Money Makes the World Go ‘Round, for Some

Money+Makes+the+World+Go+Round%2C+for+Some

Aneley Johnson, Cub Reporter

Income Inequality is defined as a significant disparity in the distribution of income between populations, social classes or individuals. There are times where it is even visible outside of just the statistics. In order to understand the gap there has to be a general understanding of what poverty is. 

Living in Poverty is classified as having the bare minimum amount of money needed to cover food, rent, clothing and other essential needs. In 2021 the District of Columbia classified the poverty line for a family of 5 as $31K a year, and 1 person is supposed to maintain their lifestyle for $18K. 

According to Statista.com 37.25 Million people were living below the poverty line in 2022. 

If income inequality had stayed the same then the average American worker would be earning $42K more in income each year. Instead of this happening the gap widened and corporate executives now earn 300 times more than their average employees. 

Though some may believe that income disparity is based on the job you get, where you came from, or personal motivation.  There are many other factors that play into it, such as discrimination, institutionalized racism, sexism and gender roles.  

Through the decades the economic gap between the wealthy and poor has grown. It’s gone past the point of simply not having a nice house and car, those at the bottom often live paycheck to paycheck and may even have no place to call home. 

Economic Inequality has been around since the beginning of today’s society. In 1915 a statistician named Willford I. King shined light on the fact that 15% of America’s income went to the Nation’s wealthiest 1%, During this time taxation for the wealthy barely had an impact. 

During the Great Depression from 1929-1933 mass unemployment became chronic. This served to reduce the Income inequality in the US. Income inequality is how income is unevenly distributed throughout the population. 

In the beginning of the 1970s the income gap widened. Income growth for the middle and lower classes slowed dramatically while those at the top continued to see growth. On average during the early 1970’s middle class yearly income was $7,343.16. Families for color earned even less than this. According to the US census out of 51 million families surveyed only 2 million families reported earning  at least $25,000. 

From 2007-2009 the Great Recession caused the most significant economic downturn in the US since the Great Depression. At one point during this time the unemployment rate reached 25%. 

In 2020, the average family’s income was $67,521. According to the US census the official poverty rate for 2020 was 11.4%, there were 37.2 million people living in poverty.

During the pandemic many average Americans have lost their sources of income. While the average class is finding money any way they can, the top billionaires of this world have seen an almost $1.3 trillion increase in their earnings. Big companies such as Amazon, Zoom, DoorDash, UberEats and Netflix all greatly benefited from lockdown. 

The COVID-19 pandemic and the resulting lockdown caused 114 million people to lose their jobs over 2020,” states the World Economic Forum.

As of today in 2022 the average income earned by the bottom class is only $19k annually, while the top .01 % earns $33 million. The bottom of the economic food chain being compared to the top .01 % is a tab bit dramatic. The gap between poverty and the middle class is still large enough to mention. The bottom 50% earned $71K less than the 40% middle class. The two class statuses that are right next to each other still have a 71K gap in between them. 

As of 2021 the two richest people in the world Jeff Bezos and Elon Musk now own more money than the bottom 40% combined. 

During 2020 the market saw the steepest increase in Global billionaire shared wealth. As of July of 2020, 9.6 million Americans have lost their job due to the pandemic with more to follow.  

In March of 2021 the government enacted the American Resource Plan Act which included $1,400 payments for many Americans, especially struggling families. In October of 2021 almost 20 million adults lived in households that reported not getting enough to eat and 12 million adults were behind on rent. As many as 40 million people lost their homes during the pandemic. During this time Forbes reports that the 10 richest people had seen their fortunes grow by $821 billion dollars since March 2020. 

While many people were struggling to get buy, the world’s billionaires easily doubled their fortunes.  Jeff Bezos and Elon musk specifically gained a large amount of wealth in the past two years.

Online shopping, food delivery apps and workplace solutions became essential parts of our society during the lockdown. During the lockdown, everyone and their mother had Amazon. Meaning Jeff Bezos saw a large increase in his money. At the beginning of lockdown, the company’s stock prices hit over $1,676.61. By the end of June 2020 the stock prices rose by $1,000. By the end of 2021 Bezos net worth had raised by $86.2 Billion dollars. 

