Income Inequality in Us

Income Inequality in the United States

December 3rd 2009

It is nothing new that in the U.S. some have more money than others. The topic of increasing inequality in the distribution of income has been a considerable public concern as well as political issue in recent years. The current U.S. income inequality is among the highest in U.S. history and is expected to keep increasing. Because all individuals should have the equal opportunities to succeed on the basis of their own efforts, skills, and ingenuities; this inequality can lead to major efficiency problems and social injustice (Bernanke). And now, with the unemployment and poverty rate rising and hitting the lower class hardest, income inequality has never been a more urgent problem. The following report will analyze carefully and thoughtfully the current situation of income inequality, its causes and consequences, and reactions from people as well as policy-makers.

Income inequality refers to the problem, which the income pie is distributed in an uneven manner among different socio-economic groups of a society. Currently, we observe four social classes in the U.S.: the upper class, the middle class, the lower middle class, and the lower class. Of these four classes, the inequality can be best observed between the top and lower classes. In recent years, income inequality among groups has been unprecedentedly high. Statistics have indicated that in 2007, the top 10 percent of American earners made over 49.7% of the total U.S. income, which even surpassed 1928, the peak of stock market bubble in the roaring 1920s. Moreover, when the economic expansion began in the early 1990s, it seemed like the trend of the roaring market of the 1920s was back. All of these changes happened clearly during the George W. Bush's term as President, when he cut taxes for the rich. "While the bottom 99 percent of incomes grew at a solid pace of 2.7 percent per year from 1993-2000, these incomes grew only 1.3 percent per year...