Analyzing the Wealth Gap in the U.S
|Author (s), title/year/source||Theme 1 –Causes of Wealth Gap||Theme 2-Effects of Wealth Gap||Theme 3-Solutions|
Jacobs, D., &Dirlam, J. C. (2016). Politics and economic stratification: Power resources and income inequality in the United States. American Journal of Sociology, 122(2), 469-500.
|Economic stratification in the United States has been growing since 1970. The main cause of this problem is the increase in political strength of neoliberal national administrations and skill-biased technical change.
The second cause of increased inequality in wealth distribution between different classes is reduction in manufacturing and expansions in minority populations.
|The increase in the income inequality has greatly affected the minority groups in the country who have remained in the lower social classes.||Reducing inequality in income distribution is essential for social justice reasons in the society.
It is also important for social cohesion and economic growth.
Hero, R. E., & Levy, M. E. (2016). The racial structure of economic inequality in the United States: Understanding change and continuity in an era of “great divergence”. Social Science Quarterly, 97(3), 491-505.
|The increase in the divergence of the American rich population from the middle class and the poor is an indication of continuous stratification by wealth and income.
Using the Theil Index, it is clear that from 1980 to 2010 income inequality between racial groups contributes the rising share of wealth gap both nationally and in the states.
Between the races wealth gap is as a result of the welfare policy outcomes which are stipulated in the United States.
McKernan, S. M. (2013). Closing the Wealth Gap: Empowering Minority-Owned Businesses to Reach Their Full Potential for Growth and Job Creation.
|The wealth gap measured as the difference in wealth accumulated by the Caucasians and the minority groups show that there is a growing gap since 1983
Generation wealth transfers increases the wealth gap because the minorities lack the assets that can be inherited to enhance even the start of a small business.
Lending inequalities affects the minorities because they face discrimination from the lenders.
|Strengthening the entrepreneurial ecosystem plays a major role in reducing inequality. This involves offering coaching programs to the poor and middle class as well as provision of capital for start-ups and expansion of businesses.
Government accountability through different agencies working together to close the wealth gap and improve access to working capital by the small businesses.
Saez, E., &Zucman, G. (2016). Wealth inequality in the United States since 1913: Evidence from capitalized income tax data. The Quarterly Journal of Economics, 131(2), 519-578.
|The top upper class people constitute only 0.1% of the population but their wealth share has increased from 7% in 1978 to 22% in 2012. This shows the amount left for the majority middle class and the poor is declining.
The upsurge of the top incomes and an increase in saving rate inequality has led to differences in wealth accumulation hence the increasing gap.
|The 90% of the population have been left with a small percentage of wealth increasing poverty.
The access of fundamental services such as health has been affected in most instances.
Increased employment levels because the majority of the wealth is accumulated by few people.
|Enact policies that enhance saving culture of the middle class and the poor. They include reduction in mortgages interests’ rates.|
Jones, C. I. (2015). Pareto and Piketty: The macroeconomics of top income and wealth inequality. Journal of Economic Perspectives, 29(1), 29-46.
|A decline in saving rates has caused the people in the middle class and the poor accumulate little wealth as compared to the rich.
The increase in the top labor income inequality and an increase in real estate prices have been contributing to low wealth accumulation especially by the middleclass people.
|Increasing burden on the government as it is required to offer essential services such as education and health.||Mitigating dynasties of wealth can be done by enactment of policies such as a wealth tax.
Buttrick, N. R., &Oishi, S. (2017). The psychological consequences of income inequality. Social and Personality Psychology Compass, 11(3), e12304.
|The increase in wealth accumulation amongst the 160,000 American households at a higher rate than the others has led to a wide gap between the rich and the other social classes.
The generational passing of wealth has led to the rich children inheriting the rich class and the middleclass and poor children inherit more poverty and hence the increasing gap in wealth distribution
|It causes an increase in worse health for the population not just the poor but also the rich.
Greater gap in wealth distribution causes lower well-being such as mental illnesses, depression and involvement in crime such as assault and murder.
Other problems are obesity, incarceration and social injustices.
Amaral, E. F. L., Yen, S. K., Wang, S. X., & Perez-Arce, F. (2019). An introduction and meta-analysis of the association between income inequality and intergenerational mobility. Open Science Framework, 2-2.
|The greatest problem that is causing the wealth gap is the steep concentration of income at the top of the distribution
Stagnation of incomes throughout most of the distribution has seen the rich maintain their wealth while the poor share the little remaining percentage.
The little growth and stagnation at the bottom of the social class has majorly contributed to the rise in wealth gap.
|High levels of wealth inequality affect United States because it reduces the levels of intergenerational mobility.
The people in the lower classes have experienced stagnation in earnings and quality of life.
The increasing gap between the poor and the wealthy families makes it very difficult for the poor children to climb the economic ladder even in the future.
Scully, M., Rothenberg, S., Beaton, E. E., & Tang, Z. (2018). Mobilizing the wealthy: Doing “privilege work” and challenging the roots of inequality. Business & Society, 57(6), 1075-1113.
|Philanthrocapitalism is a major factor contributing to the wealth gap because people are amazing wealth for themselves without considering the poor.
Little or no willingness by the rich class to participate in reducing inequality.
|The wealthy individuals gain more from the wealth gap compared to the poor and hence continued to perpetuate activities that are increasing the gap.||Advocacy by wealth is a method that is challenging in reducing the wealth gap but it may produce positive results in the long- run. This is where the wealthy decide to support the initiatives that support enhancement of wealth equality
Using “privilege work” where the wealthy use their knowledge of wealth accumulation together with the poor.
Chiteji, N. S., & Hamilton, D. (2002). Family connections and the black-white wealth gap among middle-class families. The Review of Black Political Economy, 30(1), 9-28.
|Inter-family connections which are mostly found in the middle class and poor classes affect the ability of an individual to accumulate wealth. This is because they have to share what they have with the family members.
About 9 to 16% of households in United States transfer their wealth to others and approximately 5-33% is recipients of such transfers.
|Increased poverty levels among the middle class and the poor because of the increased dependency and reduced saving.||Improved education system to enhance performance of the poor and the middle class in places of work and businesses.
Patel, P. C., Doh, J. P., &Bagchi, S. (2018). Can Entrepreneurial Initiative Blunt the Economic Inequality–Growth Curse? Evidence From 92 Countries. Business & Society, 0007650318797103.
|Increasing cost of credit where the interest rates are high and hence the poor and the middle class shun away from borrowing.
Stringent laws that require collateral to access credit.
|Reduced entrepreneurial inventions and innovations in the middle class and poor populations||Policy interventions that enhance lower startups and regulation of domestic credit in the financial sector encourages entrepreneurial development and hence reduces the increasing inequality.|