Rising Income Inequality

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Rising Income Inequality

MLA Essay on Rising Income Inequality

Rising Income Inequality


The rising income inequality in various parts of the world is an inevitable reality. In the United States alone, income inequality has increases significantly in the last four decades. Income inequality is the discrepancy between the income of the rich and the poor. The incomes of the rich keep growing higher and higher while the income of the lower income households decrease. The trend in income inequality is evident before tax and after tax (Reed and Cancian 321-333).

Rising income inequality is a great concern because high levels of income inequality have adverse effects to the economy, the society and every aspect of life. Sustained income inequality undermines the reason for existence, education and occupational choices.  As income inequality increases, economic growth plummets and financial crises occurs triggering global imbalance (Wildman 521-538). There are three reasons why income inequality continues to grow in the modern day: race and gender disparities, education and globalization.


Facts about Rising Income Inequality

In order to understand income inequality, it is important to understand how it is measured. Income inequality is the difference between the gross income earned and the net income after tax (Reed and Cancian 321-333). Inequality of opportunities is a measure of healthcare, education, standards of living and investments (Wildman 521-538). Information on the assets owned by individuals in different social classes also gives deeper insights.

Income inequality has always existed. However, the gaps between high income, middle income and low income classes have grown remarkably in the last four decades. The top 0.1 percent rich people are growing richer each day while the bottom 90% of the majority live in abject poverty (Inequality).

Figure 1: Average Income in USA – 2015 (Inequality)

Income disparities are so pronounced that the top 10% income earners earn ten times more income than the bottom 90% of the population in the USA. How can a few people have more than they can utilize while the majority cannot even afford basic needs? High income earners in the United States earn more than the national budget of some countries and yet economies are constantly embracing globalization.

The top American earners’ income has tripled in the last 20 years. Twenty years ago, the top earners used to get eight times less than what they are making now. The statistics indicate that the income of high class has increased rapidly over the last few years.

Figure 2: Average Income of Top 400 U.S. Earners (Inequality)

Global inequality has remained high even after globalization. In fact, economic integration through globalization has not helped undeveloped economies.  High levels of global inequality show the per capita income in various countries with developing countries exhibiting a general declining trend.


Consequences of Rising Income Inequality

Financial Crises

Evidence suggests that increasing levels of income disparity between the rich, the middle class and the poor can cause a financial crisis and hurt the short-term and long-term economic growth.  Studies have shown that sustained high income inequality in developed economies leads to global financial crises. Income disparities intensify leverage, extend credit and relax mortgage which allow lobbyists to urge for deregulation. Deregulation in turn leads to economic slump.


Income inequality leads to global imbalances

In response to income inequality, developed countries trade higher top income shares in the market and liberalize financial markets. Large disparities threaten financial stability and economic growth.


Social Conflicts

High income disparities can thwart social cohesion and lead to conflicts between groups of people having income differences. Conflicts discourage investment and social co-existence. Conflicts prevail in the process of resource management which makes dispute resolution difficult.


Causes of Rising Income Inequality

The growing income inequality in the United States has attracted extensive media attention, political curiosity and research (Dabla-Norris et al. 1). Income across the country shows distinguishable disparities amongst the high income, middle income and low income classes. This section explains the three main reasons for income disparities.

Race and gender disparities


Figure 3: Race and gender Disparities (Inequality)


A close examination of the main races and genders in the USA exhibits income disparities amongst the races and gender. Median income levels fall below the national median income for males and females from various racial demographics. Although policies have been enforced to push for racial equality, research findings still indicate that race plays an important role in determining income distribution (Dabla-Norris et al. 1). Most African Americans fall in the low income group while the majority of the whites are in the middle class and high income realms. Certain ethnic factions get fewer job elevations in the job market. The income disparities between genders mainly depend on factors and preferences of job seekers. Women, unlike me, consider many factors when looking for income streams. Men on the other hand are able to handle challenging career opportunities and workplace difficulties. Women are less willing to relocate or travel to remote and distant locations in quest for jobs. To cater for their fears, women are more likely to take low paying jobs as long as their security is guaranteed. Furthermore, women prefer the few government jobs available to private company jobs.

