of Policy Studies.
6. de Brey, C., Musu, L., McFarland, J., Wilkinson-Flicker, S., Diliberti, M., Zhang, A., . . . Wang, X. (2019). Status and Trends in the Education of Racial and Ethnic Groups 2018. National Center for Education Statistics.
7. Krysan, M. (2008). Does race matter in the search for housing? An exploratory study of search strategies, experiences, and locations. Social Science Research, 37(2), 581–603. doi: 10.1016/j.ssresearch.2007.06.001.
8. Manduca, R. (2018). Income Inequality and the Persistence of Racial Economic Disparities. Sociological Science, 5, 182–205. doi: 10.15195/v5.a8.
9. Mikhitarian, S. (10 April, 2018). Why White and Asian Home Buyers Have an Advantage Over Black, Hispanic Buyers. Retrieved from Zillow: https://www.zillow.com/research/affordable-home-listings-by-race-19419/
10. National Assessment of Educational Progress. (2012). The Nation’s Report Card: Trends in Academic Progress. National Center for Education Statistics.
11. Noel, N., Pinder, D., Stewart, S., & Wright, J. (2019). The Economic Impact of Closing the Racial Wealth Gap. McKinsey & Company.
12. Shapiro, T., Meschede, T., & Osoro, S. (2013). The Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide. Institute on Assets and Social Policy.
13. Smith, J. P. (1993). Affirmative Action and the Racial Wage Gap. The American Economic Review, 79-84.
14. Taylor, P., Kochar, R., Fry, R., Velasco, G., & Motel, S. (2011). Wealth Gaps Rise to Record Highs Between Whites, Blacks and Hispanics. Pew Research Center.
15. Traub, A., Ruetschlin, C., Sullivan, L., Meschede, T., Dietrich, L., & Shapiro, T. (2016). The Racial Wealth Gap: Why Policy Matters. Desmos.
16. U.S. Census Bureau . (2020). Quarterly Residential Vacancies and Homeownership, Forth Quarter 2019.
17. Weller, C. E., Maxwell, C., & Solomon, D. (2019). Simulating How Progressive Proposals Affect the Racial Wealth Gap. Center for American Progress.
18. Wilson, V., & Rodgers, W. M. (2016). Black-White Wage Gaps Expand with Rising Wage Inequality. Economic Policy Institute.
19. Peer Editors: Priyahdharshini Haritheertham and Pamela Ngui Shan May.

How would you feel if you were one of the 800 million people who went to bed starving each and every night? At this very moment, countless people are forced to bear the pain of poverty and starvation, through no fault of their own, while millions of individuals in developed-countries binge on excessive amounts of food. These same insatiable people waste enormous amounts of money and resources to maintain their exorbitant and disgustingly luxurious lifestyles. When five cents may seem absolutely insignificant, in certain parts of Africa, it can actually feed a family of four for over a week; for us, five cents is nothing, for them it is a matter of life and death. So how would you feel if you were one of the 168 million children aged between 5 to 17 who has to work so that they can have money to survive and they can not attend school because of that. In situations like that, the government must take into account to reduce the gap to an advisable level to balance the society.

To begin with, wealth gap undermines the equality of opportunities. Picture in your mind you are parenting your child. What would you do when you are parenting your child? You would leave the children unattended for so long, for example: just kicking a ball around a park that such aimless days as time well spent? Or instead you would spend the money to send your child to an algebra camp or learning music or performing arts? So here is the point: different opportunities. This sort of enrichment to the kids aimed at ensuring to give the best possible start in life. It is kind of like starting a life racing competition which every parent wants a good start by providing financial support in potential, and it seems that the race is being won by the rich. One sign of this is richer families can invest more in their next generation, which can lead to an unequal status in opportunities and different opportunities may affect them differently in their outcomes in their adult life. The data from the U.S saw rising income inequality between the 1970s and 2007. According to the researcher Sabino Kornrich and Frank Furstenberg found that the poorest 10% of the American spent on their child has increased 23%, whereas the richest 10% of the families spent on their child has increased about 132% during that period. It is like an investment to the children from the wealthier family. So what is the impact? According to Sean F. Reardon from Stanford University, he said: “The achievement gap between children from high- and low-income families is roughly 30 to 40% larger among children born in 2001 than among those born twenty-five years earlier”. And here is the graph that proves that. Here is another data: children born into low-income families are more likely to remain poor, and children who were born in well-off families are more likely to stay well-off.

To conclude those data, the income level of the parents is increasingly linked with how well their children do in education and that leads to how well they will do in their life and as Nicholas Lehman wrote last year, “Opportunity is increasingly tied to education, and educational performance is tied to income and wealth”. So the government should reduce the wealth gap between rich and poor to give equal opportunities to the next generation and to make society fairer, equitable opportunities and unbiased.

Secondly, inequality is bad for economic growth. Recent OECD researchers states that in OECD countries, the average increase in inequality of 3 points of Gini points is estimated to have cut in GDP by 8.5% recorded over the past decades, which in other words means it would drag down the economic growth by 0.35% per year for 25 years.

One of the main reasons from the OECD researchers state that high inequality leads low-income family to invest less in education and skills. They found that the bottom 40% of the children missing out on pricey educational opportunities, which leads to less productive employee, which causes lower wages, which means lower participation in economy which means it is bad for economic growth.

Another reason is that inequality leads to economic instability. The rich people spend a smaller proportion of their income than the people on low incomes spend a lot so that the rich people save money but poor people spend money. This leads to a reduction in demand. Thus, the imbalance between supply and demand is likely to trigger an economic crisis. So it is important to reduce the inequality.

Thirdly, the gap between rich and poor will cause lots of social problems. So what is the relationship between inequality and social problems?

On the one hand, inequality may affect people’s well-being. Many people fear that inequality undermines societies, making society a worse place to live and I fear that as well. I think one of the reasons is that the disadvantaged group of the society may feel injustice or hatred the rich because of inequality. What can happen is that can breeds more crime. I think it is really easy to think of that because, for example, if you have a society which has a large division between winners and losers, probably the losers will think the game is not played in their benefits and they are not going to play it by the social rules. That’s why it breeds more crime. It also proved by the World Bank: “In some parts of Latin America, more equitable income distribution has contributed to reducing violence”. On the other hand, countries with high income inequality have low social mobility. And as mentioned before that the children from well-off families are more likely to stay at well-off and vice versa. What that means is that people are less likely to rise or fall in the system of social hierarchy as a low social mobility, especially if you are really rich or really poor, you are more likely to stay in that way and the effect is that according to the OECD report, it says that “it can stifle upward social mobility, making it harder for talented and hard-working people to get the rewards they deserve”.

Furthermore, social mobility will cause changes in social structure, which in this case low social mobility will generates an unbalanced and unreasonable social structure — the pyramid-shaped social structure. In this pyramid-shaped social structure, a very small number of upper rich people occupy an excessively high proportion of the total wealth of the society, which can cause social instability as mentioned before. Therefore, from those two points, the government should reduce the gap to make a better society.

