Income Inequality in USA

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Despite sharing similar race or culture, income is the significant indicator that illustrates the diversity between people in the same country. Different people have a different source of income that might favor them to live a better life compared to those with an average salary well others rarely manage to secure revenue. Therefore, income inequality describes the degree to which income is distributed unevenly in the population as a result of an individual’s type of work. Due to income inequality, some counties have developed and have sustained their community by exporting the extra products to underdeveloped or developing countries.

On the other hand, developing countries tend to have inadequate resources that result in borrowing from developed countries. The United States of America suffers from income inequality from the expanding share of the economy on the gains from economic development flowing to a small fraction of high-income Americans’ households. Therefore, this shift of economic gains to the rich has led to lower-income incomers in America to become poorer than those citizens from developing countries (Osberg, 33).

Among other factors such as technology, trade as well as institutional changes and wealth concentration leads to income inequality in America. The global economy tends to be the major cause of income inequality in America since Americans chose to import cheaper products from developing countries such as China and India. China’s emerging markets and improved skilled workforce has led to the production of quality equipment to the extent of Americans forgoing their local made products and importing products.

However, the America markets continue to deteriorate as high-income earners import products well middle and lower-income earners rarely afford enough money to purchase products. Therefore, the wealth which should circulate in America to boost income equality is shifting to such developing countries leading to increased income inequality in America and reduced income inequality in China. Consequently, due to the decline of the labor force involvement and share of labor income, plus stagnating median wages in America results to low-income for middle and lower-income earners while skilled workers continue to have increased income. On the other hand, China markets involves both skilled and unskilled citizens as they lack advanced technology that would replace some of the unskilled workers.

On similar grounds, technology has facilitated increased in income inequality as poor people lack knowledge on how to handle sophisticated equipment. Thus, high skilled Americans that are well educated tend to obtain various opportunities despite being financially stable with another job. Additionally, most American firms prefer having machines to work in place of unskilled laborers to reduce the cost spent in paying employees and have devices that are fast and easy to manage. According to Xie (6930), China engages all classes of citizens to contribute and share ideas with skilled personnel to produce quality products.

Trade growth between America and China has improved the rates of import in America economy thus leading to job losses in companies that provide such commodities in America. Furthermore, wealth concentration illustrates how wealthy Americans hold wealth regardless of having resources to invest and create more wealth. Consequently, wealth concentration reduces the rate of money circulation; thus, facilitating income inequality. On the contrary, China experiences less wealth concentration since it is an emerging economy that is still developing, hence has few wealthy people and are not able to afford all resources. Such a trend would help boost industrial development from their investment leading to relative income equality.

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  1. Osberg, Lars. Economic inequality in the United States. Routledge, 2015.20-44
  2. Xie, Yu, and Xiang Zhou. “Income inequality in today’s China.” Proceedings of the National Academy of Sciences 111.19 (2014): 6928-6933.
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