Studies indicate that African Americans are unlikely to be hired than their white counterparts with the same academic background, experience and skills.  Asian Americans and those of European origin earn the fairest share of income. Ethnic stereotyping and racial discrimination accounts for the high levels of income inequality.



Figure 4: Education Levels of Americans and Income Distribution (Inequality)

Education plays a major role in determining income. Differences in educational accomplishments exist in many Americans. Education levels are measures using the highest degree of education attained. Individuals with masters and PhD degree have higher levels of income; the holders of bachelor’s degree are in the middle class and high class while the less educated people get the least incomes.

Education levels are directly proportional to the income level. Over time, the income disparities between skilled laborers and well educated but semi-skilled individuals increase.

High income households have more educated family members who are employed in good organizations. On the other hand, low income households seldom have highly educated members regardless of race.



Figure 5: Changes in Income Distribution in USA (Inequality)


Globalization is the assimilation of global economies in various sectors of the economy. Through globalization, the whole world has become integrated in common systems of trade, careers, markets and technology. The world has become a small global village in which cheap products can be shipped to any country within a short time. Integration of low income economies with high income economies without resource redistribution has high stakes in global income inequality. Research (Dabla-Norris et al. 1), shows that only 1% of the global middle class economies benefitted from globalization. Countries like China and Brazil have gained tremendously from globalization. Globalization has helped high income developed countries and emerging middle income countries gain an upper hand while developing economies are unable to cope up with their competition.


Solutions to Rising Income Inequality

In order to solve the income inequality issues, solutions based on the causes must be implemented. Bernstein has illustrated the following ways of solving the rising income inequality.




The most important solution is education. Knowledge is power. Education empowers people to think differently and to reason above tribal, racial and ethnical cocoons. Education reduces income inequality by determining career choices, accessibility to good jobs, monthly salaries and investment activities. Education enables people from different geographical origins to earn salaries equivalent to their skills, knowledge and experience. Education also helps people to know their rights in society hence avoiding discrimination (Bernstein).


Information dissemination

Knowledge is power. In order to empower low income communities, they should be informed about their circumstances and what they can do to move out of poverty. For instance, without knowledge, Blacks will grow knowing they are not able to earn high incomes. Knowledge empowers people to move out of their comfort zones and focus on every achievable goal. Getting high incomes is achievable only if low income individuals get the right mindsets (Bernstein).



Rules and regulations are important in determining the norms and standards of running the economy. In order to rationalize income levels, rules and regulations should be enacted and enforced to lobby for economic equity. Laws should be enforced to regulate racial prejudice. For instance, employers who show prejudice in employing job seekers should be prosecuted. However, this is not easy. Employers may hide in issues such as lack of skills, lack of experience and many other issues. With proper legislations in place, law enforcers should be in the front line to advocate for equality and equity in society. If the rich extend a hand to the poor, income inequality shall be defeated (Bernstein).



The issue of high income inequality is a perennial problem which has ravaged economies and increased the gaps between the rich and the poor. Studies indicate that income disparities are caused by levels of education, globalization, racial and gender disparities. Income inequality causes global financial crises and collapse of economies. In order to address income inequality, the causes must be analyzed with respect to each geographical location. If all people become well educated with no racial prejudice and if the rich extend their hands to the poor and employ them regardless of their origins, income discrepancies will cease to exist.


Works Cited

Bernstein, Jared. “10 Solutions to Fight Economic Inequality – Talk Poverty.” Talk Poverty. N.p., 2017. Web. 28 Sept. 2017.

Dabla-Norris, Era et al. “Causes and Consequences of Income Inequality: A Global Perspective.” Staff Discussion Notes 15.13 (2015): 1. Web.

Inequality. “Income Inequality – Inequality.Org.” Inequality.org. N.p., 2017. Web. 28 Sept. 2017.

Reed, Deborah, and Maria Cancian. “Sources of Inequality: Measuring The Contributions Of Income Sources To Rising Family Income Inequality.” Review of Income and Wealth 47.3 (2001): 321-333. Web.

Wildman, John. “Modelling Health, Income and Income Inequality: The Impact of Income Inequality on Health and Health Inequality.” Journal of Health Economics 22.4 (2003): 521-538. Web.

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