Atlanta is a scenic city and one of the most unequal in America. In Atlanta’s economic pyramid, the top 5 percent of earners earn $306,307 per year. At the bottom of the pyramid, however, 20 percent of people earn about $17,000 per year, and 9.3 percent of families earn less than $10,000 per year (Picchi).The extreme contrast between rich and poor in Atlanta reflects a huge problem in America: income inequality is hurting America’s prospects. Under the influence of the current social environment and family, a very common phenomenon is that the rich will become richer and the poor will become poorer. The causes of income and consumption inequality are complex. The reasons can be roughly divided into three aspects: the increasing inequality caused by government policies, economic and trade problems, and the demand for technology and education under the influence of society.

The per capita income imbalance is the result of many decisions made by large American companies. For many American companies, the tradition is to pursue shareholder value. In doing that companies focus more on the welfare of its shareholders than its employees. In fact, there are potential risks in pursuing shareholder value: managers are more likely to focus on investments in the current market rather than long-term development, which will reduce the value of the company. In addition, because of the company’s current performance, top executives and shareholders are earning more, while ordinary employees are not getting real benefits (“shareholder value— what is shareholder value?”). At the same time, the growth of foreign trade has greatly affected the American economy. The increase in imports from other countries affected American products. Local companies need to compare and improve their products with foreign ones to gain market share. Although most companies have these solutions, large amounts of foreign imports still affect them.

The company’s first priority is to make money. In manufacturing, American workers need to compete with workers from other countries. Many foreign companies will provide cheap labor for American industry. In contrast, American workers demand higher wages. Many companies choose to outsource work to foreign workers after weighing the required wages. As a result, “since 2000, the United States has lost 20 percent of its factory jobs. These are traditionally well-paid union jobs. Other factors, such as inflation, have also had a huge impact on the U.S. economy. With inflation, people with more savings assets would benefit more. For example, “according to the Bureau of Labor Statistics’ annual inflation rate, “A salary of $30,000 in 1970 was equivalent to just under $196,000 today” (Schluter).This is surely the “best opportunity” to widen the gap between rich and poor. Poor households, starved of savings, are still struggling to make ends meet in the face of inflation, while the rich can wait for their savings to appreciate.

Economic change is also closely tied to politics. Government policies and welfare programs have helped widen income inequality. One important reason is that the law does not guarantee that all workers have access to insurance and benefits. What’s more, the lack of access to proper insurance deprives low-income workers of savings. In addition, “most of these low-income workers do not receive health insurance, sick leave or pension plans from their employers” “(Amadeo).Without this insurance, low-income workers will have more difficulty maintaining their basic income. Without sick leave, they have less time to rest or to continue working, which increases their chances of getting sick. Moreover, they have no pension plan, which requires them to keep working even when they reach retirement age. Not having health insurance will increase their medical expenses, which will consume a lot of their savings.

Any change in political law will have an impact on the economy. For example, “on December 22, 2017, President Trump signed the Tax Cuts and Jobs Act. It lowers individual income tax rates, doubles the standard deduction, and eliminates personal exemptions. The bill lowers the corporate tax rate from 35 percent to 21 percent, a 14 percent drop. The law reduced taxes on large companies and distributed higher profits to senior employees. At the same time, the law’s larger exemption from the estate tax would benefit heirs even more.” (Amadeo).This suggests that Trump’s tax plan helps entrepreneurs while holding back the working class.

In addition to finance and politics, technology and education also affect people’s income. Advances in technology and education have helped economies and personal incomes grow, but hidden loopholes have affected more groups. The rapid development of science and technology is what the world is looking forward to, but it won’t necessarily win the favor of workers. The development of technology means that companies can choose technologies, such as fully automatic equipment, to replace workers in factories. As a result, companies can choose to buy high-tech equipment instead of workers who need to pay a monthly wage. They can also boost productivity without providing a range of benefits and insurance.

As time goes by, enterprises have higher requirements when looking for qualified candidates. For most companies, the current situation is that they prefer to hire people with higher education or strong professional skills and give them a higher salary. This is more likely to happen in developed countries because they need such employees to help them invent or create new products in order to obtain higher benefits. In this case, it is very difficult for those without higher education or high skills to apply for high-paying positions, so they can only work in low-paid positions (Baranoff). According to the study, “average wages remained constant over the same period. That’s despite a 15 percent increase in workers’ productivity”. According to Steven Greenhouse’s “the big squeeze,” corporate profits are growing by 13 percent a year. The biggest difference is Marathon Oil. The CEO of that company made $19.7 million, 935 times the average employee’s salary of $21,034.This phenomenon further widens the gap between rich and poor. Entrepreneurs receive more and more benefits every year, but they pay the same salary as before.

It must be noted that more and more companies occupy monopoly positions in this industry. When asked about mobile phone brands, most people’s first response is “Apple”, and then they may think of other brands, such as Nokia or Samsung. This situation indicates that more and more companies have monopolized or monopolized positions in various industries. This phenomenon makes other enterprises more hesitant in product innovation, and in the case of lack of competitiveness, the benefits they can obtain will also be affected and reduced.

To sum up, seemingly unrelated reasons subtly influence people’s lives. In addition, political, economic, technical and educational problems have made the social and financial problems of the wage gap more apparent. These are not the only reasons for income inequality in the US. This problem must be solved so that future generations can live in a healthy country and have the opportunity to earn a better life through their own efforts. This is the American dream.

 

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Jiaming Liu’s critical essay, “The Reason of American Inequality in Income,” won third prize in the Eighth Annual School of Visual Arts Writing Program Contest. Jiaming, who hails from China, is a freshman in the Animation Department at SVA.