Income inequality, which is also known as income gap, has been a rising trend around the world for many decades. This occurs when there is uneven distribution of income among different participants of the economy and the difference is widening. This calls for great concern as it would result in many severe social, political and economic issues. America is one of the country experiencing harsh income inequality and due to it, America is currently facing many consequences such as poverty and social and health problems. Therefore, income inequality should be heavily address as it causes detrimental economic and social consequences such as poverty and social and health problems. This essay will be using America as an example to discuss on why income inequality should be address and if the current measures taken are enough.

As stated above, income inequality causes many negative type of consequences and two important consequences would be the state of poverty and social and health problems. With high income disparity, America experience high poverty rate as mass number of its population is not earning enough to cover the cost of living. According to povertyusa.org, 47 million people lived in poverty for the year 2014, which means that 15% of America’s population are in poverty. This happens because it is usually the wealthy people that could afford to improve themselves to be qualified for the high paying jobs, thus resulting in the rich becoming richer and the poor becoming poorer. Therefore, if the income inequality continues to increase, America’s poverty rate would also increase as the poor would continue to be unable to improve themselves. Social and health problem is another disastrous result of income inequality. America has a rather high rate of health and social problems such as obesity, mental illness and homicides etc. and it might be due to the high income inequality. In the study that British researchers Richard G. Wilkinson and Kate Pickett did about inequality and varied social and health problems, America was the top among developed countries. They also assert that psychosocial stress and status anxiety created by inequality result in unwanted social problems. (Booth, 2010). If income inequality continues to increase, it might result in an increase in social and health problems for America which would then result in many more avoidable complications. Therefore, income inequality should be strongly address as the consequences such as poverty and social and health problems can lead to more devastating problems that America could avoid.

Minimum wage law is one of the method adopted by America to counter income inequality. Minimum wage law requires the employer to pay an employee at least a minimum amount for his/her service, which the federal amount stands at $7.24 per hour currently(Dol.gov, n.d.). While the minimum wage helps to lessen the income inequality by making sure the population earns at least a certain amount, it is not very effective. This is because with the minimum wage law, many employers end up with only paying the minimum amount to the employee which result in the income inequality to continue to increase as America’s top 10% continues to earn more. Furthermore, increasing the minimum wage to try lessen the inequality would result in many other economic problems such as employment. During 2014 State of the Union Address, President Obama proposed to raise the minimum wage to $10.10 per hour. Even though his supporters claim that it would help the economy and result in no job loss, opposition parties state that it would result in 500,000 job loss (Halvorson, 2014). With the loss in number of jobs, the unemployment rate would surely rise.

Progressive income tax is another method adopted by America as well as many other countries. It requires employee to pay income tax according to the amount they earned such that if they earn more, they will have to pay higher income tax. This is a very good way to counter income inequality as it tries to lower the amount that the top 10% earns. However, in the long run, income inequality would not be solved. This is because while the citizens who earns lesser are charge lesser, the amount earned is still many times lesser. According to inequality.org, America’s top 10%, on average, earns estimated nine times of the bottom 90%. This shows that even though it tries lessen the impact of income inequality, the impact is not great and in the long run, as the top 10% continues to earn more, the income inequality is going to keep increasing unless the bottom 90% pay increases on par with the increase of the top 10%.

A suggestion to consider for countering income inequality would be to make higher education more affordable. As people with a college degree earns more than a high school graduate, by making higher education more affordable average college tuition fee for a 4 years studies is $43,000 for private school and $21,700 for public school which is a 12 times increase as compared to 35 years ago. This surpass the increase of inflation (Quandt, 2013). With such an increase in college fee and majority of the populations not being able to easily afford college, it will result, it allows more people to become more competitive and qualified for higher paying job. Currently, the in rich being more qualified for high paying job which in turns increase income inequality. Therefore, by making higher education more affordable, the poorer would become more qualified for the high paying jobs and thus lessen the income disparities.

In conclusion, income inequality is a serious problem faced by not just America, but all around the world, and it requires much attention as it would result in many detrimental consequences such as poverty and social and health problem.

References:

Booth, R. (2010). The Spirit Level: how 'ideas wreckers' turned book into political punchbag. [online] the Guardian. Available at: http://www.theguardian.com/books/2010/aug/14/the-spirit-level-equality-thinktanks [Accessed 1 Mar. 2016].

Dol.gov, (n.d.). Minimum Wage | United States Department of Labor. [online] Available at: http://www.dol.gov/general/topic/wages/minimumwage [Accessed 1 Mar. 2016].

Halvorson, C. (2014). The Pros and Cons of Raising the Minimum Wage. [online] Wheniwork.com. Available at: http://wheniwork.com/blog/the-pros-and-cons-of-raising-the-minimum-wage/ [Accessed 1 Mar. 2016].

Inequality.org, (n.d.). Income Inequality | Inequality.org. [online] Available at: http://inequality.org/income-inequality/ [Accessed 1 Mar. 2016].

Povertyusa, (n.d.). Poverty Facts | Poverty Rate, Poverty Thresholds & Census Information. [online] Available at: http://www.povertyusa.org/the-state-of-poverty/poverty-facts/ [Accessed 1 Mar. 2016].

Quandt, K. (2014). College has gotten 12 times more expensive in one generation. [online] Mother Jones. Available at: http://www.motherjones.com/politics/2014/09/college-tuition-increased-1100-percent-since-1978 [Accessed 1 Mar. 2016].