Friday, September 26, 2014

Income Inequality in the US

                                                       (Comments due by Oct. 4, 2014)
The income disparity between the richest and poorest Americans has grown wider in recent years, according to a report released Thursday by the Federal Reserve, data that should add fuel to the growing political debate over income inequality.
In effect, the report titled the Fed’s Survey of Consumer Finance said what many economists have been saying for years: the richest Americans are getting richer while the poorest are getting poorer. And the middle-classes, meanwhile, are standing still.
The results of the survey are released every three years.
Families with the lowest incomes saw “continued substantial declines” in average real incomes between 2010 and 2013, according to the Fed’s survey, which continues a pattern established between the central bank’s 2007 and 2010 surveys.
Families defined as middle to upper-middle class (which fall between the 40th and 90th income percentiles) “saw little change in average real incomes” between 2010 and 2013 and consequently have failed to recover the losses experienced between 2007 and 2010, the report said.
“Only families at the very top of the income distribution saw widespread income gains between 2010 and 2013, although mean and median incomes were still below 2007 levels,” the Fed survey found.
The political debate over income inequality has led some -- mostly Democrats -- to call for higher taxes on the wealthy, while others -- mostly Republicans -- argue that higher taxes ultimately lead to economic stagnation and could act as another obstacle to the ongoing economic recovery.
The central bank’s report described “substantial disparities in the evolution of income and net worth” since 2010 despite improvements in U.S. labor markets and gradual economic growth since the 2008 financial crisis and recession that followed.
Overall, average income rose 4% from 2010 while median -- the midpoint with half higher and half lower -- income fell 5%, “consistent with increasing income concentration during this period,” according to the Fed’s report.
Meanwhile, the top 3% of families saw their share of U.S. income rise to 30.5% in 2013 from 27.7% in 2010. Fed economists said the data reflect a return to the economy's prerecession trend, after the income distribution narrowed during the recession when top-earning families saw their incomes fall. The top 3% had held 31.4% of all income in 2007.
“Overall, between 2010 and 2013 there was little movement in median and mean net worth, as the median fell a modest 2% and the mean increased slightly. Consistent with income trends and differential holdings of housing and corporate equities, families at the bottom of the income distribution saw continued substantial declines in real net worth between 2010 and 2013, while those in the top half saw, on average, modest gains,” the report found.
In addition, ownership rates of housing and businesses fell substantially between 2010 and 2013.
And retirement plan participation in 2013 continued to decline, following a pattern established between the 2007 and 2010 surveys for families in the lower half of the income percentile. Participation rebounded slightly for upper-middle income families, but it did not move back to the levels observed in 2007, the Fed said.
Ownership rates for most assets -- from stocks to retirement accounts, cars to homes -- fell from 2010 to 2013, which “indicates that while most families continue to hold some type of asset, many more families now hold fewer different types of assets,” the report said. Some 65.2% of families owned their primary residence in 2013, the lowest homeownership rate since 1995.


Anonymous said...

Bryan Rivers
The income inequality between the rich and the poor is a huge problem. I'm not sure how it can be corrected other than education. Better education in areas of poverty where there is low income will translate into better paying jobs for kids. If that does not happen then the gap will keep on increasing. Education is the only way because with that the lower class people will be more equipped for the jobs that are in demand. There are plenty of jobs that need employment, but those that are unemployed are not qualified to take on these jobs. It is the job of the government to put more money into education to help minimize the inequality.

Anonymous said...

It seems that even though the study does say that the income change has increased in the last 3 years, it does not give reason why it has changed. Obviously increasing taxes on the wealthiest percentage and lowering taxes on the lowest percentage can make the gap slightly smaller, by allowing the lower percentage groups to save the money that they do not spend on taxes.
But this article simply showed the facts of the study, without a plan of projection for growth of the future.
I believe that people must educate themselves on how to properly save their money. But the education will be up to them, to tax the wealthiest percentage more, requires that the balance must be there, to then tax the lowest percentage less. But this is only a part of helping a problem, this is not a solution, and it should be a combined effort of representatives for the lowest percentage, with their best in mind and representatives for the wealthiest who can see that these taxes will be appropriate on what the top percentages not only earn, but have inherited.

Beverly Levine

Anonymous said...

Colleen Carroll
All this blog was is a bunch of numbers supporting the fact that the rich got richer and the poor became poorer.

Matthew Kurdewan said...

This article shows the gap between the rich and the poor keeps increasing. The rich are getting richer and the poor are getting poorer. Some have called that the only way to fix this problem is to put taxes on the rich to even everything out. However that would not be successful because if more taxes are put on the rich, the people who own a majority of the busniesses, than that will only cause them to reduce and that will mean people will lose jobs. Those people probably will be the middle/poor class. So although at first you think it's good that the rich will be taxed in the long run all taxing the rich does is hold back the poor. We must find another way to increase the wealth of not only the rich but every class.

Anonymous said...

Marissa Cotroneo
For a while now the gap between the rich and the poor has continued to increase. As the rich get richer, the poor get poorer. As the cartoon on the top of the article perfectly shows, it is so hard for someone who grew up poor to become rich. Even people in the middle class have a hard time trying to get up to the next level of classes. It is even harder to do this now with the economical situation that we are all going through. Although income is increasing per household, this increase in money is not enough to make up for the crash that happen in 2007. The article states that the ownership of houses is at a all time low. People are still trying to pay off their debt that they collected during the economic recession that took place in 2007. Even though people are getting back up on their feet from that crash, they still have to make up for all of that lost time. Because of this and the fact that only 3% of American's make up the rich class, it can be concluded that most people in our society are still having a hard time keeping up with their daily bills. Its obvious that the only solution to this problem is equality. Lower the gap between the rich and the poor, and unemployment will decrease, debt will be paid, and the economy will prosper.

