Income distribution in the US is not equal with the highest 20% of the US popula
ID: 2495517 • Letter: I
Question
Income distribution in the US is not equal with the highest 20% of the US population earning 47.6 % of the total US income and the bottom 20% earning just 3.6% of total US income. This would seem to be very unfair except there is considerable mobility both up and down the income scale. Typically the young start out in the lower levels of income and then move up the scale reaching their peak earning years between 45 and 60. Past age 60, as people begin to retire, they move back down the income scale into lower levels of income.
(A.) Why is income in the US so unevenly distributed?
(B.) What factors affect income mobility?
(C.) If poverty is growing why isn’t there almost universal support for income redistribution?
Explanation / Answer
A.
Income is unevenly distributed in the US because of outsourcing and technological advancement.
Outsourcing: Labor is a factor of production. This labor charge is higher in the US compare to Asian countries. Since the US-companies require producing goods at lower price, outsourcing jobs become necessary. Such thing creates unemployment in the US and income inequality.
Technological advancement: This is also a reason for increasing jobless people in the country. Low-skilled workers become jobless or get lower payment, which creates income inequality.
B.
Factors affecting income mobility:
Tax structure: Progressive tax with higher rates can increase income mobility, since rich people have to pay high tax which ultimately passes to poor people.
Regulation: Strict regulation is required to stop concentrating wealth in the few hands.
Government transfer: Transfer income like unemployment benefit should be stopped, so that people would eager to get jobs.