Rebuttal: as I mentioned, inequality is bad for economic growth, so the government should reduce the gap between rich and poor. But it actually has a good side of it, which inequality is good for economic growth, for example, the most obvious way that inequality derive growth is that it allows the entrepreneurs, for example, like Apple’s Steve Job’s, to enjoy the rewards of their risk taking. So the government should not reduce the gap between rich and poor. However, there are two weaknesses, the first one is the economic growth is bad for the environment. For example, London smog of the 1950s, it is caused by the increased consumption of fossil fuels, which can lead to poor air quality, people’s wellbeing. The second one is it is still bad for the poor people, even the economy is growing. For example, big companies like Nike and Adidas, they employ cheap labor , slave workers in India and Thailand, they only give a tiny bit of money that they can only survive from that money, they are not going to be rich. And the company which got heaps of money because of that, which promote the economic growth, but it is really bad for the poor and they are not going to change from that. So, I think from the counterargument that the government shouldn’t reduce the gap because it is good for economic growth. Even inequality is good for economic growth, I think disadvantages is bigger than advantages. So, I think the government should reduce the gap between rich and poor.

In addition, the government should reduce the gap to an appropriate level, not too small like everyone is equal. The reason is really simple, just imagine if you are working so hard and I am sleeping while I am working but we get the same amount of money. So, no one is going to work hard anymore and the productivity is going to be really low or zero, and there will be no development in the societies.

In conclusion, because of three reasons as previously stated, the first one is the inequality of opportunities, the second one is it is bad for economic growth, the third one is it will cause lots of social problems. To sum up, I think the government should reduce the gap between rich and poor.

Income inequality is a major issue in the United States. We often hear how people cannot get basic things such as healthcare or put food on a plate 3 times a day. These are dire conditions for many people that are under the poverty line. These are basic living needs that many people in the upper-middle-class don’t need to worry about. The people in poverty are not able to afford healthcare resulting in them living with untreated diseases that end up shortening their lives. The New York Times published an article titled ‘Study Shows Income Gap Between Rich and Poor Keeps Growing, With Deadly Effects’ that was written by Lola Fadulu. The article’s intended audience is Americans across the nation because people’s awareness needs to be raised about what an issue this is and what can be done to reverse and close the income gap.

This article goes into depth talking about how the income gap affects how long people are living. It discusses that 75% of rich Americans in the US in their 50s or 60s in 1992 were still alive in 2014 compared to only just over 50% of poor Americans were still alive. The article talks about how not only rich people are living longer, but life expectancy is actually shrinking for some compared to their parents or grandparents (Fadulu). This statement shows how income inequality is becoming a bigger issue and more people are falling into poverty resulting in them not being able to afford good healthcare ultimately resulting in shorter life expectancies for many Americans across the nation.

Health issues are a major concern for many people in low-income situations due to their lack accessible healthcare. For example, people living with diabetes in high-income areas have no problems and it is a very manageable disease for people like them because of their education on the topic and access to certain doctors and products that make it manageable. However, people at or below the poverty line don’t have such access resulting in easily managed diseases cutting their life expectancy down.

Another factor that was linked to longevity was in educational levels. The study found that people who graduated from college lived longer than those who didn’t. This also ties into the notion that people who are college-educated fall into wealthier income levels. People with more money have the income available to attend college in contrast to people who barely have enough money to live comfortably. It could possibly be because higher education could lead to a better understanding of health as a whole therefore, people who do not have as high of an education as their peers may not understand how important maintaining a healthy lifestyle is.

Another concern is for the many Americans who are heading towards retirement age. Many Americans are working longer because they can’t retire on their current savings. When they finally do retire, they are dependent on a failing social security system that can barely sustain them. This also goes back to the gap between wealth and poverty.

Clearly something needs to be done for this to change so there is no inequality because everyone should have an equal chance to live as long as possible. It is unfair that just because some people don’t have access to good healthcare that means that their lives are cut short. Many have suggested solutions to help with this growing crisis. One idea was to cut Social Security benefits for wealthier individuals and target programs for those with less income. Because wealthier individuals have access to retirement plans, they rely less on social security during their retirement. Fadulu quotes Bernie Sanders, “We must put an end to the obscene income and wealth inequality in our country, and ensure living wages, quality health care and retirement security for our seniors as human rights”, he also is quoted as saying “If we do not urgently act to solve the economic distress of millions of Americans”, he added, “a whole generation will be condemned to early death”. Sanders believes that taxing the rich is a solution to closing the income gap. A solution to the issue of the income gap getting in the way of people having access to good healthcare is to have places for lower-income people to go to get good healthcare. There should be programs developed to educate people on how to live a healthier life even if they are in low-income situations and give them access to healthcare if they have such health problems.

Bernie Sanders who is quoted quite a lot in the article is a proponent of affordable housing for low-income Americans and he also believes in Medicare for all and some sort of education for all. There was a Time magazine article titled ‘Why Bernie Sanders Is Talking About Poverty’ by Sam Frizell in which Bernie Sanders speaks on the subject of poverty. “There have been a number of studies that have come out recently which have shown that low-income people have a life expectancy significantly lower than wealthy people. In other words, poverty is a death sentence”, Sanders told an audience at Marist College in the Hudson Valley. “There is a physiology of poverty — that means when you wake up in the morning, you don’t know how you’re going to feed the kids, how you’re going to get access to health care. That stress alone wreaks havoc on your body”, Sanders continued (Frizell). This connects to the New York Times article because it touches upon how there is a lower life expectancy in lower-income people. This Time magazine article connects and intertwines with the New York Times one a lot because of its discussion about how people are working more and lower-paying jobs adding so much stress to their lives while subtracting years. Both articles are talking about the major issue of how low-income families across the nation are dying sooner and Sanders is quoted in the article and specifically discusses how the stress alone of worrying about affording healthcare or simply getting food on a plate wreaks havoc on the body and cuts down life expectancy.

The article’s main purpose is to bring awareness to the fact that the gap between wealth and poverty has a severe impact that can affect lives. It wants to show how serious this issue is by highlighting life expectancy decrease and effect on the nation’s health in general. It states how people who are in low-income situations should have the same chances of living to old age as their wealthier counterparts but the only way this could happen is by offering resources to healthcare and retirement benefits that could sustain them for the rest of their lives.

Discussion of inequalities has long been at the forefront of economic and political debate due to the concerns regarding the widening gap between the rich and the poor. Income inequality describes the extent to which income from revenue streams is distributed unevenly amongst the national population. Statistics from the Organization for Economic Cooperation & Development (OECD) depict the United Kingdom (UK) has one of the highest levels of income inequality in the world, with quite a large differential between the top and bottom quintiles. Income inequality does not just effect income and living standards but has flow on effects regarding family situations and even the scope of opportunities available to individuals with largely disproportionate incomes. In order to counteract this prevalent and growing economic issue, injecting investment into education and training programs to increase the quality of human capital would greatly benefit the UK, as an educated workforce is the foundation for sustainable wages growth and ultimately a prospering economy.

