Economic Inequality: What Is It?

 

Economic inequality is the term used to describe differences in wealth and income among people. And those variations may be substantial. When Forbes completed its most current rankings in 2021, there were a record 2,755 billionaires in the world.

1 In the meantime, the World Bank predicted that more than 711 million people worldwide would be subsisting on less than $1.90 per day in 2021.

In fact, that represents a significant improvement from 1990, when there were just 269 billionaires worldwide and more than 1.9 billion people lived in abject poverty.
These figures will be seen by some as supporting the idea that rising tides raise all boats. Global wealth has grown during the past 30 years, and overall living standards have improved. Others may consider it unacceptable that anyone lives in poverty in light of the fact that the aggregate net wealth of the world's billionaires is $13.1 trillion.

Naturally, both claims may be accurate at the same time.

Questions about economic inequality are raised by disparities like these and those that many people observe in their daily lives when those who are homeless or have unstable housing dwell in tent cities just a few miles from luxurious condos. It is what? What causes it, and how? Is it the way things always are, or is the system rigged? Should efforts be taken to increase equality, such as by raising taxes on higher incomes as Sweden has? And would the epidemic exacerbate this inequality?

We lack the solutions. Numerous factors contribute to economic disparity, but our society hasn't come to an agreement on what, if anything, should be done about it. Political gridlock has kept things as they are for the time being. We may provide some background information and analysis on the current level of economic disparity in this nation.

KEY LESSONS
 

• The discrepancies in wages and wealth in a society are a basic definition of economic inequality.
   
• The majority of Americans support the meritocracy principle, according to which people rise in status and income by working hard rather than via privilege, although unequal access to opportunities might impede this trend.
   
• The COVID-19 outbreak has brought economic disparities to light. Chronically marginalized populations are more likely to get the virus and die from it, and those without health insurance as well as those who work in demanding, hazardous, but low-paying "vital" jobs are more vulnerable.
   
• People with good educations and information differ on whether, how much, and how best to eliminate the economic disparity.
   
• Knowledge of Economic Inequality
   
• The distribution of wealth in a community and the amount of money made by the least and most wealthy is the essence of economic equality. What resources do people have to help them invest in fresh chances and get through tough times? These variations are significant for many reasons.

Let's start by considering how people perceive economic disparity psychologically. Each of us makes comparisons with others. What we can buy with our money or how comfortable we are as a result of our riches does not solely determine our level of satisfaction with those figures.

Instead, how well off we are relative to others, including our coworkers, friends, siblings, classmates, and bosses, determines how happy we are. Let's use Lorenzo, an accountant, as an example. Lorenzo may be content with his $70,000 annual salary as an accountant—but only until he discovers that Sebastian, a coworker and fellow accountant, makes $80,000. The disparity seems unjust. He feels upset about it, possibly even enraged.

Lorenzo confronts Sebastian and inquires as to what he is doing to make an additional $10,000 annually. He notes that they perform the same duties, have around the same amount of experience, and started working for the company at about the same time.

How Los Angeles Voters Delivered a Referendum on Economic Inequality https://t.co/pQ1fOTNeo0 pic.twitter.com/a2hCbxA4zS

— 🌊 R Saddler (@Politics_PR) December 3, 2022

Sebastian replies that it's more significant that their CEO makes $60 million. Additionally, their friend Marco only makes $20 per hour and doesn't have the same perks as them when working in customer service for a contractor their company contracts. no health coverage. No 401(k) (k). There are just 10 paid holidays each year, and he must decide whether to use them for vacation, personal time, or sick leave.

The continuous wealth and income difference between men and women, as well as between whites and non-whites, is a major cause of economic inequality. Despite recent progress, there are still significant disparities between white and black households due to widespread prejudice that started with enslavement and persisted through the Jim Crow era.
 

Does Economic Equality Make Sense?
 

Marco's position and income have an explanation, according to Lorenzo. Lorenzo and Sebastian studied hard in high school and were accepted into prestigious universities, whereas Marco chose not to attend college. In addition, they both earned their qualifications as certified public accountants, which required a lot of additional effort, passing other exams, and spending a lot of money. Marco shouldn't be paid $75,000; it wouldn't make sense. None of that was done by him. The system operates in this manner.

The majority of Americans concur. They would claim that despite the fact that Marco is supporting his partner and two children while Lorenzo and Sebastian are both single, meaning that Marco may need the higher income more than Lorenzo and Sebastian do, they do not agree with the concept of "from each according to his ability, to each according to his needs."

