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Wages

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KINF OF

WRITTEN BY LILLIAN HURLEY AND SAMANTHA JACOBS

The issue of wealth inequality in America is directly connected to the income its citizens are earning. According to the Tax Policy Center, in 2012, wages were the main source of income for 99 percent of those who filed taxes.

There are many factors that impact the current status of wages in this country. The federal minimum wage is currently set at a rate that is not considered a “liveable wage” for those working full-time. A forty-hour work week, earning the current federal minimum wage of $7.25, gives someone $290 a week, and that’s before taxes are taken out.

The other issue surrounding wages is that they have become stagnant. This means the cost of living in this country has been increasing at a fast rate, while wages have not been able to keep up. The problem is, these wages are not adequate and so many Americans are relying on them as their source of income. This has created a domino effect and, consequently, it is impacting the country as a whole.

To better understand these issues and how they relate to wealth inequality, we need to first understand what we’re dealing with.

FED MIN WAGE

MIN WAGE

States have the ability to either follow the standard federal minimum wage of $7.25, or increase this rate. According to the Economic Policy Institute, 29 states, plus the District of Columbia, have established a state minimum wage that is higher than the federal wage of $7.25.  

CREATED BY SAMANTHA JACOBS

The assistant secretary for policy at the Department of Labor and chief economist for the AFL-CIO supports the increase of the minimum wage.

“Economics clearly shows that business actually benefits when the minimum wage goes up, but you can always count that the business community will oppose a minimum wage increase,” William E. Spriggs said.

2009 is the last time there was a change made to the federal minimum wage, which was an increase of 70 cents. Whereas the state minimum wage of Massachusetts went from $9 to $10 in the beginning of 2016, and according to the EPI, it’s intended to increase again in 2017. Seven years with the same federal minimum wage has had a direct connection to the increasing issue of wealth inequality in America. This seven-year absence of an increase to the federal minimum wage has created the issue of stagnant wages in America.

THE PROB

Stagnant wages are having an effect on the economic system of America as a whole, not just those who are earning this low income. The Department of Labor explains that the federal minimum wage that is currently in place was set to $7.25 an hour in 2009. This wage isn’t something that gets increased on an annual basis. The federal minimum wage can only be increased if Congress can pass a bill that the president signs into power.

As workers fight for a higher minimum wage, the data can help explain why. According to the Department of Labor, the minimum wage peaked in 1968 at $10.34 and since then has lost approximately eight  percent of its purchasing power since then.

Since then, the federal minimum wage has never surpassed this rate. This reality is playing a major role in the growing  amount of wealth inequality in America. The vast gap between the often talked about, top one percent  and the remaining 99 percent of Americans will only continue to increase if the majority of the population sees little increase in wages, while a small amount of the population sees a great increase of wages.

AMERICANS EARN

It is not just the minimum wage employee who benefits from an increase in wage.

“Economics clearly shows that business actually benefits when the minimum wage goes up, but you can always count that the business community will oppose a minimum wage increase,” Spriggs said.

GROWING

The correlation between the current wage situation and wealth inequality is a matter of quality and quantity. So many Americans are relying on these low and stagnant wages as a source of income. According to Pew Research, in terms of the rate of annual pay increase, the top 1 percent has seen a 138 percent wage increase while the bottom 90 percent  have seen a 15 percent wage increase over a 34 year period.

As you can see from this chart, about 90 percent have seen little, to no increase in their wages, while the top 1 percent of Americans have seen the exact opposite.

Another aspect of the current wage issue that is contributing to rising  wealth inequality is that the rich are not relying on wages as their main source of income. While the rich do make a significant amount from wages, they are not solely relying on this to generate income.

So an example of this is that 99 percent of Americans reported 75 percent of their income in 2012 was generated from wages alone. However, those Americans who made $10 million or more in 2012 had only 15 percent of their income generated from wages, while almost half were from capital gain, according to the Tax Policy Center.

There is such a large population of Americans that are earning more than half of their income from these low and stagnant wages, while a smaller percentage of Americans are earning income from a completely different source. This difference creates an unequal gap between the rich, who have money to invest, and the poor, who are barely getting by.

Jobs

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WRITTEN BY LILLIAN HURLEY

There’s no secret about it, the types of jobs people have, the wages they make and the businesses in this country directly affect the issue of wealth inequality in America. Employment in the United States is laced with many factors, which work to create more of a division between the working class and those of a higher economic standing, and gender and race inequalities in the workplace are creating different classes of working Americans.

According to the Urban Institute, whites have seven times more wealth than African Americans and six times more than Hispanics.

Currently, the federal minimum wage is causing many Americans to rely on government-funded programs. “If you make the minimum wages, you don’t make enough to actually be at the official poverty line,” William E. Spriggs, chief economist of AFL-CIO, said.

The way businesses are operating in this country have a direct connection to the jobs that are available, and the wages people earn. Businesses, big and small, have a lot to keep in mind when they are developing deals. A big business deal could be beneficial for the parties at the top, but could leave those in the middle, or lower, without a job. What’s the balance between capitalism and what’s morally right for workers?

Knowing this, everyone can better understand how this gap between the rich and the poor has reached its current state.

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The systemic issues in America have a wide web of roots but grow from the same trunk. A major player feeding the issues is the disparity of wealth between classes, races and genders. Essentially, wealth inequality affects everyone.

It is a business’ job to make a bottom line. It is a political system’s job to represent their constituents and develop policy. So, if a political system is knotted with business, money trumps the moral obligations of a society. At what point is a dollar worth more than someone’s livelihood or future?

The way to make a change starts with being socially responsible. By flexing your democratic muscles, you’re exercising your given right as an American.

But you can’t just do that.

In order to fix anything in this nation, we have to acknowledge where we are and everyone has to be informed. Right now people are suffering, struggling and barely surviving in this beautiful nation because of the inequality of wealth.

“America is so much stronger when we see ourselves as a quilt. When I take the best of you and you take the best of me and we put it together, we are so much stronger,” Renee Hughes, chief executive of the eastern Pennsylvania region of the American Red Cross, said. “I don’t have to be like you, you don’t have to be like me, but we do need to all share values.”

Everything in society today comes down to money. For a family of four, being in poverty means that the total income does not exceed $23,850, according to the U.S. Department of Health and Human Services. In 2014, there were a total of 46.7 million people in poverty in the United States alone, meaning that people were not making enough to survive.

But that could change.

It is a very important time in the United States. A time when new leadership will be coming in, which means the importance of voting is higher now than ever before. If every citizen takes a stand by voting, lobbying, calling their congressmen and women, there is a high chance that the systemic flaws you want to see reformed, will be discussed by your government.

“I think the concept of the common good, is one that might be developed in a way to contextualize so much of what we need to do,” Mark Rosenman, a nonprofit sector scholar and activist, said.

Do you want to be a part of a nation that sits idle or turns a blind eye when the perpetual cycle of devastation is happening in your own backyard?

We hope not.

 

 

WRITTEN BY MACKENZIE HARRIS