Context

The basis of growing income inequality in the UK stems from strong wages growth for the top 1% of the population, but stagnant to low wages growth for the bottom quintile. This decreasing pay progression for the low skilled workers leads to a weakened labor market creating a self-fulfilling prophecy of economic insufficiency. As per the IFS income growth for the median households has stalled due to wages growth declining by 0.3% and inflation increasing by 1.8% due to the political uncertainty regarding Brexit and the EU referendum. Reductions in transfer payments and welfare benefits to low-income families have also suppressed low-income family income by 1.6% (IFS 2019). Furthermore, over the 2018 UK fiscal year, the top quintile covered 42% of disposable income, whilst the bottom quintile covered only 7%, illustrating the significant disparity between the rich and the poor (McGuinneas 2019). All these factors concurrently have led to the UK Gini Coefficient being 0.34, significantly higher than in the 1970s, indicating increasing levels of inequality (0 being perfect equality and 1 being perfect inequality). To make matters worse, income inequality is expected to rise into the 2020s due to two main factors: increasing real earnings for high earners and cuts to benefits to low-income households by 7% in 2021-22.

Increasing housing costs, stemming from rising mortgage repayments limits income growth for the lowest earners by up to 5%. Low wage earners also tend to have low levels of education, stemming to restricted blue collar job opportunities and ultimately decreasing returns to scale restricting the productive potential of the overall economy.

Advances in the technological sector and computing have pushed wages to high skilled tech-based workers. Globalization and import competition have made manufacturing and administrative jobs redundant forcing low-income earners out of employment. Outsourcing menial jobs offshore and rising innovation entrepreneurship have shifted the combination of the labor force towards high tech, high skilled firms and have hollowed out the job market.

Income inequality also has flow on effects regarding family structures as less educated low-income families tend to have more volatile family environments as illustrated by the figure below. In the UK especially, most low-income families have no patriarch or father figure leading to disparity in family stability and a lack of parental investment in children leading to higher rates of inequalities for future generations, i.e. 8% difference in stability.

Income inequality ultimately is a result of a disparity between the top and bottom quintiles and in the UK, there has been a stark increase in top incomes, where the top 1% used to control 3% of national income in the 1970s, almost tripling to 8% in 2017.

Furthermore, amongst the FTSE100 companies an executive’s wages has increased exponentially by about 145 times compared to average workers, albeit not all these income streams are law abiding with the use of tax havens and other unexplained pay benefits. Higher levels of transfer payments from the government have helped to stem the flow of income inequality even though earnings inequality increased, as per the figure below showing the constructive effects of benefits for low-income earners, especially for the lowest 10% of the population increasing their net income by approximately 25%. Nevertheless, this methodology is not sustainable in the long run, as increasing transfer payments are funded by taxation revenue, meaning higher levels of taxes disincentivize high earners to reside in the UK, shifting out productive human capital, which limits overall economic growth as the skilled population emigrate away. In relation to the low-income earners there will also be a sense of human pride and dignity with the fact that they want to increase their income through employment rather than handouts from the government.

Thus, the most effective method to close the income gap is to increase the levels of education for low skilled workers, as it builds up their knowledge and expertise to catch up with white collar workers, to create a more holistic and productive labor force that enables technical efficiency.

Policy Options

To counteract the widening income inequality in the UK- an impediment to economic growth and development, it is strongly recommended that the UK government invest a large percentage of their budget and other fiscal measures towards education and training programs. The decision to invest in the acquisition of a more educated and skilled workforce by the UK government leads to an increasing rate of productivity gains in terms of future earnings job security and general increase in economic output. A more educated population provides a more efficient, effective and flexible citizenry. However, since there are benefits to the population that are externalized the demand curve demonstrating the private marginal benefit will undercut the real social benefits. As a solution to this problem the UK government can either subsidize supply to bring down the supply curve, subsidize demand by discounting the individuals’ willingness to pay or take responsibility for the provision of education and training programs at the optimum price and quantity. The UK government does engage in all three aspects by providing free education for pupils aged 5-16, as well as having government funded universities for tertiary education; incentivizing undertaking these endeavors by providing tax discounts, student allowances and concessions to make the cost of living slightly less expensive whilst students invest in their human capital. Education is the fundamental way for profitable returns on investment with people, as more educated individuals can undertake higher levels of vocational training to further their industry specific skills on the job. Active labor market policies to reduce unemployment amongst low earners such as re training schemes will also help to reduce income inequality by bridging the skills gap to nullify the effects of frictional unemployment when workers have a mismatch of skills compared to jobs available in the workforce.

There is also the argument for the taxation aspect regarding reallocation and redistribution of income. By employing a progressive tax system, the government directly taxes gross income of high earners to redistribute to low earners through welfare and cash benefits to cover housing and child support. Direct taxes across the increasing tax brackets help to reduce the wage gap and reduce inequality, however creates a disincentive effect for individuals to not work as hard as most of their wages are being taxed. On the contrary, handouts from the government create a potential moral hazard as low-income earners could be content on receiving money from the government rather than entering the workforce to seek employment. However regressive indirect taxes such as the Value Added Tax (VAT), offset the positive impact of income taxes, as the tax burden falls onto low earners as most of their income is spent on consumption compared to high earners who can diversify their earnings into savings and investment. Thus, ‘benefits in kind’ such as education or healthcare which are provided for free or heavily subsidized or discounted at consumption, increases disposable income exponentially for low-income earners lowering the gap between the rich and poor.

Conclusion

In summary, income inequality is a fierce talking point amongst economic and political debate and there has been a vast search to find a remedy for it. By exhausting all possible options and examining the taxation redistribution and its disincentive effects through progressive tax and welfare payments compared to educational investment, it can be ascertained that education has greater positive flow on effects, despite the increased-up front cost to the government. Ultimately, increased school quality leads to decreased intergenerational inequality as it creates a more cultivated and productive workforce that can maximize output given the adequate resources to do so.

Income inequality not only puts us in harm, but affects our physical and mental well-being. With that being, it is important to know the correct ways of distributing the wealth among people. Income Inequality has affected citizens in the United States ever since the American Dream had come into existence. The American Dream is the concept of having the ability to work hard, support a family, buy a home, have an investment for retirement and be able to send their children to college. Having a decent income and having economic gains is one of the ways you can fulfill this dream. It is unfortunate that so many people can not have this dream due to low income. The United States has experienced a rise in income inequality which is bad, the rich are becoming richer and the poor are becoming poorer, decreasing the stability of these two classes.

During the recent years, America has had a tremendous gap between the rich and the poor and it has been becoming a manner. The United States actually has one of the largest inequalities among many income distributors. Since 1928, our country has been experiencing the worst income inequality, and it seems to be only continuing and growing. “Almost everyone’s affected by it to a greater or lesser degree; we each adapt as best we can” (Thorson). Why is it, that so many people are being affected by this? People really find it unfair that people make more money than them, but really it comes down to, did you go to college to get a degree, do you have a good job? It is a very large concern for so many people and it will most likely be continuing to be.

