Income Inequalities in the United States

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Income Inequalities in the United States

Raw Outline

1. Incidence of income inequality in the United States
2. Issues and factors contributing towards income inequality

• Possible solutions and recommendations towards reducing income inequality

Income Inequalities in the United States

Introduction

Income inequality in the United States remains relatively high as compared to other OECD states around the world. In essence, income inequality is associated with lower levels of social mobility, which impedes access to equitable opportunities. It is imperative for subsequent governments to address the high and growing gaps between the poor and rich through appropriate policy measures.

Discussion

In the article, United States: Tackling High Inequalities Creating Opportunities for All by the Organization for Economic Cooperation and Development (OECD) notes that there is a growth in the incidence of inequalities in the United States as well as in other OECD member states. The inequalities presented in the United States and other OECD member states illustrate a high-risk trend towards increased dispersion of incomes (salaries and wages) (Olshansky 1808). Societal and demographic change has also played a critical role, albeit at a lower level than the contributions made by labor market oriented factors. The OECD notes that technological advancements, globalization, and regulatory reforms have played a critical role in employment and economic growth. However, they have contributed towards polarization of salaries and wages. Furthermore, the recent economic crisis in the year 2007-2008 period reinforced pressures on disposable incomes across households.

It is important to note that income inequality would not be a problem if there were equal opportunities for increasing incomes and more so distribution of incomes. Additionally, the article also notes that intergenerational changes and differences in accessing opportunities are also illustrative of the inequality changes in any given country. Thus, in the event that children achieve better opportunities and higher incomes than their parents do, then the intergenerational mobility is relatively high. According to the article, the United States has lower levels of intergenerational mobility as compared to other societies or states within the OECD (OECD 14).

Across states in the OECD, there is evidence that affirms that states with high levels of economic inequalities do not compensate for such differences through increased opportunities to reduce such disparities. On the other hand, there is reduced mobility in earnings across generations in states where the income inequalities are high. States that have relatively high equality status exhibit great mobility levels in incomes. On the other hand, there is low intergenerational mobility is states that income inequality is high such as the United States and United Kingdom.

In another article titled, Income Inequality in America: Fact and Fiction notes that income inequality and other disparities has become a critical point of political discourse and public policy. The article provides a disclaimer that the extent of inequalities may differ based on the measures utilized. A report by the International Monetary Fund (IMF) published in February 2014 noted that measures for inequality that use market income provide varied perspectives on high and low income earners in a given economy or state (OECD 21). The article also claims that demographics play a critical role in the occurrence and affirmation of inequalities in the United States as well as round the world. Increased life expectancy and high divorce rates play a role in single parenthood, poverty and the unequal distribution of incomes. The article also notes that existing literature provides minimal linkages between economic or social inequalities and intergenerational differences and immobility and persistence of such incidences. The measurement of inequality has focused on a variety of issues such as distribution of incomes, taxable incomes, and wages with minimal consideration of consumption as a viable account of inequality.

Conclusion

It is evident that income and other social inequalities remain an issue of concern even in the developed countries. It is critical to note that increasing and promoting policies that enhance access to public services is critical towards elimination of both social and economic inequalities especially in the United States. The United States has the highest per capita expenditure in healthcare, yet such services are not availed to all people. In the year 2008, the life expectancy at birth in the United States was estimated to be more than 14 years amongst the most educated men of the white race than for black males with the lowest levels of education. Moreover, policy shifts such as sealing taxation loopholes and broadening the taxation base can contribute significantly towards reduction in income inequalities (OECD 29).

Reforming the benefit and taxation policies is a direct and relatively powerful means of distribution of incomes in a state. Income inequality in the United States remains relatively high as compared to other OECD states around the world. In essence, income inequality is associated with lower levels of social mobility, which impedes access to equitable opportunities. It is imperative for subsequent governments to address the high and growing gaps between the poor and rich through appropriate policy measures. It is also apparent from the two articles that technological advancements, globalization, and regulatory reforms have played an important role enhancing economic and employment growth across all sectors (The Manhattan Institute 33). On the other hand, it should be noted that such developments have contributed towards polarization of salaries and wages across different income and social brackets especially in the United States. Furthermore, the recent economic crisis in the year 2007-2008 period reinforced pressures on disposable incomes across households.

Works Cited

OECD. United States: Tackling High Inequalities Creating Opportunities for All. Paris: OECD, 2014. Print.

Olshansky, Jay S. “Differences in Life Expectancy Due To Race and Educational Differences Are Widening, and Many May Not Catch Up.” Health Affairs 31.8 (2012):1803-1813. Print.

The Manhattan Institute. Income Inequality in America: Fact and Fiction. New York: The Manhattan Institute, 2014. Print.