Income Inequality In America

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Income inequality is the uneven distribution of pay among the population. Income inequality is seen as the gap between the top ten percent and everyone else. In America income inequality has reached an historic high and is higher than any other rich, democratic country. (Heerwig) Though it’s at an historic high now it has not always been this way. Income inequality in the United States has varied over time and this variation is often called the great U-turn. Before World War I the top ten percent earned between forty and forty-five percent of all income earned in the United States. Then this number dropped to about thirty-three percent in the early 1940s. Then in the late 1970s and accelerating in the 80s the income share of top earners began …show more content…

At the bottom there was barely an increase and for the middle it was a modest increase from 1965 to 2012. (Heerwig) However for the top earners there was a significant spike in incomes. In 2012, over a fifth of all income earned in the United States went to the richest one percent. That is more than double of its share of national income in the early 1970s. (Wright & Rogers: 277) Inequality in America is so much higher now than forty years ago for many reasons. Inequalities generated through exclusion from labor markets, which occurs through marginalization. Marginalization in the United States occurs when there is a mismatch between distribution of skills in the population and distribution of jobs in the economy. (Wright & Rogers: 286-287) Since the United States has deindustrialized there has been a lack of opportunity for people with “low or outmoded skills and low education.” (Wright & Rogers: …show more content…

Since the 1970s there has been an increase in inequality at the top of the pay scale while a number of Americans are “working poor” which means that they only learn poverty-level wages. (Wright & Rogers: 287-288) Again deindustrialization plays a part in this inequality. Since the deindustrialization people with a higher education or technological skills have been more valuable to employers. This leads there to be a greater inequality between unskilled, less educated people and skilled, highly educated people. Though education and skills play a part in the growing inequality they’re not the only factor. Another factor of inequalities within labor markets is the decrease in government regulation and the increase in competition within labor markets, which leads to a further exacerbation in inequality in earnings. Intensified competition without regulation leads to a greater spread of wages over time and in certain labor markets competition takes the form of “winner-take-all competition,” a term coined by Robert Frank. (Wright & Rogers:

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