Courtney DuVerneay
Let’s Make a Change
Siena Heights University
MGT 360--Human Resource Management
Dr. Ball; Winter 2015
We live in one of the most beautifully rich countries in the world yet millions of people are living paycheck to paycheck, or worse. Why is that? It is because we live in a nation where the rich are becoming richer and the poor are becoming further impoverished, in a nation where the middle class is slowly becoming non-existent. Since the recession, the distribution of wealth has begun growing wider at more rapid rates than ever before. The last time that the U.S. saw such a large fluctuation in income inequality was during the Great Depression.
“There’s class warfare, all right – but it’s my class, the rich class, that’s making war, and we’re winning” said Warren Buffet, businessman, entrepreneur and one of the richest people in America. It is estimated that the top 10% of wealthy Americans have watched their income rise a staggering 61% since 1989. The top 40% of earners have seen an increase in their income over the last two decades whereas the bottoms 60% have experienced a decrease in income, with people fewer than 65 experiencing the biggest decline. The people in Delaware and Florida are among the ones who saw the biggest gains amongst the 1% of wealthy Americans and the citizens of Washington, D.C. have experienced the largest income gap. The reason that states like Florida and Delaware have seen the biggest gains amongst the 1% of wealthy Americans is because both of these states have an older population as many retirees reside there. Florida is known for having a large retirement population and we know that people over 65 have seen their income rise significantly which would account for the state seeing such a big gain. As you can see in the following chart, workers in Washington, D.C. have seen extreme job growth in high-paying jobs but mid-level jobs are falling which means the income gap which is why they have the biggest income gap when compared to other parts of the U.S.
Let’s Make a Change
Siena Heights University
MGT 360--Human Resource Management
Dr. Ball; Winter 2015
We live in one of the most beautifully rich countries in the world yet millions of people are living paycheck to paycheck, or worse. Why is that? It is because we live in a nation where the rich are becoming richer and the poor are becoming further impoverished, in a nation where the middle class is slowly becoming non-existent. Since the recession, the distribution of wealth has begun growing wider at more rapid rates than ever before. The last time that the U.S. saw such a large fluctuation in income inequality was during the Great Depression.
“There’s class warfare, all right – but it’s my class, the rich class, that’s making war, and we’re winning” said Warren Buffet, businessman, entrepreneur and one of the richest people in America. It is estimated that the top 10% of wealthy Americans have watched their income rise a staggering 61% since 1989. The top 40% of earners have seen an increase in their income over the last two decades whereas the bottoms 60% have experienced a decrease in income, with people fewer than 65 experiencing the biggest decline. The people in Delaware and Florida are among the ones who saw the biggest gains amongst the 1% of wealthy Americans and the citizens of Washington, D.C. have experienced the largest income gap. The reason that states like Florida and Delaware have seen the biggest gains amongst the 1% of wealthy Americans is because both of these states have an older population as many retirees reside there. Florida is known for having a large retirement population and we know that people over 65 have seen their income rise significantly which would account for the state seeing such a big gain. As you can see in the following chart, workers in Washington, D.C. have seen extreme job growth in high-paying jobs but mid-level jobs are falling which means the income gap which is why they have the biggest income gap when compared to other parts of the U.S.