This impact of the middle class, is causing a shrinkage in average income jobs. So many jobs that are considered a necessity to everyday life are now going away and are disappearing. This then becomes a strong concern for high school students, they will severely have less economic opportunity than their parents did. Furthermore, these students will find it harder to reach a good economic point and achieve a good financial status. “An increase in income inequality tends to become entrenched across generations due to various market failures connected with social stratification” (Ebeke). These individuals who are born in the middle class, are finding that they are actually being pushed into the lower class, due to the fact of middle-class jobs decreasing. The American Dream is slowly but surely becoming way out of reach.

It is unfortunate that many high school students do not choose the path to go and succeed at trade schools, community colleges and other options. Where as if they chose to take this path, it would lead them to be hopefully one day successful, leading to union jobs, providing good wages and great benefits. Being economically stable is a crucial factor for income inequality, and college is an important role for providing economic advantages. “Inequality is wrenching the nation’s poorest and richest households farther and farther apart” (Jones). So, why do people not choose to go to college and want to succeed? These people could have not grown up with parents who went to college, which results in having no motivation to do so. To continue, they may just think that it is a waste of time or they do not know what they want to do in the future.

In reality, a higher level of income inequality leads to a higher level of poverty. Poverty is where there is an increase in crime and poor health, which just makes the economy worse. “Economic inequality contributes to varieties of domestic unrest – uprisings, violent crime, sometimes even civil war” (Jones). You probably would not think that income inequality has much to do with crime rates, but it does. The health and crime with people with low incomes is something that is really common sense. Someone who has a lot of money is not going to be going to rob banks or not keep up to date on their health. On the other hand, people who are poor and have no money, are probably more likely to be stealing money, robbing banks and not keeping up with their health. Poverty actually increases the chance of poor health and poor health keeps the communities in poverty.

Most people think that income inequality is a single phenomenon. Most believe that the rich are getting rich by taking money from the poor. How is this possible? It is possible because people are just assuming and not having evidence nor a conclusion: “economic growth has benefited from rising inequality” by leaving poor and middle-class households “with a smaller share of a bigger economic pie and no worse of for it”(CQ researcher). To be able to understand what really income inequality is, talking to people who are either rich or poor can lead to better information rather than just assuming. Knowing what each have done differently throughout their lives would definitely also help. Most people who tend to be rich, are fairly driven, they may have flaws, but being lazy is definitely not one of them. Determination becomes a huge factor, if you want to become rich, you will do everything that you possibly can to become rich. People who do not have money are one hundred percent not determined and did not want to better themselves. Every single person in this world has the opportunity to become what they want to be, this is why financial aid is a thing, so everyone has a chance. Some people do not take this chance and end up feeling like it is their fault, well it is.

On the other hand, although income inequality is not something really good for the United States, it may not be such a bad thing overall. There has always been income inequality in America, and there always will be. This is because there are so many different types of people in this world, and that is ok. Not every single person in this world has a drive in becoming a millionaire. People are on all different kinds of levels of success, depending on how they contributed to society. Another reason why income inequality is good is because wealth is growing at a significant rate, wealth expansion is good for everyone.

In conclusion, I believe that income inequality is something that is not good for the economy. I feel that if people are going to complain that they are not rich, then maybe they should do something about. Complaining will not get you anywhere, but by doing something, it will. Going to college, getting a good job or going to a trade school will definitely benefit you rather than realizing you have no money and are broke. There are so many different types of ways that you can make money now a days, I feel that every single person could have an opportunity. It is true that there are so many different types of people in this world, so it is hard because of that. Hopefully income inequality will one day become less and less of a problem and will eventually be fixed. People just need to realize that there is an opportunity open, you just have to be determined to take it. Although there are definitely ways of getting rid of income inequality, with lowering the cost of living one of them. People also do not realize that income is not the same thing at wealth, someone retired with a five-million-dollar house could have no wage income. Finally, income inequality is a widespread problem throughout the United States, even in other countries, and there has to be developed ways to solve it.

It is known and obvious that there is an education gap and inequality between schools in lower income cities versus schools in higher income cities. Students who do not have the resources or money to attend a college will likely drop out of high school instead of achieving their goals but students who do have all the resources and will go onto college. This is inequality within education and it is unfair because all students deserve to have all the resources they need and funding to be able to go to any college and succeed in their life. This is an issue that happens in the Los Angeles area and even happens globally. Not everyone is receiving what they need in order to be successful, this can become a bigger issue than it already is because then the poverty rate will go higher and the next generation will be dealing with the same problem. Cities with higher poverty rates, such as cities in the Los Angeles area, are more affected because the government is not doing enough with helping schools out, just funding non-profit organizations and these organizations should be doing more to make sure every student is receiving what they need in order to be successful. Schools in and around Los Angeles need better organizations to help students stay in school and be motivated so there will not be a dropout rate and everyone will be able to succeed.

Education inequality is a very huge and important issue to focus on. It is essential to have the next generation succeed because this means the poverty rate will become lower, more jobs would be occupied and open, and the economy will rise. Many students in low-income cities within the Los Angeles area do not receive the same funding or resources a student does in a high-income city like, for example, San Marino. This causes the student (in Los Angeles) to not be motivated to go to school or not apply to colleges. We need students to go to school in order to help themselves, their future families, and economy.

In 2016, about twenty-seven percent of LAUSD high school graduates enrolled into a four-year college, according to a data analysis done by the National Student Clearinghouse, where it was mentioned in Sarah Favot’s article. There are plenty of non-profit organizations in LAUSD, however, they can be doing more to have a high percentage rate of students who do attend college after high school. In the Los Angeles Unified School District about seventy-seven percent of high school students graduate, but compared to Palos Verdes Peninsula Unified School District, 98.6 percent graduate high school. The schools in Palos Verdes Peninsula Unified School District have way more funding and programs that help every student. That is a very huge gap which is why we need more help from programs.

Los Angeles deals with a huge crisis of homeless families. About 17,000 students within the Los Angeles Unified School District are homeless which results in students who are eight times more likely to repeat a grade and twice as likely to have a low score on standardized tests, which is stated by Sahra Sulaiman in her article. These cities include East San Fernando Valley, South Bay, Downtown, and East L.A. However, these cities are actually helping these students and their families. LAUSD allows overnight parking for families that live in their vehicle which is part of the Safe Parking L.A Program, provides shelter, meals, and support and converting building to provide temporary or permanent shelter for homeless students and their families. LAUSD also started to provide counseling, backpacks, school supplies, and transportation but the increase with students becoming homeless became too much to handle and limited the resources that were given.

Another effort is that schools have provided free or reduced to help students not experience hunger while trying to concentrate in class. Some other schools have distributed small rewards to acknowledge the students with 96% attendance, these rewards were gift cards to local chains. This gives the students some sort of motivation to attend school and not drop out.

Two non-profit organizations that help schools in LAUSD are LA’s Promise and Los Angeles Fund for Public Schools, where their goal is to improve students’ academic achievements with the help of the programs within these organizations. Students in higher income cities perform better because of the economic resources they have and the funding that goes towards them, says Ann Owens. Low-income schools need more funding than any other schools.

