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Favour Igbinyemi

Wealth Inequality

Inequality in the United States has been a persistent and ever growing issue that has received increased attention in recent years. Wealth concentration among the top 1% of the population has reached unprecedented levels, surpassing those seen since the Great Depression. This paper will look at the causes and effects of wealth inequality in the United States, using sources from 2018.

A growing concentration of corporate power within a small number of the vast population is the primary cause of wealth inequality. The growth in CEO pay is iIllustrative of the true scope of this disparagement: according to the economic policy institute, Between 1978 and 2018, CEO compensation increased by more than 900 percent while worker compensation increased by just 11.9 percent.

This concentration of power allows the wealthy elite to wield an unbalanced influence over the political process, resulting in policies that benefit the wealthy, such as income tax rates dipping from the highest sitting at 90% upon the entrance of john f kennedy (1961) to today's 37%. This assisted retention of the concentration of money and therefore power amongst the top 10% heavily contributes towards the widening gap between rich and poor.

The decline of labour unions and the erosion of workers' rights is another factor contributing to wealth inequality. According to an Economic Policy Institute report, declining rates of unionisation over the last few decades have resulted in a decrease in workers' wages and benefits, particularly for those in low-wage jobs (Gould, 2018). This decline in unionisation has reduced workers' bargaining power, resulting in a furthering of wealth transfer from workers to executives and shareholders. The rise of the gig economy, as well as an increase in the number of independent contractors who lack employee protections, has exacerbated the problem.

Wealth inequality has serious and far-reaching consequences. The growing wealth disparity has made it more difficult for low-income individuals and families to advance economically. According to a Brookings Institution report, poverty persistence is linked to a lack of economic mobility, with low-income individuals and families finding it difficult to escape poverty (Katz and Summers, 2019). This difficulty can also be linked to frequent tax cuts when dealing with the taxes placed upon corporate income, the sale of assets including stocks, land, and art, those usually gated by the already succeeding 10%. This perpetuates poverty and undermines economic mobility, creating a difficult-to-break cycle of poverty. Furthermore, the wealthy elite's unbalanced influence on the political process undermines democracy. Wealthy individuals and corporations can fund political campaigns and lobbying efforts to influence policies that benefit their interests over the interests of the general public. This issue has been documented in a study by the Center for Responsive Politics, which found that wealthy individuals and corporations had an outsized influence on the political process (Center for Responsive Politics, 2021).

One potential solution to address wealth inequality is to strengthen labour protections and increase unionisation. According to the Economic Policy Institute, unions play a critical role in reducing inequality by negotiating better wages and benefits for workers, particularly those in low-wage jobs (Gould, 2018). By strengthening labour protections and increasing unionisation, workers will have increased bargaining power, resulting in a more equitable distribution of wealth.

Another potential solution is to implement progressive tax policies. Progressive taxation is a system where individuals with higher incomes pay a higher percentage of their income in taxes. According to the Institute for Policy Studies, progressive taxation can reduce wealth inequality by redistributing wealth from the top 1% to the bottom 99% of the population (Collins and Hoxie, 2018). This can help fund social welfare programs and other initiatives aimed at reducing poverty and promoting economic mobility.

In conclusion, wealth inequality is a significant issue in the United States that has far-reaching consequences for the economy, society, and democracy. The concentration of corporate power, the erosion of workers' rights, and the decline of democracy are all factors contributing to this issue. The consequences of wealth inequality, such as poverty and the erosion of democracy, necessitate immediate attention from policymakers and the public alike.

Collins, C., & Hoxie, J. (2018). Billionaire Bonanza 2018: Inherited Wealth Dynasties in the 21st-Century U.S. Institute for Policy Studies.

Gould, E. (2018). Unions, inequality, and faltering middle-class wages. Economic Policy Institute.

Katz, L. F., & Summers, L. H. (2019). Long-term unemployment: What do we know?. Brookings Institution.

Center for Responsive Politics. (2021). The wealthiest donors to each of the 50 states. OpenSecrets.