*graph courtesy of DEBORAH NELSON AND HIMANSHU OJHA taken from Reuters.com
What are some of the causes of income inequality? The government has helped widen the income gap by outsourcing. There have been many federal jobs cut that provided good incomes to middle-class citizens that did not have a college degree, which in turn caused these workers to accept lower-wage paying jobs. The outsourcing of federal jobs did benefit some citizens, such entrepreneurs as it created a way for them to start working for the government, making good money but again, the middle-class jobs were still lost. Outsourcing by non-governmental businesses has also helped to widen the gap. Many of the jobs that were once performed here in the U.S. are being sent overseas to do because the businesses can get the work done at a cheaper rate. Another cause is the advancement of technology. Due computerization and automation many good paying jobs have been eliminated. These jobs have not been outsourced to another country but rather are being done by machines. Technological advances have negatively impacted manufacturing jobs within the U.S. because at one point in the early 1940’s companies such as GM, Ford and other manufacturing plants were the leading employers for U.S. workers. The industries in which we have previous relied on for employment have shifted and now we rely heavily on service industry companies such as Walmart to provide jobs. Walmart employs more people than the 20 largest manufacturing companies combined, which is another contributing factor to the widening of the income gap. A worker in a manufacturing plant, in Jackson, MI can make anywhere from $10-$12 an hour to start out. A worker that is employed at Walmart will make minimum wage, which in Michigan is $8.15 an hour. This worker is losing $1.85 to $2.85 an hour which will make it extremely difficult for them to take care of themselves, much less their family. We have to figure out a way to minimize the income inequality throughout the U.S. as the problem is only getting worse and people are having a harder time surviving. The following chart explains what the majority of American’s feel the ideal distribution of wealth would be, what American’s think it actually is and the startling truth.
*chart courtesy of H. Blodget, taken from Business Insider.com
One factor from that chart that stands out to me is that 92% of Americans, both democrats and republicans agree that the top 20% if Americans should have the most wealth, the middle class should have plenty of wealth and the lower class should have some wealth. The majority of Americans agree that everyone should have something, which I think is critical if we ever want to fix the income inequality in America. We have to come together as a nation who wants change and then commit to making it happen! There have been multiple articles and reports that have stated that the gaps among income levels are so significant that they are at the same levels as they were in the early1900’s.
A widely accepted idea would be to raise the minimum wage as a solution. When you raise the wage of low-earning people you increase the consumer spending which in turn stimulates the economy. One of the issues with raising the minimum wage is that costs of goods will also increase along with it. If you start paying a worker at McDonald’s a higher wage then McDonalds will have to start charging customers a higher price to offset the higher wages being paid. Another potential solution problem is that there is a lack of skilled workers to fill open positions. There are certain good paying professions that cannot find qualified candidates to fill the open positions within their company so many open jobs go unfilled. The best way to help candidates seeking employment find a decent paying job are (1) for the candidate to go back to school and get the necessary degree for these positions and/or (2) to start offering more specific training programs for these open positions that are going unfilled. Both of these solutions would help bring more qualified candidates to these open positions and help more people who would be earning a low-wage make a much high one.
Who can help fix this problem? There are several different answers as to who could help minimize the income inequalities. First, the federal government could step in. Many people believe that the extremely uneven distribution of wealth is a problem that is direct result of our government’s actions. Revamping public policies and adjusting the incomes of politicians would be examples of how the government could help lessen the income gap. Some states have chosen to impose reforms on government spending, some have cut funding for schools, roads and lending for college students while others have chosen to revamp their welfare programs. The problem is that politicians in Washington cut taxes and use deregulation to help the rich people who in turn just spend more money supporting these politicians. It is a vicious cycle that really only negatively impacts those workers that earn low wages. If the rich people who benefited from these tax cuts actually reinvested these savings into their businesses then we could see the income gap lessen and see more people climb back into the middle-class. It would help to stabilize the problem we are facing and help stimulate spending while strengthening the economy.
In closing I want to ask, so what’s the answer? I don’t think the solution to the growing income inequality in the United States has a simple answer. A lot of changes must be made on multiple levels, from the government to the small business owner. Unemployed or underemployed workers need to figure out what jobs are in demand and then obtain whatever required credentials are necessary for them to work those jobs. Public policies and reforms need to be changed and implemented in order to better use money available to the government for job creation and training programs. During my research one phrase has been used over and over again, “the unequal state of America.” To that I say, Let’s Make a Change!
