InCome Inequality in Usa

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Introduction

Income inequality is the unequal distribution of individual or household income across the diverse players in an economy. It is often depicted as the percentage of income to a fraction of population.

Income Inequality in the U.S

Analysis of recent trends in shows proves that income inequality in the United States has escalated considerably and exhibits no signs of reversing. The current levels of inequality can be equated to the high levels experienced during the great depression, thus, the trend pose a serious threat to the US democracy and economy. The inequality is totally incompatible with US norms of equal opportunity and social justice. In 2007 the top .01% of American earners pocketed almost 6% of total U.S. wages, a number that has virtually doubled since 2000 (Slottje, 2).

The problem has been compounded by income stagnation while an increasing share of profits in the performing economy goes into the pockets of only a small fraction of high-income households. To add, the average family income has been flat since the 1980s. The disposable income of poor households cannot be matched to those from other developed countries since the intergenerational earnings elasticity (an assessment of how probably a person can be stuck in the income group he/she raised) is higher in the U.S. The middle class is also being affected by the sluggish wage growth (Slottje, 5).

Additionally, globalization and technological change has also affected the middle class but favored the lower-skilled workers. Falling workforce participation has also led to the income stagnation. With low disposable income, consumption is affected thus people turn to credit, personal savings and mortgage to survive. Income inequality was also aggravated by the 2007-2008 financial recession. The increasing stagnant incomes and income inequalities for the majority of Americans essentially lead to weaker aggregate slower economic growth, supply and demand. It also has diverse impacts on human capital development and educational opportunity in a vicious cycle (Slottje, 3).