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United States

Income Inequality: A Century's Review

March 21, 2016

Leah Bartle
The Trends of Income Inequality

As humans, we love to mix our feelings of strong dissatisfaction with passive action. Income inequality is no exception of this. Although it may seem our society has moved forward greatly in the past century, our level of income inequality is more similar to that of early twentieth century than it was post-world wars. This widening gap between incomes of the rich and poor is not only an American phenomenon- all around the globe wealth is incredibly imbalanced, especially in rapidly growing developing countries such as China.

No matter who you are or what situation you are living in, there is a way you are affected by the powerful imbalance in incomes around the world. The majority of people are negatively affected, as they earn an exponentially lower income than the tiny percent of the richest citizens. Income is imbalanced between differing races, gender, and many more situations most people do not have control over. If one is in the richest 1% of America, they are impacted incredibly positively as they earn 40% of the nation’s wealth and a very high income. Yet in the middle class percentage of national income has decreased from 1989 to 1997, and by the late 1990s, the poorest 20% of Americans held less than 4% of the national income (Inglehart).

This extreme difference between the top of the top and the low of the low is nothing new. In 1918, the richest 1% of Americans earned 18% of the total national income. This number went down to below 10% through the 70s, yet in 2007 peaked back up to 24% of America’s income. In the 1920s before WWII and the Great Depression, the income for the top 1% in America was at its peak. Until the 1970s, this number was decreasing as the top 1% did not have such staggeringly different total income. In the mid ‘70s, the number reached its lowest point with the top 1% earning only 8.9% of total income.  The income gap began to decrease in the 1940s due to a few important factors, such as the economic impacts after having a world war, and fear of chaos due to lack of reform. Unfortunately, the richest Americans are back to earning over 20% of the nation’s income- even after economic growth in the 1990s.   

From these aforementioned numbers alone, one might say that there is not a huge problem with this imbalance in wealth. They could simply be saying that there has been growth in the power and success of the economy, and that the wealthy have simply been able to triumph in heightening their earnings. Yet if that were the case, then wouldn’t the average worker move up as well? Wouldn’t the balance remain to a certain extent? The lower class have fallen down the ladder as the wealthy have moved up. In 1980, the average CEO of American company earned 41 times as much as average worker. By 2000, an average CEO earned 531 times as much as the average worker ("Income Distribution"). If the economy alone grew, these numbers would not be so different. As the rich earn more and more money, the working classes are not to increasing at this same constant. 

What can someone do with this information? It is now known that income inequality is present and is happening, but who is anyone to say it can be stopped? In a French survey, 90% of participants thought income differences needed to be reduced. In spite of that, 57% said income inequalities could not be avoided and 85% said income differences “were acceptable when they rewarded individual merits.” (Rosanvallon). Unfortunately, it is next to impossible for everyday people to change income inequality. There is no concrete solution that will fix uneven distribution- a largely disputed topic by economists is how this inequality can be combatted. But there is not any confusion over the fact that income inequality has returned to a dangerous and shocking place.

Works Cited
"Income Distribution." Current Issues: Macmillian Social Science Library. New York: Macmillan Reference USA, 2003.     Opposing Viewpoints in Context. Web. 28 Feb. 2016.
Inglehart, Ronald. "Inequality and modernization: why equality is likely to make a comeback." Foreign Affairs Jan.-Feb.     2016. Opposing Viewpoints in Context. Web. 28 Feb. 2016.
"Income Inequality |" Inequalityorg. Institute for Policy Studies. Web. 1 Mar. 2016.
Ragbir, Nandika. "Globalization and Its Impact on the Caribbean: The Poverty and Inequality We’ve Suffered."     Littleusgoneglobal. 2015. Web. 1 Mar. 2016.
Rosanvallon, Pierre. "How to create a society of equals: overcoming today's crisis of inequality." Foreign Affairs Jan.-Feb.     2016.Opposing Viewpoints in Context. Web. 28 Feb. 2016.



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