Organizations are trying their best to help students improve in every aspect of the student’s life. However, some are not doing enough. The organizations that are providing food, shelter, and supplies are all starting somewhere but other organizations are just in schools not making the students motivated about their education or life. The organizations that provide resources for students are showing them that they care about their future and the students should too. Some organizations do not have enough money to provide the students with resources which is where they can set up any funding events to help raise enough money to help out. This will accomplish having food, supplies, and, maybe, shelter for those in need. The free or reduced lunch also helps students a lot because they might not be able to have any food at home and no student should be hungry at school.

There are many other ways to help students in low-income cities. The schools can develop relationships with adult human services agencies so when a student is leaving high school, they can receive support and help in the new transition to their new chapter of life. Employment programs, training programs and transportation systems should also be included and part of this process. This will help the student not feel so lost after high school since many do not know what route to take or what the next step is. With these new programs, more students will have access to everything they need. Schools in high income cities, who have all the resources, can branch out and help the schools in need. There is probably enough money within the wealthier schools to help out the schools in need. Students will also realize why it is important to keep on going to school and to succeed in life. If these become policies and these organizations keep doing what they do, then there will be a lower dropout rate, there will be more students applying to college, and there will be less people living on the street. A lot of people do not understand or even know that the amount of people on the streets is caused by the amount of people who did not go to school, who did not have any help or resources in their life so they took the wrong path. A student’s life and foundation start at home and school, so it is very important to make sure they are focused and motivated to stay in school. There can also be people who give motivational speeches at school, saying why it is important to have an education and what can happen if a student takes the wrong path. This can also accomplish the amount of jobs open, where professionals are needed, and given to when students pursue their career. The economy will rise. It is tremendously important to have motivation at home and in school so that students will not be on the wrong path.

The education gap and inequality is a huge crisis that needs to be fixed immediately. It is not just happening in the city of Los Angeles, but is happening all over the world. There should not even be an educational gap in the first place if all schools received an equal amount of help, resources and programs. Every student, no matter if they live in a low-income city or wealthier city, should have the opportunity to succeed in life with the help of organizations and programs. More students need to go to school and go to college in order to live a happy life and help their own families. Schools in low-income cities just need extra funding and more programs to help the kids stay in school. More students need to be successful so there will also be a low poverty rate. College should be available for everyone to go to, even if they do not have the money for it. The education gap is important to get rid of. These students are our next generation and it is important they stay on the right track.

Bibliography

1. Blume, H., Kohli, S., & Argrawal, N. (2019, August 20). Homeless Kids, Chronic Absenteeism, Frustrated Parents: L.A. Unified Is Back to School and Trying to Help. Retrieved from https://www.latimes.com/california/story/2019-08-19/la-unified-back-to-school-seeking-help-usd-first-day-of-school​.
2. Favot, S. (2017, July 10). LA School Report. Retrieved October 25, 2019, from http://laschoolreport.com/1-in-4-lausd-graduates-head-to-four-year-college-data-show/​.
3. Gordon, L. (2017, April 18). Graduation and Dropout Rates: Look Up California Districts and High Schools. Retrieved from https://edsource.org/2017/graduation-and-dropout-rates-look-up-california-districts-and-high-schools/580171.
4. Janofsky, M. (2016, June 24). Education Organizations Merge to Expand Programs in Los Angeles County. Retrieved from https://edsource.org/2016/education-organizations-merge-to-expand-programs-in-los-angeles-county/566130​.
5. Owens , A. (2018). Income Segregation Between School Districts and Inequality in Students’ Achievement. Retrieved October 25, 2019, from https://scholar.harvard.edu/aowens/publications/income-segregation-between-school-districts-and-inequality-students-achievement​.
6. Sulaiman, S., Newton, D., & Linton, J. (2018, November 20). LAUSD to Explore Housing and Wraparound Service Provision for its 17,000 Homeless Students. Retrieved from https://la.streetsblog.org/2018/11/20/lausd-to-explore-housing-and-wraparound-service-provision-for-its-17000-homeless-students/​.
7. https://www.latimes.com/california/story/2019-08-19/la-unified-back-to-school-seeking-help-usd-first-day-of-school
8. http://laschoolreport.com/1-in-4-lausd-graduates-head-to-four-year-college-data-show/
9. https://edsource.org/2016/education-organizations-merge-to-expand-programs-in-los-angeles-county/566130
10. https://scholar.harvard.edu/aowens/publications/income-segregation-between-school-districts-and-inequality-students-achievement
11. https://la.streetsblog.org/2018/11/20/lausd-to-explore-housing-and-wraparound-service-provision-for-its-17000-homeless-students/

This essay will discuss the health inequality income and its impact on an individual’s physical and mental health. I will go into discuss stresses due to poverty and underprovided areas negative impact on the body and mind, as well as the lack of adequate health care for poorer communities. Definitions and common causes will be discussed, and examples will be provided. This essay will then go on to describe a policy that aims to address the impact of health inequalities on physical and mental health.

Health inequalities such as income impact significantly an individual’s physical and mental health. According to the definition, “Health inequalities are unfair and avoidable differences in health across the population, and between different groups within society. Health inequalities arise because of the conditions in which we are born, grow, live, work, and age” (NHS England definition). These inequalities impact a range of socio-economic and deprived areas. Evidence shows that groups living in more underprivileged areas tackle the worst health inequalities, for example, they have less access to medical care, have poorer experiences, and have inadequate results. The fundamental causes of health inequalities are down to an unequal distribution of income, power, and wealth. These vital causes also impact the circulation of wider environmental influences on health, such as the availability of work, education, and good-quality housing. Children in the poorest 20% have almost double the chance of losing their life before the age of 5, compared to the wealthiest 20%. This is due to the income of their household, which limits their housing standard and health access. There are gender-based health inequalities, such as healthy life years, mortality, and morbidity risks, some are partly due to the socially constructed roles of men and women. A good example is the pay difference between men and women, meaning women have to work harder to have the same standard of life as men. The pension gap also means older women are at risk of social exclusion and poverty, which causes less access to health services. Women also have fewer years of good health. Even though women have a higher life expectancy than men, poorer health, birthing complications, and postnatal depression add to the need for more access to health care.

Income as a health inequality affects many individuals worldwide, an individual’s income dictates their life condition, for example, a person with a low income most likely lives in a rural and poorer area, has less access to medical assistance, and is likely to live a more unhealthy and shorter life. However, if a person’s income is higher, their quality of life improves, for example, a person with a higher income most likely lives in a safer and wealthier area, has access to medical assistance and private health care, and is likely to live a longer and healthier life. On the other hand, with a higher income some people will take the opportunity to drink excessive amounts of alcohol, eat richer food, or have access to illegal drugs and substances such as cocaine and heroin, which can cognitively impair an individual and cause permanent damage to a person’s health. It also can impact mental and physical health and lead to issues such as obesity, alcohol dependence, depression, or anxiety.

Income dictates where a person can afford to live. Low-income areas tend to be more deprived and rural than higher-income communities. In these areas, there may be fewer educational books available in schools and fewer opportunities for parents to be able to afford further learning activities for their children. This has an impact on the physical and mental well-being of both parents and children.