That is the communist tenet, and after communism was established in the Soviet Union in 1917, it brought about tremendous hunger, war, and untold suffering for the populace. (However, some might counter that the issue isn't the communist doctrine per se, but rather how it was historically applied by cruel dictators.)

Returning to our accountants Lorenzo doesn't believe it's just to give Marco $15,000 of his $70,000 salary so they can both make $55,000 annually. Sebastian is also reluctant to part with that sum of money. Although he is single and without children, he does have a mortgage to pay and plans to return to school to get an MBA. It's not cheap, that. He is unwilling to provide for the children of others. He wouldn't have bothered to become a CPA if he thought he would only make $55,000 a year.

What Causes Economic Inequality?
 

We now know that comparing oneself to others is one of the reasons why economic inequality is a concern. When we learn that someone else has more than we do, especially someone who is similar to us, we feel guilty. People believe they deserve to keep their earnings and that they need incentives to work hard. They also support the meritocracy viewpoint, which holds that hard effort and initiative rather than advantages should be used to increase one's position in society. But if they discovered more about Marco's life narrative, how would Lorenzo and Sebastian react?

The community where Marco grew up was semi-rural. He had little choice in where he received his education, despite the fact that the schools he attended were slightly below average. At the neighborhood supermarket, his dad restocked the shelves. His mother worked as a waitress. His parents both dropped out of high school. They were unable to assist him with his assignments. They frequently worked on weekends and nights. During those times, Marco's grandparents looked after him while he played with the nearby children. He worked as a busboy at his mother's workplace restaurant while still in high school. Although his pals were all decent young people, none of them ever mentioned attending college. In their lives, the majority of adults were not college graduates. Nobody anticipated that Marco or his pals would attend college or work in a white-collar field.

Both Lorenzo and Sebastian were raised in urban areas. Sebastian's parents resided in a wealthy area with top-notch public schools. To get Lorenzo into better schools, his parents used a school choice program. The teachers of the two boys spotted potential in them and pushed them to enroll in challenging courses. Even though they didn't always achieve perfect grades, they did well enough to enter prestigious universities. All of their buddies were also enrolling in colleges. Their teachers encouraged them to prepare and expected them to attend.

Inequality of opportunity helped these three men get to where they are now. None of them violated any laws. Their parents also didn't do anything improper. But Sebastian benefited from the riches that were passed down through the generations, enabling him to grow up in a lovely neighborhood with good schools. Lorenzo benefited from attending those institutions and spending time with children like Sebastian whose parents expected them to go to college and pursue lucrative corporate professions. None of these advantages applied to Marco.

This is but one instance of how economic inequality can occur. The life-altering effects, however, are significant.

How Economic Inequality Has Been Revealed by the COVID-19 Pandemic
More individuals are aware of the economic disparities in our society as a result of the ongoing threat posed by COVID-19, a highly contagious, occasionally lethal virus to which no one is known to have developed a long-lasting immunity. As examples, here are a few: Native Americans, Black Americans, and Latinx Americans have all experienced historical discrimination and mistreatment; as a result, their rates of infection and death from the virus are far greater than those of White people.

And then there's the low salary that people in difficult and risky jobs typically earn. According to the U.S. Bureau of Labor Statistics, meat processors and slaughterers, who make an average hourly pay of $15.00 as of May 2020 ($31,210 annually), have been disproportionately affected by COVID-19 outbreaks at work.
7 \s8

Christopher Krebs, director of the U.S. Department of Homeland Security's Cybersecurity and Infrastructure Security Agency, published a memo on March 19, 2020, listing the "essential critical infrastructure workers," also known as "essential workers," whose positions are crucial for preserving public health and safety, as well as economic and national security. According to the memo, "the sectors they assist include, but are not limited to, defense, food and agriculture, transportation and logistics, energy, water and wastewater, law enforcement, and public works."
 

The states are given recommendations on who should continue working and who should stay at home to help stop the spread of the disease by using this list, which is not a compulsion. The aim? "Flatten the curve" in order to prevent overtaxing the healthcare system and preventing sick people from receiving possibly life-saving care. Additionally, the letter promotes remote work whenever possible and offers tips for preventing the spread of illness among people who are unable to work remotely.
 

Health and Economic Inequality
 

Evidence that many firms have not offered a sufficient protection to prevent critical workers from contracting and spreading COVID-19 has emerged in response to the release of a Homeland Security document regarding vital workers and COVID.
The issue is partially caused by a lack of pandemic preparedness on a global scale and, in accordance with national press reports, a severe lack of personal protective equipment, especially for medical personnel.

