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Inequality of USA Economics - Pt2
By Chase L Morgan Published: 06/05/2009
The status of the income mobility within the lower, middle, and upper income groups in America goes seems to go against and contradicts that there is even an income equality gap. According to D. Mark Wilson of the Heritage Foundation, the income mobility in the United States is consistent. The Mobility Rate chart shows that from 1969 to 1994 the increasing movements upwards from the second lowest to the third quintiles are greater than the movement downwards.
About fifty three percent of the workers were able to move to the next higher quintile. The graph shows that there is an equal distribution of people moving upwards and downwards in the quintile (Wilson, The Heritage Foundation). Columnist Alan Reynolds of the Cato Institute makes the idea of income inequality distribution as just some dogma obsession that prejudiced some people thoughts. Reynolds states that the reason why some people are in higher quintiles than other is, "they work harder, and have more experience and or more schooling (Reynolds, Cato Institute)". Reynolds also quotes in his article a 1980 study done by Princeton graduate Alan Blinder, "The richest fifth of families supplied over 30% of the total weeks worked in the economy - while the poorest fifth supplied only 7.5%.
Thus, on a per-week-of-work basis, the income ratio between rich and poor was only 2-to-1. This certainly does not seem like an unreasonable degree of inequality". Reynolds and Blinder believe that if there is an inequality income gap that it is reasonable and sensible because those who work harder and have more of an education should be the ones advancing.
The Lorenz Curve suggestion about the idea of financial inequality in the USA economy is that America is well below the line of equality. The Lorenz Curve graph provided by Answer.com, illustrates how far the USA is from equal distribution. Only the upper class or the last 25% receives 70% of the national income compared to the lower class that only receives 5% of the national income, which means that only half of the population or 50% only receive 15% of the national income. The Lorenz Curve could also be used to with the first point of the trend of growing financial inequality over the past years. Receiving 65% more than the first 25% the upper has advantage over the lower class as they are able to increase their income.
There are several factors that apppear to promote the apparent widening income gap between the lower, middle, upper income groups. Uri Berliner, journalist for the NPR, states the advance in new technolgy has caused many jobs to become outdated. Most of the jobs today demands experience in computers, finances, and the media. The assembly-lines occupations dissappears and is becoming outsourced over sea(Berliner). William A. Sundstrom suggest in his article that globlilization is also a major promoter of the income gap.
In past twenty to thirty years low skilled worker are competing against low paid immigrants and workers who produce goods for other nation that compete against the United States (Sundstrom). The individual income tax policy is one of the main reasons according to David Cay Johnston, "The Internal Revenue Service estimates that it is able to accurately tax 99 percent of wage income but that it captures only about 70 percent of business and investment income, most of which flows to upper-income individuals, because not everybody accurately reports such figures" (Johnston). The lower income people are being cheated out of their money when big corporations are barely being taxed.
Congress should be demanded to give a solution on the significant issue of Income Inequality. Income Inequality my not hurt us in short term but will mostly likely damage the United States in the long term. The increasing economic growth might jeopardize our economic growth.