There is evidence to suggest that mental health problems vary according to socioeconomic position. Greater inequalities in health are observed in societies where there are greater inequalities in wealth. Those in secure employment tend to report better levels of mental health compared with those in insecure employment or those who are unemployed. Individuals with a poorer socio-economic status have a higher chance of suffering from depression. Vaster socio-economic difficulties are associated with greater suicide risk, predominantly among males. It is thought that individuals of a lower economic position are likely to have a lower social status, essentially causing isolation, which impacts a person’s mental health and ability to participate in the economy and is more likely to suffer due to poverty.

Income can cause individuals to feel isolated from others as a result of differences between earnings, for example, an individual from an underprivileged background with a minimum wage job may not have enough money to live on, leaving them with fewer opportunities to socialize with their peers and join in with non-essential activities. This can have an effect on mental well-being. People communicate through social media and through digital devices nowadays, however, with a low income that can barely be used to pay mandatory bills, many people don’t get to experience this privilege. This lowers an individual’s connection with the outside world and can lead to a lack of self-esteem.

Low income of parents can have a detrimental effect on their children when they do not have the latest trainers, clothing or mobile phones, etc., and are then ridiculed or bullied by their peers whose parents are in a higher income bracket. These children who come from lower-income homes may suffer from stress, anxiety, and poorer health due to exclusion by classmates, lack of confidence, and possibly going hungry or having less use of facilities such as hot water adding to their stress levels, which inevitably impact on their studies, learning ability and how they communicate with others. This, in turn, has an impact on the parent’s emotional well-being and mental health and can add to the anxiety of being able to provide for their children.

Food banks are charity-based groups that operate for no profit and help those who struggle to afford enough food to eat. Food distributed at a food bank is mostly donated by members of the public and sometimes supermarkets will donate short-dated products for the charity to give out rather than the products being thrown away and wasted. Items that may be provided at a food bank include cereals, tinned goods, pasta and rice, bread and milk, and other food products. It is not only food that is available, but other everyday goods are issued to people who are struggling, for example, nappies and baby wipes, soap and deodorant, washing powder, and toilet rolls, which are essential items but not always affordable to the unemployed or people on low incomes.

Mental and physical health are associated with poverty, and people in low-income areas are more likely to be affected by depression and anxiety. Lack of money can lead to stress, which impacts a person’s personality and confidence, which, in turn, can be detrimental to health. Low income and unemployment can increase the likelihood of a person depending on a food bank to help provide some essential items to enable them to feed themselves and their families.

For most people who use the food banks in their area, it is a last resort, and they often can feel embarrassed that they cannot provide for themselves and their families without resorting to accepting charity. It is important that volunteers provide a welcome word and can have a non-judgmental conversation with people who are ashamed to attend. The volunteers are also able to provide information and make suggestions about other charities or organizations that may offer benefits or income support.

In conclusion, income as a health inequality affects mental and physical health in many ways. Some of these have been outlined within this essay. Health inequalities have been defined and common causes and examples have been provided throughout. Other health inequalities such as gender and location have been discussed and evidence has also been given to support this information. The issue of low income and the necessity of people being forced to rely on food banks to help them provide for families and how they can address income as health inequality, as well as the importance that these food banks have of providing help and support for people who are struggling with lack of income.

Before I start my essay, I would like to introduce some abbreviations and special proper noun that appears in my essay. The first one is OECD. OECD is the abbreviation of the Organization for Economic Co-operation and Development. It is an intergovernmental economic organization with 36 member countries, promoting economic growth and world trade. The second one is the Gini coefficient, which stands for the inequality level, for example, the level of income. The Gini coefficient of zero is expressed as perfectly equal (e.g., everyone has the same income) and the Gini coefficient of 100 percent is expressed as a maximal inequality (e.g., one person has all the money). The third one is social mobility. The meaning is just as the name implies – the movement of people within the social stratification or, in other words, the social hierarchy.

Imagine you are one of the 800 million people who went to bed starving each and every night. At this very moment, countless people are forced to bear the pain of poverty and starvation, through no fault of their own, while millions of individuals in developed countries binge on excessive amounts of food. These same insatiable people waste enormous amounts of money and resources to maintain their exorbitant and disgustingly luxurious lifestyles. When five cents may seem absolutely insignificant, in certain parts of Africa it can actually feed a family of four for over a week; for us, five cents is nothing, for them, it is a matter of life and death. So, how would you feel if you were one of the 168 million children aged between 5 to 17 who has to work so that they can have money to survive and they cannot attend school because of that? In situations like that, the government must take into account reducing the gap to an advisable level to balance society.

To begin with, the wealth gap undermines the equality of opportunities. Picture in your mind you are parenting your child. What would you do when you are parenting your child? You would leave the children and let them explore the world themselves? What I mean explore is letting it grow freely as a great childhood. Or instead, you would spend the money to send your child to a study group or learn music or performing arts? So, here is the point: different opportunities. This sort of enrichment for the kids is designed to ensure the best possible start in life. It is kind of like starting a life-racing competition in which every parent wants a good start by providing financial support potential, and it seems like the rich people are winning.

One sign of this is richer families can give more financial support than the poor in the next generation, which can lead to an unequal status in opportunities. Different opportunities may affect them differently in their outcomes in their adult life. According to researchers Sabino Kornrich and Frank Furstenberg, they found a rising income inequality between the 1970s and 2007 in the U.S. They found that the poorest 10 percent of Americans spent on their child increased 23 percent, whereas the richest 10 percent of families spent on their child has increased about 132 percent during that period. So, what is the impact? According to Sean F. Reardon from Stanford University, he said that in the achievement gap between children from high- and low-income families is around 40 percent larger among children born in 2001 than in the early 1970s.

Here is another piece of information that shows the relationship between a child’s family income and the child’s income in the future. It has been established that the children’s income level is affected by the parents’ income level. If their parents have a low income, their children are also more likely to have a low income, and if their parents have a high income, their children are more likely to have a high income as well. It shows that children born into low-income families are more likely to stay poor, and children who were born into well-off families are more likely to stay well-off.

To conclude those data, the income level of the parents is increasingly and strongly linked with the achievement of their children, which leads to how well they will do in their life, and as Nicholas Lehman wrote last year, “Opportunity is increasingly tied to education, and educational performance is tied to income and wealth”. So, the government should reduce the wealth gap between rich and poor to give equal opportunities to the next generation and to make society fairer, equitable opportunities, and unbiased.

Secondly, inequality is bad for economic growth. Recent OECD researchers point out that the average increase in inequality of 3 points of Gini points is estimated to have cut GDP by 8.5 percent recorded in the last few decades, which in other words means it would decrease about 0.35 percent for economic growth per year by 25 years.

One of the main reasons cited by OECD researchers is that high inequality leads low-income families to invest less in education and skills. They found that the bottom 40 percent of children missed out on expensive educational opportunities, which can lead to less productive and skilled employees in the future, which means lower wages are provided and lower participation in the economy, which results in a bad economy. Thus, as inequality rises, there is not much impact on the numeracy skills of people from medium- and high-parent education backgrounds. In contrast, there is a huge decrease in the numeracy skills of people from low-parent education backgrounds.

