Work attached
1
The Income Inequality in US
Name
Institution
2
The Income Inequality in US
Income inequality refers to the variation in earnings among the poor and the rich in the
society. By the way what is the cause, present status, effect and the possible solutions of the
income inequality in United States? According to Caliendo (2015), the inequality has been
steadily increasing in the US since the period of the 1970s. From a one point of observation by
Jorgenson, Schor & Huang, (2017), the gap existing between the top and the bottom among the
Americans in the income ladder has experienced an increment to a tune of 27% between the year
1970 and 2016. However, based on my basic knowledge in economics, I am aware that there is a
variation increment in the inequality between the ethnic and racial communities from one group
to the other. Thus I will talk about the income inequality in US, its causes, its current status, the
how it affects various races in the country and the possible solutions towards it.
Several aspects are behind the cause of income inequality in US. First, Saez & Zucman
(2016) said that there are blames put on cheap commodities got from China, rates of exchange
that are not fare and the outsourcing of jobs. Firms normally carry the blames of placing profits
before the employees. However, they have to be competitive all the time. Companies operating
in US need to show aspects of competition with lowly priced Indian and Chinese firms who tend
to be paying their employees very less. Consequently, many firms have begun outsourcing their
top technological and manufacturing job from overseas. According to Ryscavage (1999), the US
has so far lost nearly twenty percent of firms offering employment opportunities from the year
2000. Before, these proved to be more paying companies in the country. The second reason
behind the income inequality in US is the service jobs that have experienced increment but
receive low payment. Deregulation implies fewer instances of stringent types of investigation
3
through disputes pertaining to labor. Kelly (2009) believed that this creates benefits to business
more than earners of the wages. Thirdly, technology unlike the globalization has the tendency of
supplying the income inequality. At the same time, it has resulted into the replacement of
majority of employees at factory oriented jobs. Persons who are trained in technology stand a
chance of getting good pay in terms of jobs.
In the period of 1990s, firms decided to go public for the sake of gaining finance for
growth investment. Managers need to be involved in the production of bigger profits in a bid
towards pleasing the stockholders. To many companies, payroll is one of the biggest items in the
line of budget. The attempts towards restructuring it have resulted into doing a lot with less full
time workers. At the same time, Jorgenson, Schor & Huang (2017) noted that it also implies that
hiring many contract and temporal based employees. Immigrants, who are many and illegally
residing in the country, occupy the lowly paid jobs. The power of bargain is less when it comes
to demanding for more wages. On a fifth note, Kelly (2009) added that President Trump has had
a hand in the creation of structural form of inequality. This is evidenced in his taxation plan that
has assisted investors and businessmen more when compared to the wage earners. The other
sixth reason behind …