Elon Musk the owner of Tesla and SpaceX had seen the most gain. As the pandemic calms down Musk continues to see his stock prices rise making him the first person to cross the $300 Billion mark. 

In 2020 while there were people dying from the COVID-19 virus there was a large amount of people dying due to not having adequate resources whether that be medical, food or shelter. Yet Elon Musk was taking rides in his spaceship while donating nothing and tweeting “The Coronavirus panic is dumb”. The insensitive remarks show clearly how much the money has created a gap in our humanity. 

When the government was going through an unfortunate long process to provide us with emergency resources the billionaires of the world could have spared a penny to help aid those in need. 

“Billionaires’ wealth has risen more since COVID-19 began than it has in the last 14 years. At $5 trillion dollars, this is the biggest surge in billionaire wealth since records began. A one-off 99 percent tax on the ten richest men’s pandemic windfalls, for example, could pay to make enough vaccines for the world; to provide universal healthcare and social protection, fund climate adaptation and reduce gender-based violence in over 80 countries; All this, while still leaving these men $8 billion better off than they were before the pandemic.” states Oxfam.org 

Income inequality is a whole different world outside of the US. The Global poverty line is set at $1.90 a day. Globally, an individual in the top 10% will earn around $122,100 while an individual at the bottom half will earn just $3,920. Global inequality is rampant across the world and it has been exacerbated by the COVID-19 Pandemic.

In America as of 2020, 19.5% of Black people living in America are impoverished. Compared to their White counterparts this is a drastic contrast. Only 8.2% of White people living in America are below the poverty line.  

Due to the long history of racial economic inequality people of color have a lot stacked against them. Systematic Racism is still very prevalent in today’s society and it affects economic disparity. 

After slavery ended, Jim crow laws were put into place preventing African Americans from accumulating and inheriting wealth. During the Great Migration they faced employment and housing discrimination across the nation. 

Another invisible practice occurring across the nation is Redlining. Redlining is the practice of color coding neighborhoods into red zones that are ‘considered to be hazardous areas’. Redlining derived from maps drawn by the Home Owners Loan Corporation back in the 1930s.  Although the government has gotten rid of Federally sanctioned Redlining, it still exists in many ways today. Due to this practice many minorities are denied loans at higher rates and have a harder time finding housing. 

These ‘hazardous’ neighborhoods are normally designated underperforming schools to send their children too. 

The schools across the country as well as the education system in your local areas, are tied to the housing area. Which makes those living in predominantly minority areas unlikely to receive the same high quality education as those living in white areas. 

“The average U.S. ZIP code associated with the highest quality (A+) public elementary school has a 4-fold ($486,104) higher median home price than the average neighborhood associated with the lowest quality (D or less) public elementary schools ($122,061).” found the Joint Economic Committee. This means where you can afford to live will determine the quality of education you will receive. 

“The extraordinary income inequality in the United States diminishes opportunities for low-income families and for children of color,” states Juliana Murnae and William Foss Thompson. The two are research professors for Education and Society at the Graduate School of Education. 

Economic disparity is not a simple issue to solve, it will take years for this gap to close and make everyone on an equal playing field. I believe that something as simple as awareness can improve things. 

In schools providing education regarding systematic racism, and redlining can create empathy and awareness of issues in minority communities.

Disproving stereotypes about poverty and those who are impoverished can aid the gap as well. Poverty can be generational and chronic, it is not as simple as working hard there are large odds against anyone escaping poverty. 

For those who believe that the key to escaping poverty is quality education should urge the government to ensure high quality schools in every area regardless of redlining and population. 

According to a study done by Raj Chetty, and William Ackerman, Professors of Economics came to the conclusion that the possibility of working harder so your children can have a better life than you did has declined, because of the inequality gap. 

Federally, policies should be created to decrease the income of the richest or to tax them heavily to a more appropriate relation. If this isn’t feasible, continue to increase minimum wage as a move towards closing the gap and flattening the playing field.

Income inequality affects everyone and will continue to do so until we as a society address it.