Another reason is that inequality leads to economic instability. Rich people spend a smaller proportion of their income than poor people, so rich people save lots of spare money, but poor people do not have money to save. Those spare money is standing idle rather than flowing into the market. This leads to a reduction in demand and it can lead to assert bubbles Thus, the imbalance between supply and demand is likely to trigger an economic crisis and finally economic failure. So, it is important to reduce inequality to make sure this won’t happen again.

Thirdly, the gap between rich and poor will cause lots of social problems. So, what is the relationship between inequality and social problems? On the one hand, inequality may affect people’s well-being. Many people fear that inequality undermines societies, making society a worse place to live, and I fear that as well. I think one of the reasons is that the disadvantaged group of society may feel injustice or hatred toward the rich because of inequality. What can happen is that can breed more crime. I think it is really easy to think of that because, for example, if you have a society that has a large division between winners and losers, probably the losers will think the game is not played to their benefit, and they are not going to play it by the social rules. That’s why it breeds more crime. It was also proved by the World Bank: “In some parts of Latin America, more equitable income distribution has contributed to reducing violence”.

On the other hand, countries with high-income inequality have low social mobility. According to the Great Gatsby Curve. It shows a negative correlation between social mobility and income inequality in some countries. And as mentioned before that children from rich families are more likely to stay rich and vice versa. What that means is that people are less likely to rise or fall in the system of social hierarchy as low social mobility, especially if you are really rich or really poor, you are more likely to stay that way, and the effect is that, according to the OECD report, “it can stifle upward social mobility, making it harder for talented and hard-working people to get the rewards they deserve”. Furthermore, social mobility will cause changes in social structure, which in this case, low social mobility will generate an unbalanced and unreasonable social structure – the pyramid-shaped social structure. In this pyramid-shaped social structure, a very small number of upper-rich people occupy an excessively high proportion of the total wealth of the society, which can cause social instability, as mentioned before. Therefore, from those two points, the government should reduce the gap to make a better society.

As I mentioned, inequality is bad for economic growth, so the government should reduce the gap between rich and poor. But it actually has a good side to it, which inequality is good for economic growth, for example, the most obvious way that inequality derives growth is that it allows entrepreneurs, for example, Apple’s Steve Jobs, to enjoy the rewards of their risk-taking. So, the government should not reduce the gap between the rich and the poor. However, there are two weaknesses, the first one is that economic growth is bad for the environment. For example, the London smog of the 1950s; it is caused by the increased consumption of fossil fuels, which can lead to poor air quality, and people’s well-being. The second one is that it is still bad for poor people, even though the economy is growing. For example, big companies like Nike and Adidas; they employ cheap labor and slave workers in India and Thailand, they only give a tiny bit of money, and they can only survive from that money, they are not going to be rich. And the company got heaps of money because of that, which promotes economic growth, but it is really bad for the poor, and they are not going to change from that. So, I think from the counterargument that the government shouldn’t reduce the gap because it is good for economic growth. Even though inequality is good for economic growth, I think the disadvantages are bigger than the advantages, so I think the government should reduce the gap between the rich and the poor.

In addition, the government should reduce the gap to an appropriate level, not too small like everyone is equal. The reason is really simple, just imagine if you are working so hard and I am sleeping while I am working, but we get the same amount of money. So, no one is going to work hard anymore and the productivity is going to be really low or zero, and there will be no development in the societies.

In conclusion, because of three reasons as previously stated, the first one is the inequality of opportunities, the second one is it is bad for economic growth, and the third one is it will cause lots of social problems. To sum up, I think the government should reduce the gap between the rich and the poor.

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Income inequality has been a growing issue within the U.S. for decades. People are becoming increasingly richer while the poor somehow becomes poorer. People are starting to see polarization and communities are becoming increasingly divided. Many would think if this was an ongoing issue, then why is this widening gap continuing to increase? First, it is important to understand what economic inequality means; economic inequality is defined as the difference in wealth split between groups within society. This ongoing issue is hard to resolve since there are several different factors attributing to the cause, but by recognizing these key factors Americans can find ways to help diminish the wealth gap.

A contributing factor that keeps the rich richer and the poor poorer, thus perpetuating income inequality, is the gender pay gap. There have been many different studies and articles written to prove and disprove that there is a difference in pay between genders, nevertheless, there have still been studies showing the difference in pay even though it may not be substantial. In an article by Abigail Hess of CNBC, in the U.S., “it is often estimated at around 80 cents earned by women for every dollar earned by a man” (cnbc.com). When looking at the income data in the U.S. there is a wage gap in each state, some are greater than others. In 2018, the American Association of University Women (AAUW) collected data from the median annual earnings ratio by state and gender; “the state with the largest gap was Louisiana, which had a gender pay ratio of 70%; the state with the smallest gap was California, with a gender pay ratio of 88%” (aauw.org). Rising inequality affects everyone and not just the growing urban areas. Other factors that contribute to women earning lower earnings are discrimination, lack of paid family leave, subsidized childcare, and more. Ways that can combat these issues are taking equal pay opportunities, fighting against stereotypes and segregation, and improving work benefits for families.

The labor market takes a huge role in the lack of income equality; with so many competitive fields and people applying for these jobs, there has been a shortage and more challenging requirements of job openings. Ben Bernanke, former federal reserve chair, states that “gross domestic product is expanding, but median income is not growing substantially” (shrm.org). With limited jobs and opportunities, it becomes harder for people to move up the ladder, this results in less wage growth and career opportunities. Another result of limited jobs leads to more people staying at their current jobs; this results in fewer opportunities for potential job seekers and less movement around the workforce. Job fluidity has declined in all 50 states and every major industry within the past five years. Wage growth is moving frustratingly slow right now, which is surprising because right now unemployment is very low; this is a result of low productivity. In the U.S. productivity has been declining. Professor Jake Rosenfeld of the University of Washington states that “labor productivity grew at an average of 2.1% from 1987 to 2004; since 2011, labor productivity growth has fallen to an average of 0.7%” (businessinsider.com). Giving more American to chance to showcase their skills, hard work, and new talents could help move the economy in the right direction.

The rich are becoming increasingly richer while the bottom percent continues to stay steady. A 2017 study by economist and UC Berkeley professor Emmanuel Saez claims that the “richest 1% take in 188 times as much as the bottom 90%” (inequality.org). It becomes increasingly difficult trying to fix this issue when the top percenters are doubling their income while most Americans are continuing to struggle to take care of basic needs like their home and families. In Saez’s study, he states that “an estimated 43.5 percent of the total U.S. population (140 million people) are either poor or low-income” (inequality.org). During financial crashes, such as the ones in 1929 as well as 2008, it is much easier for the rich to recover from economic catastrophes. This gap is expected to grow larger as a result of the tax cuts, which essentially benefit the wealthy. The top 1% are projected to collect 27% of benefits from the cuts in 2019.