Anonymous said...

Income inequality is a major problem in today's world. Over the past few years, the rich have gotten richer, while the poor have gotten poorer. The middle for the most part, have stayed at their level of income during this time period. The best way for the economy in America to function is if the poorer people and the middle class are making money to decrease the gap between rich and poor. Taxing the rich more and more is not a good solution to this problem, however, because if it doesn't work then the highest income will not be as high as it used to be, which will cause another decline in the economy.
-Nick Bellantese

Brenden Wisnewski said...

This article discusses how the rich are getting richer and the poor are getting poorer. This has been going on for years now. I do not think that taxing the rich will do anything to help. Like it said in the article, it will just cause stagflation. I agree with Bryan in that we should focus on education for the lower class. Inner-city education is no where near education for the middle class and upper class education. If the education for the lower class is better, hopefully drop out rates will decrease and kids will be able to get into better colleges that will put them on the right track. Also a big problem with the lower class is the minimum wage. Does the Government really expect families to thrive with a yearly income of about $20,000? The minimum wage has to increase so the lower class afford living in this country and support a family. These changes are hard to make but in the long run will hopefully close the gap.

Alexa Lauro said...

The gap between the rich and the poor has increased over the past years. As the rich get richer, the poor get poorer. This political cartoon represents how difficult it is for one who’s poor to become rich, and how easy it is for those who are rich to become even richer. As for the middle class, their economic growth most of the time stays at a constant. I don’t believe that raising taxes for the wealthy will solve this problem, but I agree with my classmates stating that better education opportunities for the poor will diminish this gap.

Doris Da Silva said...

The income gap between the rich and the poor in the United States is wide and it has been for many years. We already know that the rich get richer and the poor just gets poorer, obviously the poor gets the worse situation, but what is being done to fix this problem?? Raising taxes to the wealthy might be a short term solution for a small percentage of this issue; however, something more concrete is needed, such as high paying jobs and education to help get those jobs. Something needs to be done or else this issue will continue generation after generation.

Aedjet Simoy said...

Our social class today is divided into three sections, high, middle and low social classes. The inequality between these three sections are unfortunately inevitable because of our economy. The income gap between the classes are tremendously illustrated in a way that, the top 1% are the wealthiest people in our society while the 99% struggles to get the wealth that they needed. Our social classes should be equal to eliminate unfairness within our society. At the end of the day, the rich will get richer while the poor gets poorer.

karthik said...

This article talks about the distance between the rich and the poor and how the richer stays rich and the poor stay poor and the middle class stay the same . this is true because the rich either inherit the money or they have better connections so they do get high pay jobs where as the middle class stay about the same because there are so many people in the category that only 1% of them become rich by meeting a good connection . the rest 99% stays in the middle class with a middle paying job. the poor stays poor as they do not have good schools in their neighborhoods so they don't get a good education. a good way to decrease the gab between the rich and the poor might be increasing minimum wage therefore they get some money to save as right now they live hand to mouth

Aly Rafeh said...

I frankly disagree with the Republicans' idea. I think that the rich should be taxed more than the middle class. If that does not happen, I don't think the gap between the rich and the poor will be fixed. It will probably continue getting wider and wider. Obviously just taxing the rich will not fix everything but at least its a start.

Brittany King said...

This article discusses the increasing gap in income divergence between the upper class, middle class, and lower class. I agree with the Republican side of the political debate arguing that higher taxes ultimately lead to economic stagnation as people have less income to spend on luxury goods and services. I also believe the government continues to focus on increasing taxes on the rich because they have no alternative plan to correct what's really wrong with our economy.
Additionally, I agree with the article in saying the rich have gotten richer, and the middle class has stayed the same. I also believe that the rich have better connections, but feel they have earned where they are at and should not be penalized by the government for their hard work and investing. Look at Warren Buffet, who lives the life of the average man though he has billions. Why should he have to pay more? Yes the gap has increased throughout the years but personally, I believe that some poor people stay poor because it doesn’t benefit them to increase their income. There are many government run benefits that they can only obtain if they earn beneath a certain level, for instance food stamps. Though many people need those benefits and they should be provided, there are just as many who are abusing the system and if they wanted to could work to increase their financial situation. I am a full time student that works full time and takes on other side jobs to cover my expenses. Therefore, I believe if you are willing to work hard and have the commitment to do it, you can accomplish anything you are determined enough to do.

Domenick Luongo said...

This article talks about the gap between the wealthy and the poor in America getting larger. This topic brought up the question whether or not we should raise the taxes on the rich to shorten the gap between the rich and the poor. I believe that there should not be a tax raise on the rich because eventually they would move out of the country and we would lose 30.5% of Income. Look at the outsourcing of jobs from major corporations. Since those taxes are so high nobody is paying them and the U.S. is loosing money.

Christiana Camaj said...

Income inequality has always been a huge problem. The rich only get richer, the poor only get poorer, and the middle-class doesn't budge. The government tries to fix this income of inequality by raising taxes for the rich(Democrats), which is no where near resolving the issue of income inequality. Taxing the rich, makes things worse. They will have less money, employment will decrease, and it will be a decrease in our economy. There is no resolving this situation for now, maybe even ever.