However, it is also clear that economic inequality has made a terrible situation for many employees significantly worse.

Some people have persisted in working in high-risk jobs because they believe they have no other option because their families depend on their income. A 62-year-old California woman described to the Los Angeles Times how she persisted in going to her $13.58 per hour work doing laundry at a nursing home despite her husband's objections because he has underlying cardiac issues. She claimed she had to provide for her family because they were all infected.
 

People have claimed that individuals considered important employees are actually treated as throwaway employees in situations like these.

Where it has been provided, hazard pay has been regarded inadequate; it may also soon prove to be transitory. Some firms, most notably airlines, have gone so far as to ban their employees from donning face masks and to keep them in the dark about possible virus exposure at work.
 

Because their employers don't offer the salary, insurance, or sick leave they require to take time off and obtain medical care, some people have reported showing up to work with COVID-19 symptoms. Stay-at-home orders have thrown millions of people into unemployment; while they may be more protected from the coronavirus, they are unable to pay their bills unless they have substantial emergency funds, which the majority of people do not. Since inexpensive, high-quality health insurance in the United States is frequently linked to employment, even with the Affordable Care Act, those who are unemployed may not have access to medical care if they become ill (ACA).

Let's get back to the tale of our fictitious employees. Technically, Marco, a customer service agent in a location that has closed due to the pandemic, is permitted to work from home. But because revenue has slowed down so much, the company doesn't have enough work for all of its reps. He is now fighting to obtain unemployment benefits from a broken system after being fired. Lorenzo and Sebastian, however, have carried on working from home at their well-paying accounting positions. Because Marco works through a contractor and is not an employee of the company, they continue to enjoy the health insurance that their employer never provided. Although he has an Affordable Care Act exchange plan, he is unsure about how he will continue to pay the payments.

For anyone, going without health insurance is a tremendous danger, but Marco, who has asthma, is at an even greater risk. In actuality, many of the individuals he was around when he was growing up still smoke, perhaps as a result of the fact that many of their parents smoked or the terrible outdoor air quality caused by the nearby chemical plant. These limitations didn't apply to Lorenzo and Sebastian. Additionally, they have good fortune on their side and are healthy overall.

Because they are marginalized their entire lives, persons of color and those with lower incomes are more likely to have underlying health concerns like asthma and high blood pressure. This is another facet of economic inequality that has become starker as a result of the pandemic.


Due to their predisposition to COVID-19 complications and increased likelihood of occupational exposure, these people are at a significantly higher risk of passing away during the pandemic.
 

Economic Inequality Fixing
 

Is it something we should aim to solve, economic inequality? This topic has become a contentious political one in the US. Progressive taxation, universal healthcare, unemployment insurance, a basic income, Medicaid, and COBRA health insurance are among the topics it covers. Some people believe the US should strengthen its social safety net and incorporate more aspects of the Nordic model. Some people think this strategy is too socialist and would rather use a more capitalist one. They contend that using the services of private charities to cover the gaps is a preferable option because they don't want to pay the additional taxes needed to finance greater social programs.

According to a 2018 academic study, it takes both taxation and charitable giving to meet a community's needs. Additionally, it revealed that Republicans and Democrats had different views on the overall amount of income redistribution that they believe society requires and the proportion of funding they are ready to devote to taxes vs donations.
 

Most people are eager to pay taxes, but their willingness to pay varies depending on how much they want to lessen economic inequality. Lorenzo and Sebastian like to imagine that through funding federal and state income security programs, the taxes they pay on the money they are still earning are currently assisting people like Marco. Additionally, some of their tax money supports their grandparents through Medicare and Social Security.

Additionally, Lorenzo and Sebastian each give away 10% of their current salaries to neighborhood NGOs that support others who are jobless in surviving the pandemic. Since their ability to continue working is partially down to luck, they feel compelled to give back to their community because they don't want others who are unemployed to suffer as a result of bad luck.

The conclusion
 

The problem of economic inequality is complex. Unevenness on some level could be natural. Like Lorenzo and Sebastian, Marco did not choose the circumstances of his birth. Although other variables undoubtedly assisted Marco in obtaining a position that pays quite well for a person without a college degree, it is possible that social forces dictated the circumstances they were born into and subsequently sustained their unfair circumstances. Then again, why couldn't Marco have benefited from the same chances that his teammates did? The question of economic disparity and the extent to which it is natural, unavoidable, acceptable, or even desirable is subordinate to the questions of fairness and equality of opportunity. Each of us must select how we want economic equality or inequality to seem before casting our votes and spending our money.

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