What are some of the causes of income inequality? The government has helped widen the income gap by outsourcing. There have been many federal jobs cut that provided good incomes to middle-class citizens that did not have a college degree, which in turn caused these workers to accept lower-wage paying jobs. The outsourcing of federal jobs did benefit some citizens, such entrepreneurs as it created a way for them to start working for the government, making good money but again, the middle-class jobs were still lost. Outsourcing by non-governmental businesses has also helped to widen the gap. Many of the jobs that were once performed here in the U.S. are being sent overseas to do because the businesses can get the work done at a cheaper rate. Another cause is the advancement of technology. Due computerization and automation many good paying jobs have been eliminated. These jobs have not been outsourced to another country but rather are being done by machines. Technological advances have negatively impacted manufacturing jobs within the U.S. because at one point in the early 1940’s companies such as GM, Ford and other manufacturing plants were the leading employers for U.S. workers. The industries in which we have previous relied on for employment have shifted and now we rely heavily on service industry companies such as Walmart to provide jobs. Walmart employs more people than the 20 largest manufacturing companies combined, which is another contributing factor to the widening of the income gap. A worker in a manufacturing plant, in Jackson, MI can make anywhere from $10-$12 an hour to start out. A worker that is employed at Walmart will make minimum wage, which in Michigan is $8.15 an hour. This worker is losing $1.85 to $2.85 an hour which will make it extremely difficult for them to take care of themselves, much less their family. We have to figure out a way to minimize the income inequality throughout the U.S. as the problem is only getting worse and people are having a harder time surviving. The following chart explains what the majority of American’s feel the ideal distribution of wealth would be, what American’s think it actually is and the startling truth.
*chart courtesy of H. Blodget, taken from Business Insider.com
One factor from that chart that stands out to me is that 92% of Americans, both democrats and republicans agree that the top 20% if Americans should have the most wealth, the middle class should have plenty of wealth and the lower class should have some wealth. The majority of Americans agree that everyone should have something, which I think is critical if we ever want to fix the income inequality in America. We have to come together as a nation who wants change and then commit to making it happen! There have been multiple articles and reports that have stated that the gaps among income levels are so significant that they are at the same levels as they were in the early1900’s.
A widely accepted idea would be to raise the minimum wage as a solution. When you raise the wage of low-earning people you increase the consumer spending which in turn stimulates the economy. One of the issues with raising the minimum wage is that costs of goods will also increase along with it. If you start paying a worker at McDonald’s a higher wage then McDonalds will have to start charging customers a higher price to offset the higher wages being paid. Another potential solution problem is that there is a lack of skilled workers to fill open positions. There are certain good paying professions that cannot find qualified candidates to fill the open positions within their company so many open jobs go unfilled. The best way to help candidates seeking employment find a decent paying job are (1) for the candidate to go back to school and get the necessary degree for these positions and/or (2) to start offering more specific training programs for these open positions that are going unfilled. Both of these solutions would help bring more qualified candidates to these open positions and help more people who would be earning a low-wage make a much high one.
Who can help fix this problem? There are several different answers as to who could help minimize the income inequalities. First, the federal government could step in. Many people believe that the extremely uneven distribution of wealth is a problem that is direct result of our government’s actions. Revamping public policies and adjusting the incomes of politicians would be examples of how the government could help lessen the income gap. Some states have chosen to impose reforms on government spending, some have cut funding for schools, roads and lending for college students while others have chosen to revamp their welfare programs. The problem is that politicians in Washington cut taxes and use deregulation to help the rich people who in turn just spend more money supporting these politicians. It is a vicious cycle that really only negatively impacts those workers that earn low wages. If the rich people who benefited from these tax cuts actually reinvested these savings into their businesses then we could see the income gap lessen and see more people climb back into the middle-class. It would help to stabilize the problem we are facing and help stimulate spending while strengthening the economy.
In closing I want to ask, so what’s the answer? I don’t think the solution to the growing income inequality in the United States has a simple answer. A lot of changes must be made on multiple levels, from the government to the small business owner. Unemployed or underemployed workers need to figure out what jobs are in demand and then obtain whatever required credentials are necessary for them to work those jobs. Public policies and reforms need to be changed and implemented in order to better use money available to the government for job creation and training programs. During my research one phrase has been used over and over again, “the unequal state of America.” To that I say, Let’s Make a Change!
*photo courtesy of DEBORAH NELSON AND HIMANSHU OJHA taken from Reuters.com