In recent years the economic inequality has given the rich class a greater edge over the lower-income earners. Income inequality is a hot topic of discussion all around the world and especially in the United States. The people who are on the lower end of the income spectrum do not see many opportunities for increasing their income. The economic remains are ending in the hands of few people belonging to the rich class. Because of the prevalence of this income inequality, people are earning $42,000 less than they would have previously. This is the kind of imbalance that needs to be addressed on a larger scale so that people can increase their income levels.
Previously it was a trend in America that would increase in the economic activity; the overall possible credit would also increase. But in the last four decades, the entire situation has completely been changed. This all started in the late 70s when the rich class would take away all the economic remains. This would leave the lower-income class devastated while the middle class still struggling. The workers were not able to cash on the true hours that they have worked the entire week. This would impact their mental as well as the physical capability to add value to the country’s economy.
Some believe that if a full-time worker is earning around $50,000 then it is not the true face of the economy. The same worker could have earned $92,000 if he had shown the growth according to the economic growth. This leaves a huge question mark on the economic growth and how the rich class has been exploiting the working class since the 70s. This income inequality is something to be pondered upon so that people can earn true income in the future.
It is believed that only 5% of the American population was able to reap the fruit of economic growth. It is a very little percentage as compared to the entire American working population. And in some figures, it was seen that only 1% of the entire working population of America were able to get the true growth in their income. In some cases, this income inequality is going to increase because of the coronavirus situation in America. Millions of Americans have lost their lives during this pandemic and many are unable to retain their jobs afterward.
In the past four decades, rural workers have also lost their jobs. A typical full-time rural worker earned $43,000, but if they can keep up with the growth of the national economy, they should get $78,000. Their share of growth is about six percentages lower than that of urban workers. Before the mid-1970s, Americans’ income, regardless of their class, generally increased with overall economic growth. But this changed in the late 1970s. The rich accounted for the largest share of economic growth, while the middle class and low-income workers earned far below.
The coronavirus crisis has sent an unprecedented shock wave to the US job market. Social distancing and other restrictions have crippled many businesses, especially in services. Thus, the number of unemployed registrations exploded between mid-March and the end of May. This has further influenced the condition of the workers.
The deterioration of the labor market required an urgent and strong response from the American authorities. And all the more so since household consumption remains the engine of the American economy and social safety nets are very limited in the United States.
The huge economic impact is still a challenge for American society as the new president has taken the oath. Income inequality is yet a huge problem that the new president is going to face in the coming years. Joe Biden has indicated that there will be a new tax policy that will be targeted towards the rich class of society. But experts believe that it is going to be a short-term remedy rather than a long-term solution. This has raised many questions about the tax policy given forward by Joe Biden’s administration. Previously the entire income inequality could be traced back to the tax policies of the past.
The Gini coefficient is the true measure of the income inequality prevailing in society. When this coefficient was calculated for the United States it came out to be 0.39. This coefficient is a lot worse when compared with the other G7 countries. Although it is a mathematical calculation and cannot be considered as a true form of income inequality, it gives an indication. The coefficient can tell that the United States is heading towards the worst situation. America is known for its job opportunities in the entire world and seeing the number of this coefficient is an alarming situation for economists. Therefore, it is important to bring a balance in the possible credit of the people across America.
The people who are suffering from this income inequality belong to the working class of the US. This problem is deep-rooted in the discriminatory factor being prevalent in society as well. Another class that is being devastated by this income inequality is the ruler class of America. This is a terrifying situation for the economy of America as it is inclined towards providing the rich class only. This entire situation can be tackled with new economic policies directed towards the working class. And Joe Biden’s administration is hinting towards making the lives of the common man easier. The traces of this income inequality could be found in the political activity in the country. But moving into this territory will open an entire debate.
The current crisis is increasing the rift between the poor and the rich. When the income level of the working class is supposed to increase with the growth of the economy, it is learned that the working class is earning less than the expected growth. The annual income of the typical worker is decreasing with every passing decade and it is benefiting the rich class.