The contributing factors showcase how negativity impacted the U.S. economy is becoming; they lead to not only one but many other harmful effects on the U.S. More economic inequality leads to greater levels of poverty. The wealthy citizens have more political power than then the poor, which results in neighborhood developments favored and geared towards the wealthy, otherwise known as gentrification. Besides the aesthetic appeal of opening trendy cafes and building new apartment buildings may seem like a good idea because it brings more money and people into these communities, but it is making it harder and almost impossible for people who lived in these areas before to even afford their current living situations. According to the American Community Survey, “poverty remains two-thirds higher in urban cores than in suburbs. Many longstanding middle- and working-class neighborhoods are disappearing” (city-journal.org). The people that matter the most in these communities are being driven out by upper-class individuals. “Teachers, firemen, and police officers are struggling to afford homes in many American cities” (city-journal.org). How do we expect our educators or nurses to do their best and put in their hard work if they are having to commute two hours to even get to work? We see Americans flocking to these big cities such as San Francisco, Los Angeles, and Portland which are all being flooded by homelessness now more than ever. An increase in homelessness can lead to an increase in crime in neighborhoods.

Economic inequality and crime are very closely correlated. In a study by researcher Nicholas Birdsong, he states that economically unequal societies have higher crime rates. That survey concludes that inequality is the single factor most closely and consistently related to crime. Most crime-related offenses by the homeless are due to petty theft as well as public disorder. Most individuals who commit these crimes have no resources to pay for bail or an attorney and eventually stay longer in jail than most who could afford those resources. Many individuals who go to prison and were not homeless at first end up becoming homeless. It is a never-ending cycle for these individuals; they aren’t given the right resources to escape these communities that they have always known as home. These underprivileged communities are unsafe because they are also known to have reduced law enforcement; wealthy areas can afford police, and more of them leave poorer areas with fewer officers. People living in these low-income communities also feel unsafe with police because they believe officers are biased toward them because of their gender, race, or sexual orientation. It almost seems impossible to combat these issues when there are so many all at once. Figuring out the root of these issues is the only way to save these communities. Some ways to improve underdeveloped communities are having a diverse range of people with different incomes, providing a better education system, and providing higher-wage jobs.

Low-income communities have a decrease in education. “In an economically unequal society, the society-wide average level of education decreases, while the number of educational elites increases” (sevenpillarsinstitute.org). A lack of proper education for many of the people living in these communities starts in childhood. When these children become adults, they usually do not have the funds to afford college and further their education; ultimately, they are unable to apply for higher-wage jobs and end up staying in their low-income communities. Schools in these communities also lack school supplies, ranging from laptops to even up-to-date textbooks. Teachers and parents end up having to pay for these supplies out of pocket, which can be very expensive. Without the proper educational system, the future of the economy cannot excel because of the lack of properly educated workers.

In conclusion, there are several effects on unequal income and wealth in the U.S. Most attributing factors are negatively affecting the economy and widening the gap between the rich and poor. There may not be a final solution to completely fix income inequality, but there are steps the government and people in their communities can take to help improve the unbalanced economy the U.S. is currently facing.

Leibbrandt and Shipp break down the source, cause and solution to the income disparity in South Africa. Their findings tackle how the bridge between the rich and poor, gender and racial inequalities, equalization workers’ wages and salaries, stability of the middle class and the division caused by the need for some form of tertiary education. This essay will explore a more circumstantial point of view towards their points.

The most unmistakable way to combat income inequality in South Africa is to address the networks of income as a whole. Thus meaning, we need to analyze statistically where, how and whom is the money of our economy branching towards. The prevalence of income inequality is due to the enormous gap between the rich and the poor. This gap allows people who are wealthy to stay wealthy and people who are poor to stay poor. People who have less skill are most likely to be more susceptible to low income and no employment. The solution to this problem is to implement education consistently at a young age, develop skills, and match people’s skills with their work as many people struggle to find jobs even after they have received education.

The need for educated people in South Africa has increased, this need enlarges the gap between the rich and poor. Everyone seeks the need to be sustained, secured and happy. This need and increased competitiveness, when it comes to your level of education, has caused income inequality to grow exponentially due to the fact that – people who are rich will have a better education and eventually end up in a high earning career field thus securing their wealth. People who are poor will not receive tertiary education, not getting a job and the cycle of poverty will continue.

The equalization of workers’ wages and salaries are deeply rooted in the dynamic problems of the business. Dynamic problems such as compensation discrimination which is when people work correctly and do not get paid equally as other people doing their exact same work. Once we extirpate discriminations against race, gender, age or sex, the salaries and wages of a certain career field will reach an equilibrium. The Government and businesses need to adopt improved policies that ensure workers are getting paid correctly and that no fraudulent crimes are occurring in the business.

Policies around wages, tax and social grants have reduced the income inequality to some extent but it is not sufficient. The sufficiency of these policies is reduced due to the poor services delivery and protection given by the government. The high level of corruption, fraud, immorality and unlawfulness in the government system has caused deficiencies in the policies that supposed to reduce income inequality such as rich people are becoming richer by coercing people in the workplace, citizens are not aware of their rights which means they become susceptible to exploitation like getting paid under minimum wage and lack of administrative structure which means grants are given to people who don’t qualify for it thus keeping the poor in poverty.

The socio-economic sphere of South Africa has been re-constructed, reshaped and repackaged into a sphere that marginalizes groups into minorities causing problems such as income inequality. Problems arise because people are deprived of their full potential – patriarchy in the work-place causes women to feel inferior which prevents them from working, discrimination because of your skin color, which results in people not making use of their opportunities and the lack of social reconciliation towards people who were affected by apartheid.

Due to apartheid majority of South Africans are situated in the middle-class working sector. The stability of the middle class will create a platform where income equality will be optimized. In relation to tax and transfer systems, the progressivity in South Africa should be improved. This means that people in the middle-class should not be paying for tax more than people who are in the upper-class (earning more money). Income inequality goes beyond income, in order to stabilize the middle income, we need to improve their working conditions, better their tax and transfer systems and consider their emotional well-being.

In South Africa, if you fall into the top earning bracket many things fall into favor. Firstly, fraudulent crimes become easier to get away with. Secondly, you have more security on your assets and can afford a lawyer. Lastly, it’s easier to accumulate generational wealth meaning that you will make it easier for your next generation to become wealthier. This causes income inequality as people who are rich stay rich and deprive people who actually worked instead of buying their way into something.

The decrease and increase in salary – a short term solution to our income equality problem. The gap in earnings between unionized and non-unionized workers will eventually increase so in order to end this problem is to improve the security system of how the income is being distributed and how the policies are being implemented. If this were to happen, less people will be paid under minimum wage, workers’ will be protected against discrimination, entrepreneurship will increase, more people will follow their passion and the gap between the rich and poor will decrease.

In order to address income inequality, we need to navigate towards a more liberal society that does not involve discrimination, an economy with a more stabled tax and transfer system, a country where income is distributed equally and improve our education system. Income inequality is a problem that multifaceted with many sources, causes and solutions. I believe that through more research such as this brief done by Murray Leibbrandt and Timothy Shipp, we are navigating South Africa to a destination of income equality.