Income Iequality

Bob Cobb

Income Inequality and the Minimum Wage

The perception of the post 2008 economic climate in the United States is as contentious as the upcoming elections in November. Two topics that will undoubtedly illicit significant debate are income inequality and the battle to raise the minimum wage. There is no shortage of information for both topics, but even hard data has plenty of room for interpretation. Income inequality is an issue that has the potential to negatively affect every segment of the socio-economic scale, while the minimum wage is a policy decision that aims to correct that economic imbalance. It’s possible to find an opinion on both topics that are as different as the demographic make up of the United States. The opinions in this paper are comprised from two interviews of the two people from opposite ends of the economic spectrum. This is not to ignore the underlying fundamentals that contribute to the changes in standard of living and income dispersion that have been observed, quite differently, by the parties involved in my interviews. Technology, globalization, and a change in the political system are the primary issues that have contributed to change in the economic landscape of the U.S. and are the basis for the interviews conducted.

Despite data being appropriated to suit any position there must be some analysis of facts. The common measure of income distribution is called the GINI coefficient. The GINI, simply put, measures the observed income distribution of a population against a line of perfectly equal income distribution and is expressed as a number between 0 and 1(Appendix A). 0 meaning perfectly equal income distribution, while 1 represents absolute inequality. Of course, this number is extremely susceptible to distortions. There is a significant difference between the GINI when it is based off total income or disposable income, which takes into account the proportionality of taxes and expenses (Appendix B). According to the...