What do you think is to blame for the widening income gap in the United States?

Question

It seems like lower and middle class America are now grouped as one, while a larger portion of the population seems to be getting richer every day.

Thanks for the correcting, WellTraveledProg. I intended to use the term smaller when putting together the question. Great answer so far, thanks!-

Answer 1

Actually, a *smaller* portion of the population controls a larger percentage of the money than ever before. In 1990, the people in the US with the top 5% in annual incomes controlled or had about 75% of the money. In 2005, the top 2% in annual incomes controlled or had about 80% of the money. That means that 98% of the rest of the people in the US (about 294 million people) only get to work with 20% of the total money supply.
Government policies that allow the wealthiest individuals to pay less in taxes, no increases in the minimum wage, loss of strength by unions as manufacturing jobs were moved overseas by large companies, lack of government funding for education and job training...all of those things contribute. A government that treats 98% of its citizens poorly will eventually have to answer to those masses...

Answer 2

"Monopolies".

I love the board game "Monopoly". We start off equal, and slowly acquire wealth (land). As the game continues, the roll of the dice and the suaveness of the players allow power to roll. Soon, someone goes bankrupt, and another gains all his or her property. Soon, we're in an Oligopoly situation (few players) ... then the final Monopoly.

Same thing has happened in the USA. I watch commercials like "Johnson & Johnson" where they say, "4th Generation and proud" ... sure, great for them, but their lawyers and estate planning have put an Oligopoly / Monopoly on the industry. The dreams of starting off as a janitor, and becoming president as squished by this super sized company.

Then I watch on Oprah ... the super rich generation who'll inherit the wealth ... and most of them don't have the passion their grandparents had about the business. In fact, I think I remember that a grandchild of the "Turner Enterprises" worked as a babysitter for a living.

It would be great if these children of the successful were passionate about the company; but most are not ... and so estate wills/ trusts are written and the company is then super sized again with it's estate distribution to the corporation instead of to people.

If you own individual stock and get the annual report ... you can visually see the accounting numbers that the Board of Directors have secrete shares ... strengthening voting powers (reason we buy stock) ... and the normal public cannot out vote the elite within the corporation who hold these secrete shares (S, C, class earned as bonuses for performance). To lessen the publics’ power to have true benefits from owning the stock (voting rights) ... most of the public owns stock in Mutual Funds. When the public owns the shares in the Mutual Funds, they are relinquishing their voting rights to the Fund Manager ... and the Fund Managers are not voting ... and sometimes (rare cases) get payments from the majority shareholders.

Plus, we're in the mentality that the "Government should Fix all" --- Yeah, It's all Bush's fault --- NOT. Last thing I want is bigger government --- I want to stand on my own; I don't want the government to stand 4 me. Seems too many are putting blind faith into the government --- when the government is we the ppl ... and we the ppl should be capable of standing on our own too.

In the board game, "Monopoly" once there is a winner ... we start over. What would happen if the USA started over? Could it happen??? Studying Economics, history tells me that we'll become Communist, fail, and then the game will start over.

Socially, the problem is too many laws that no body understands, so we all give up our rights and blame others.

Answer 3

The income inequality has been growing for the past 30 years. There are 2 separate phenomena at work. The top 0.1% been capturing an increasing share of the income with extremely large compensation (CEOs, sports and movie stars, hedge fund managers, etc). This has accelerated with the tax cuts for the top income bracket from 70% to 50% in1981and then to in the 30's since 1987. Part of the reported increase is due to increased reporting of income, but it also provided an incentive for people to negotiate for higher salaries. The second thing is that unskilled or semi-skilled workers have had to face wage competition from workers in low wage countries both from trade and immigration which has kept the median wage adjusted for inflation constant for 30 years, and low wages workers losing ground. Other factors that effect household income is that women as second workers have seen there wages rise as they became more career oriented, and many more households have 2 workers which causes a income difference between 1 and 2 worker households. There are a series fo graphs show data on the various aspects of the income distribution at http://www.visualizingeconomics.com/category/graph/

Answer 4

Yes the rich are getting richer and the poor (and middle class) are getting poorer, Why, Because everyone in the lower and middle class wants instant gratification. They want the newest cell phone, the newest SUV, the largest big screen TV.....do you get the idea???? they are spending more than they make and are going into debt, you can't get rich that way, a debt has to pay for the goods plus the interest involved. Both the American Government and the American People are spending beyond their means. The rich people are a lot smarter than that, that is why they are on top of the heap.

Answer 5

I believe the Cato institute has done the best study of this it turns out that the "income gap" has not changed in decades. What has changed is the way income is reported. Because income and capital gains tax rates have varied the higher income people have the option of shifting their income to or from capital gains.

So the main culprit in the widening income gap being reported is faulty reporting and trying to create a mountain of an issue from a mole hill of doctored data.

Answer 6

No one should have the right to any money or connections from his parents after age 18. Conservatives are liars who allow unearned birth privileges and then claim they believe that everyone should make it on his own through hard work. So the Cato Institute is a hypocritical fraud; right-wing economists are toy rats for fatcats to play with.

After inheritance is confiscated, it should be used to pay students to go to college. Free tuition plus the same salary they get now after they graduate. If you don't pay people to go to college, you get what you pay for--zeroes. So, as it is now, college education is a fraud and should not be rewarded. It is indentured servitude for inferior people with no self-respect.

The regime will collapse soon because it chose dishonest Diplomaed Dumboes as its subordinates. The Stalinistic command economy over employment wanted puppets, it got dummies. It wanted mice, it got rats. It wanted worms, it got snakes.

A democratic people would realize that birth privileges are the same as loafing on welfare; that we allow people to own property only if their personal benefit also benefits the people; that shareholders don't own businesses, they only own workplaces. So unions must be made mandatory in order that the other owners--those who own their work--get sweat equity.

Under the present system that rules the American people and overrules their will, 95% of our talent goes undeveloped because its spirit is crushed by being forced by the Parasite rulers to submit to a humiliating sacrifice. Defiant manliness is crushed too, because those who demand that we sacrifice for their freeloading privileges must be sacrificed themselves, by the guillotine.

Answer 7

Big business. They are now sucking up all the air. Their size makes them formidable, whether it is inside their industry [stifling competition & dispensing favors to gain advantage] or peddling influence and buying favorable treatment [tax abatement, fair trade, outsourcing, etc]. As Lou Dobbs [author of 'War on the Middle Class,'] said on his show: [something about] 'when will we learn that America is NOT just about Big Business?' You have to ask yourself, for example, when two banks in the top 15 nationwide merge, why? Who wins? [Note: Dems are no better on this either].

Answer 8

Our government is making it more profitable for the manufacturing sector of the USA to move offshore by eliminating tariffs (NAFTA, CAFTA). Businesses overseas have an unfair advantage because they do not have labor laws or unions. it's only a matter of time (by 2011) before China has the worlds largest economy. Thus eliminating middle class jobs in the USA.

Answer 9

Capitalism. When it is the purpose of companies to make as much profit as cheaply as possible there has to be a greater divide. As American businesses make more money and outsource jobs to cheaper markets the divide between upper and lower classes divides more and more each day.

Answer 10

Illegitimacy Rates:
Black ~ 68%
Hispanic ~ 45%
White ~ 24%
Asian ~ 15%

Median Household Income:
Asian ~ $61,000
White ~ $51,000
Hispanic ~ $36,000
Black ~ $31,000
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And, as government grows - so grows the gap.
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