Pazzanese (2016) proposed “increasing economic mobility,increasing taxes on corporate profits and investments, raising the minimumwage, cutting college debts, and improving K-12 education.” The authoradditional proposed “, reducing the influence of money in politics, taxingcarried interest at higher rates, mentoring low-income children, boostingvocational education, and lastly making business taxes a compliance issue, andevening disposable family incomes.” Ofcourse, most of these solutions are easier said than done. However, it seemsthat the gap between the “haves” and the “have-nots” willonly continue to widen without the proper steps being taken to reduce incomeinequality. The question that remains is: “How to solve incomeinequality?” Some solutions can besubstantially controlled, such as getting an education (Ganguli, Hausmann, andViarengo, 2014) and others cannot. An example of a situation that cannot becontrolled is The Great Recession, which lasted from 2008 – 2013 (Miranda,2017). The occurrence extended income gaps because it forced many companies tomove employees to part-time or to lay them off. As the recession came to an end, not only was job creation a problem buthow to incentivize companies to help in closing broadening gaps in earnings (Neumarkand Grijalva.
2017). Incomeinequalities have long-term impacts. For example, Social security, which was neverdesigned to be a sole source of retirement, but 75% of minorities rely on itfor their income compared to approximately 67% of whites, links incomeinequalities to race (Green, 2005). Minoritiesdisproportionately pay more into the program in a given year than those elderbeneficiaries receive (Ozawa and Yat-Sang, 2001). Additionally, their findings indicatedrecipients over 65 could be represented by 35% white, 55% Hispanics and 49%black and Asian which was corroborated by the Social Security Administration. While race and gender play intercessory roles ineliminating the income gap between men and women, especially for those ofcolor, it does nothing for solving income inequalities. According to theacademic journal, Going Back in Time?Gender Differences in Trends and Sources of the Racial Pay Gap, 1970 to 2010,the authors noted that the racial gaps sharply declined between 1970 and 1980and continued to fall, but at a slower rate, until 2000. Mandela and Semyonov(2016) say racial discrimination is the major contributor to racial pay gapsamong men, but not among women.
Nonetheless, please don’t mistake the mention ofthe above statement to mean income inequalities doesn’t exist for women,especially for women of color, but the gap is just narrower. The decline in racial disparities for bothgenders declined between 1970 and 1980 but fell at a slower rate for womenuntil 2000 (Mandel and Semyonov, 2016). Garris (1998) gives a compelling argument of theoverwhelming disadvantages childrenoccur in a single-parent environment have in acquiring high earnings. Whilethere exists some opportunity for income mobility for these children, it ismainly concentrated among the middle quintile (Davidai and Gilovich, 2015). Significantpercentages of children born into the top and bottom quintiles remain therethroughout their lives. The likelihood of Millennials achieving the ‘AmericanDream,’ defined as earning more than their parents, has fallen from ninety percentto fifty percent over the past fifty years (West and Friedline, 2016).
Upwardmobility rates vary by geographic regions within the United States. Furthermore,wages for the bottom 50 percent have remained stagnant while salaries for thetop 1 percent have boomed (Corak, 2013). Parts of the Midwest and Northeast andthe West have higher rates of ascending mobility, while prices are low in theSouth and parts of the Rust Belt (West and Friedline, 2016).
According to Larrimore (2014), the changing familydynamics of single-parenting has deepened the income gap. There have been manysurveys and reports completed on the single-parent factor showing there are bothpositive and negative factors on employment and earnings. For instance, while theunemployment rate for single mothers is higher than those of mothers who aremarried, single mother’s incomes were higher (Mathur, 2015).
The difference isslight, but the outcomes are likely contrary to what many believe to be true. However, the impact of income inequality onthe children of single parents doesn’t give the picture of a ‘land ofopportunity.’ Children from single families face additional challenges. Forinstance, when a single parent works full-time, to include multiple jobs, thereis less time with the child (ren). Subsequently, this situation typically leadsto behavioral and academic challenges (Hill, 2017). Various reasons have contributed to the increased levelof income inequality in the United States. Breen and Salazar (2001) suggest thegrowth in earnings of elite professionals and their choice of mates hascontributed to the rise of income inequality. Lindsey and Teles (2017) agree, however,using this theory, the increase in income inequality implies other problems,such as decreased accountability, concentrated power, and rent-seeking middleclass (Piketty, Saez and Stantcheva, 2014).
According to the CongressionalBudget Office (2016), market income, before-tax income, and after-tax incomeall became less equally distributed from 1979 to 2013. The rise in inequalityof before and after-tax revenue was attributed to the increase in the differencein market income due to the significant increase in income at the top of themarket income distribution. Melly (2005) asserts that in the United States, the topquintile of households earns 7.4 more income than households in the bottomquintile.
Under these circumstances, there are individuals or groups in societythat have unearned advantages over others. Those born into wealth wouldnaturally have better opportunities and face fewer barriers than those borninto poverty. The wealthy also exerts more political power and has more accessto political systems. That being the case, income inequality puts democracy andcapitalism in conflict because market economies cannot serve an equal amount ofwealth (Chien and Lustig, 2010). Preferably, each person must get his share ofthe wealth.
For example, a furniture maker creates wealth through makingfurniture and having people willing to give him money for it in return. According to Lindert andWilliamson (2016) just three decades ago, it didn’t matter how much money youmade; incomes tended to increase at approximately the same rate. The argument by many during those times as ifthe system affords all people in the economy the opportunity to obtaineducation and the freedom to compete in business and labor markets, then thesystem can be judged as economically fair. While this idea sounds impartial intheory, there is still the issue of equality of opportunity. As a result, thegap between the rich and poor has been steadily rising in the United Statessince 1960 (Piketty & Saez, 2003). In fact, this phenomenon has affectedmost developed economies (Petit, 2010). Nevertheless,the United States is the only affiliate of the Organization for EconomicCo-operation and Development (O.E.C.D.) which has experienced a sharp rise inthe top 1 percent’s share of income, and no other member nations are as unequalas the United States (Rothwell, 2017).