Wednesday, 24 December 2014 19:59

Thirsty in the Rain: American Income Inequality

Written by  Michael Omidi
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Dr. Michael Omidi is co-founder of No More Poverty, among other charities. Here he discusses income inequality in the U.S.

When you’re sitting down to a great feast over the holidays, try to remember those less fortunate. To some, the holidays are a reminder of what they lack and not a celebration of abundance. We live in a country that has gross income inequality and it has only gotten worse in recent years.

Income inequality is a real problem, and it isn’t just about luxury expenses. Research shows that a large difference in incomes can lead to increased feelings of disenfranchisement, increased poverty and fewer opportunities for advancement. Most economists agree that severe income inequality is bad for economic growth, too.

What is causing income inequality in the U.S.?

You may hear the old canard that “Americans are lazier” than we used to be or something to that effect. This is simply and demonstrably not true. The graph above illustrates just how untrue that sentiment is. Our productivity has increased by 80 percent since 1979 while wages have stayed nearly the same.

If productivity is up, where is all the money going? Take a look at that red line. That line shows the average income of the 1 percent. These are the wealthiest people in the nation, those in the top 1-percent income level. It is pretty obvious where much of our nation’s wealth is going.

The average CEO makes about 354 times more than the average worker. That means that by the middle of the day on Jan. 1st, the average CEO has made what his average employee will make for the year. Think about that for a minute. Is this sustainable? Most experts don’t think so.

What can we do about income inequality?

There are many things a nation can do to combat income inequality. Raising the minimum wage to a livable wage could do a lot. If we were to attach the minimum wage to inflation, we wouldn’t have to fight a political battle to have it raised every few years. Expanding the Earned Income Tax Credit would give more money to those Americans who work and still can’t get by. Most people agree that someone who works full time should not be in poverty.

Raising taxes on corporations and wealthier Americans would help, too. The tax rate for wealthy Americans in 1954 were at 92 percent. Today they are at 35 percent, with plenty of loopholes. Many of those in the top income bracket end up paying 14 percent or lower.

There are many things we can do to improve our situation. Making college cheaper would help to lift families from the cycle of poverty. Many things could be done with our tax system, as well. The first step is admitting we have a problem. It seems most Americans are aware. Stay informed and vote for leaders who protect your interests, not corporate interests.

The last time we had such a disparity in wealth was just before the Great Depression in 1928. We may see things get worse before they get better, but a change is likely on the horizon. Hope for the best and be prepared for the worst.

Enjoy the holidays,

Dr. Michael Omidi

The Omidi Brothers, Julian Omidi and Michael Omidi MD, are dedicated to the elimination of global poverty. No More Poverty was cofounded by the brothers.
Read 1212 times Last modified on Monday, 05 January 2015 17:54

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