Policy to Address Income Inequalities

ECONOMICS 1
Policy to Address Income Inequalities
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ECONOMICS 2
Introduction
Income inequality is referred to as a situation where the concentration of income
or wealth is in the hands of a few people in an area. In simple terms, it is the gap
between the poor or low-income earners and the rich. Most studies indicate that poor
people have become poorer whereas the rich have become richer. For the purpose of
this paper, we shall make an analysis of income inequality in the United States. Further,
we shall propose a policy that can be adopted to address the extent of income
inequality in the U.S (Gabaix et al 2016).
Statement of the problem
In United States, the level of income inequality has been high whereby the rich
people have got richer and the poor have continued being poor. Within 1963 and 2016,
it is indicated that the middle families had doubled their wealth to average and families
in the top ten percent had more 5 times their wealth. After the Great Recession in the
United States, the entire trend of income inequality has accelerated. Between 2008 and
2014, the income levels of those people within the top one percent grew very fats as
compared to the income of the rest ninety-nine percent of the people in forty-three
states. The high rate of income inequality in the United States is attributed to a number
of factors such as reduced tax rates for the rich people in America, loss of
manufacturing jobs, age stagnation for salary-earning Americans and many others.
Also, the high demand for skilled labor may also be the issue behind income inequality.

ECONOMICS 3
In this case, it is known that various companies in the United States are focusing on
hiring the specialized skills in different fields that is to say; healthcare and engineering.
This leads to automation or cuts in other activities, pushing down the workers' wages in
jobs which are not competitive. In United States, income inequality has continued to hit
harder as compared to others, with terrible wage gaps among African America,
Hispanics and Women in the United States. According to the research by Heathcote et
al (2010), "women of all races and ethnicities were paid an average 81.8% of the
salaries paid to men in 2017." In the history of the United States, this was considered
as the narrowest. In the United States, it is indicated that white men are continuing to
earn more wages as compared to other groups of people such as the Hispanics and
black Americans (Gabaix et al2016).
Policy Proposal
Definition of the policy to reduce income inequality in the United States
In order to reduce the level of income inequality in the United States, the
government is supposed to ensure workers are paid a fair minimum wage. In this case,
all workers in the United States are supposed to earn a fair wage so as to ensure the
level of income inequality reduces. The lower wages don't only hurt workers but also
affects the society at large (Hubmer et al 2017). By raising the minimum wage, workers
can be in the position to share the economic growth of the nations. Notably, the "Fair
Minimum Wage Act of 2013 (S. 460)" would aid in increasing the minimum wage up to
$10. 20 per hour. If the minimum wage is implemented, it can raise the wage of workers