US Income Inequality Rises to its Highest Level in 50 Years. What Does it Mean?
On September 10, 2019, the United States Census Bureau released 2018 numbers indicating that the income gulf between the haves and have nots grew last year to its highest level in 50 years. Globally, the World Economic Forum in Davos, on January 22, 2018, reported that 82% of the wealth generated in 2017 went to the wealthiest one percent of the global population.
Inequality refers to the extent to which something is distributed unevenly to a population, in this case, income.
Income inequality contributes to poverty and can inhibit access to adequate housing, education, and healthcare for many. Vast income inequality between the top one percent and the rest of us will affect all our lives, in some way, at some point because it inhibits economic mobility.
For example, income inequality impacts Millennials and Gen Zers who are in the early stages of their work lives, because they are earning much lower salaries. You need to spend only a few minutes perusing job listings on Glass Door or Indeed to see that employers are paying less for skilled employees. Unemployment is low, but wages are also.
Could policy offer solutions? What kinds of events could be contributing to the dismally uneven score? Significant events in history do impact income equality as does policy. Liaquat Ahamed covers this in his article published on September 2, 2019, in The New Yorker. He states that during industrialization, 1750-1914, “the United States, England, and Germany had experienced a narrowing of economic disparity.” Nobel Prize-winning economist, Simon Kuznets discovered “that in advanced economies the poor were catching up with the rich. Kuznet attributed this partially to the rise of mass education.”
However, after the American Civil War, which ended in 1865, Ahamed writes, “the gap between the rich and poor began to widen. This change was due to the concentrated incomes during the Gilded Age,” 1870s to about 1900. Emerging markets, such as China are also impactful. In the 1970s, American income was as equal as any of the Scandinavian countries are today.” However, in the 1980s income going to the top one percent soared from 8% to almost 20%. At that time, inequality also increased in Britain, Australia, Canada, and large parts of Europe, and even Japan,” Ahamed says. Economists believe new technologies were the impetus.
Today climate change is affecting poverty rates, migration, agriculture, and water globally. Researchers such as Solomon Hsiang are studying the impact of climate change on economics. “Unmitigated climate change will be very expensive for huge regions of the United States,” stated Solomon Hsiang, Ph.D., Chancellor’s Associate Professor of Public Policy at UC Berkeley. “If we continue on the current path, our analysis indicates it may result in the largest transfer of wealth from the poor to the rich in the country’s history.”
Policy is also a driving force for income inequality and parity as well. Pay attention.
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