Problem of Income Inequality in the United States

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Problem of Income Inequality in the United States

On May 7-9, 2018, UCLA staged a vigorous three-day strike. For a long time, not only UCLA, but also the entire UC system (UC system). More than 20,000 of the lowest-level employees (not professors, but meager labor) have been protesting, the financially fascinating University of California is actually on pay so embarrassing. Their ‘humble’ status is the cornerstone of keeping the University of California’s huge machine functioning. They include chefs, repairers, cleaners, porters, drivers, health care workers, and more. If the outstanding academic achievement of the University of California is ‘skyscraper’, then these workers are the foundation of the skyscraper. Their relationship with the UC system has been very tense. University professors and management have raised their salaries, but the salaries of these bottom-level employees have been close to the minimum wage. After California passed the bill to raise the minimum wage last year, their salary finally rose slowly – the school is still very reluctant. Not only is the overall treatment low, but also under similar positions, the treatments of different races and genders are not as ridiculous as other institutions, but they are also obviously unequal. The parade is vast, knocking on drums and passing through all corners of the campus. Not only employees, but many students also joined the parade. Some professors even joined in solidarity. The protesters had a clear division of labor and knew that the parade would cause them to lose their wages. Therefore, many volunteers and sponsors were convened, and a large number of booths were set up to provide food and rest services. Outside the UCLA hospital, the placards piled up like mountains. Any passerby passing by can pick up one and join the demonstration queue.

Why there are more than one strikes happening almost every year? Some demonstrators said that there has been no salary increase or contract in the past few years, and they have taken the lowest salary in the systematic work with excellent academic performance. Inequality in income has put them on the road to rights protection. Technological progress has greatly improved labor productivity, but it has gradually phased out traditional labor and gradually brought about the Matthew effect on the income gap. With the popularization of advanced technology in industrial production, the production process tends to be intelligent. Laborers who remain in the industry need to have unprecedented levels of knowledge and skills and need specialized training. The threshold of laborers in modern, automated factories have greatly increased. The income of senior technicians who have crossed this threshold is constantly rising, while those with low education levels, poor technical skills and unprofessional training are gradually losing competitiveness in the labor market. It can be seen that in the labor market, technological advancement has increased the demand for complex labor, and the demand for ordinary workers in the job market has shrunk accordingly. This inevitably leads to a large number of ordinary workers becoming surplus labor, thereby increasing unemployment. The laborers, who barely left, have to accept lower wages. Although the tertiary industry in the US society has absorbed a large amount of employment, its average income level is still quite low. Under such circumstances, if the redistribution of the income structure is not achieved, or the industrial structure and compensation are re-adjusted, it is difficult to get rid of the ‘Matthew effect’ that the technological gap brings about a widening income gap.

What social problems are behind the income inequality? Social classes are the most common type of grouping used to depict economic groups in a particular society. Although the three most frequently cited classes are low-level or working-class, middle-class and upper-class, in reality, American society cannot be classified neatly. American society has enormous wealth, income, education, and occupational differences, and no system can completely classify them. Further complicating the social class is the adoption of other tiered systems based on the values or norms of these societies in different societies and elsewhere in the world. Deep social problems such as racial discrimination continue to be the embarrassment of managing income inequality. The deep-seated problems of American society have also profoundly affected the formation of the gap between the rich and the poor. For example, the issue of racial discrimination, although the US public policies and laws and regulations rarely have discriminatory provisions, racial discrimination is deeply embedded in every corner of the economy and society. The level of education of black Americans is still much lower than that of whites, and the employment of blacks is clearly concentrated in low-income areas. The wealthy whites in the Los Angeles metropolitan area do not want to have much communication and connections with black races and low-income groups. The racial differences in education and division of labor bring profound social problems, and the negative impact on society is almost impossible to eliminate. If social problems such as racial discrimination cannot be eradicated, they will still be the root cause of the widening gap between the rich and the poor. One of the reasons for the fact that whites in poor schools are less is that low-income whites are less likely to live in communities where the poor are concentrated than those with the same income.

Another term that is often used when discussing the economic level of an individual or family is economic inequality. This refers to the main difference in economic assets and income distribution among the population. The widening gap between the rich and the poor is the most basic problem in American society. It is not only an economic issue but also a social issue. The US policy is biased towards the affluent population. The rich have an important impact on the taxation policy and the allocation of resources for public goals such as education, health care and retirement, social security, and employment. The political equality in the United States is severely challenged. Economic inequality is seen as the root cause of political inequality. Taxation is the main lever for regulating economic inequality. The tax policy that mainly benefits the rich is an important reason for the widening gap between the rich and the poor in the United States and the crux of political conflict.

In ‘Capital in the Twenty-First Century’, Thomas Piketty pointed out that at the highest levels of society, income from capital (production materials, deposits, stocks, real estate, etc.) outweighs income from wages, salaries, and bonuses. In the United States, inequality is becoming more and more serious, and a large part is caused by capital gains. In Europe and the United States, the wealth of 1% of the richest people is accumulating faster than many developing countries. This large concentration of wealth has an impact on politics. The rich use more money for politics, such as providing campaign funds, lobbying government officials, and increasing the influence of interest groups on elections, legislation, and bids.

Piketty points out that income inequality has a snowball effect on wealth distribution. The highest income is stored with high interest, which makes the wealth concentrated in a large amount, which makes the wealth inequality expand continuously. The expanded wealth inequality leads to further concentration of capital gains. The middle class and low-income workers do not have enough money to support their livelihoods. They often rely on borrowing to live, and they are incapable of accumulating wealth. This creates a vicious circle of perpetual rich people getting richer and poorer getting poorer. The basic situation of economic inequality in the United States, Piketty believes that this is not an accidental phenomenon, but it is considered to be a feature of the capitalist system, but to be reversed, only through state intervention. If this system is not reformed, the democratic order will be threatened.

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