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Land of the Few

What does a price tag mean to you? When shopping, have you ever second guessed buying something because you can not afford it? Does debt plague you? If you are a parent, have you ever felt uncomfortable sending your child to a certain school because of financial reasons? While some people live in lavish houses and never have to say yes to these questions, others can not even afford basic housing and food. There is a reason why some cannot afford to live in the United States. The economic disparity is real and income inequality is a modern crisis.

Our Society is Divided: An Overview

Income inequality can be defined as a small percentage of a population having the majority of the wealth or income in an economy (Gale). The San Francisco Bay Area has one of the highest levels of income inequality in the United States. The area is filled with people taking in a variety of wages; and in 2016 a Brookings Institution analysis showed that “families on the high end of the income spectrum earn 11 times more than families on the low end — making it the third most unequal region in the U.S.” (Kendall). The uneven distribution of income has been prevalent in the U.S. since the 1870’s and continues to be a problem today.

Personal Interest

Income inequality has become an increasingly large problem in the U.S. and more specifically the Bay Area. I find myself drawn to this topic of study because the Bay Area, including Oakland, where I live, is a central area where income inequality is a glaring problem. The disparity between areas like Piedmont and downtown Oakland is noticeable. How can two areas, that are so close, less than two miles, seem so divided? Income inequality is a problem that needs to be solved. Through my research I was interested in answering the questions: What could be done to solve income inequality? How long would it take to adequately close the gap of income inequality in the U.S.? And what are the short-term and long-term effects of income inequality?

If you would like to read more about my interest in income inequality, click here.

The History of Income Inequality in the U.S.

Since the beginning of the Gilded Age in the 1870s, income inequality has progressively worsened throughout the United States. The Gilded Age was a time period from the 1870’s to 1900, when corrupt industrialists and those in prosperous professions such as banking earned and accumulated an extreme amount of wealth, while the working class worked for low wages. During the Gilded Age and throughout the Progressive Era, income inequality was high and stayed at roughly the same level. The Progressive Era (1890s – 1920s) was a time of many economic reforms. (Mintz and McNeil). In 1913, the Sixteenth Constitutional Amendment was passed, establishing an individual income tax (Terell). Although the Sixteenth Amendment was ratified, “due to generous exemptions and deductions, less than 1 percent of the population paid income taxes at the rate of only 1 percent of net income” (Our Documents). The Sixteenth Amendment was enacted to address the issue of income inequality but its execution during this period was not effective. However, income inequality did decrease at the end of the Progressive Era as a result of World War I (1914 – 1918) (Piketty and Saez). In order to pay for World War I, the government used taxation which mostly affected the wealthier people. The taxation covered 30 percent of World War I’s cost and helped the income gap close slightly (Zielinski). There was a substantial decrease in the income gap during the Great Depression (1929 – 1939), a period of worldwide economic depression. Businesses collapsed which “significantly reduced top capital incomes” (Piketty and Saez)  The poor and wealthy were both negatively affected by the Great Depression, but the reduction of the wealthiest people’s capital led to a decrease in income inequality, narrowing the gap between the rich and the poor (Saez). Following the Great Depression, was World War II, from 1939 to 1945. This war transitioned the weak economy into a strong and profitable economy. During World War II, top marginal income tax rates, which increase with an employee’s income, were set to about 80 percent. It is possible that these tax rates led big businesses to stop increasing top wages (Soltow). From the end of World War II to the 1970s, wages were more equal for Americans. In the 1970’s, income inequality became a problem again. The wages of corporate leaders kept increasing, while those of other poorer workers stayed the same or fell. Thus “among the wealthiest one-fifth of families, the Census Bureau says that average income grew from $70,260 to $76,300– in 1986 dollars. Among the poorest one-fifth of families, average income fell from $8,761 to $8,033” (Levy).  Since 1970, the gap between the rich and the poor continues to widen as social norms change to accept higher and higher wages (Piketty and Saez).

If you would like to learn more about the history of income inequality, click here.

Income Inequality Today

Income inequality is prevalent in the Bay Area largely because of the tech industry. People who work in technology, receive high wage increases compared to many other professions.Technology workers “received a 69 percent salary bump to about $233,000 between 2005 and 2015. Retail workers, by comparison, got a 5 percent raise to about $41,000, and educators saw their pay increase by 9 percent to about $59,000” (Treuhaft).  Though many people in Silicon Valley work in the tech industry and receive high wages, “nearly a third of Silicon Valley households don’t earn enough to meet their basic needs without assistance, and more than 10 percent of the population lacks regular access to nutritionally adequate food” (Kendall). As the tech industry grows, the income gap will continue to widen.

An area that exacerbates income inequality is the lack of fair educational opportunities. Today, good education comes with a high price tag. Top 1% (people that take in the highest incomes in America) have the capability of paying for expensive education such as at Ivy League schools; it was seen that “at five different Ivy League schools, more students came from the top 1% of the income scale than from the entire bottom 60%” (Lartey). Wealthier people in the United States typically have more opportunity for their children to receive a top notch education;  they have the ability to pay for expensive schools, donate generously and pay for tutors to help their children receive impeccable grades (Manjoo).

Another current impact of income inequality is how it affects the housing market and homelessness, specifically in the Bay Area. Many people do not receive enough money to pay for affordable housing and “at the bottom of the income distribution, individual consumers must choose between the minimum quality of housing available and homelessness” (Quigley). San Francisco has one of the highest housing costs in the country and in 2017 about 25,951 people were homeless in the Bay Area. As rents rise, people with lower income cannot afford a home and  “in the San Francisco area, where the median rent is $4,331, a 2 percent increase could make 67 more people homeless” (Kendall). San Francisco is a place where “10 percent of households subsist on less than $10,000 a year” which is not a strong financial standing (Glantz). People on the higher end of the income gap, like those in Silicon Valley, do not have to worry about rising rents because they are receiving high incomes. Because of the wide income gap in the U.S. today, some full-time working families have to worry about living on the streets while others live in lavish houses with excessive features.

If you would like to learn more about the current day affects of income inequality, click here.

Solutions

How to contribute in you daily life:

The Bay Area does not have to wait for the government to take action. Residents can donate or volunteer to nonprofits such as Community Housing Partnership (a non-profit that secures housing for the homeless), to build programs that would help with homelessness and wage inequality. These programs would assist those in need and help them create a better and self-sufficient lifestyle. Community members can also vote and put in place political candidates that would construct and promote programs that would help to close the income gap, such as increasing the taxes on the wealthy and ensuring these taxes are invested back into the economy. In addition, citizens can vote for representatives, local and national, that support reducing income inequality like our past president, Obama.

Large-scale solutions:

The United States is in a constant struggle to find effective and lasting ways to decrease/address income inequality. We need the government to help. Regulations, such as rent control, are necessary to combat rising housing prices, help with homelessness, and ensure affordable housing. Rent control ordinances limit how much rent landlords charge their occupants. By strengthening rent control laws, people with lower incomes, including the homeless, would have the ability to rent homes at reasonable prices (Hemelright). Rent control would positively affect the housing crisis since there would be more affordable housing. If similar programs were implemented throughout the United States, “universal rent control would help 42 million households” (Ivanova).

Another way the government could substantially help to close the income gap is by increasing minimum wages both in California and across the United States. Increasing the minimum wage for the lowest paid workers would take about 4.6 million people out of poverty (Powell).  President Obama had a goal to increase the minimum wage and acquire equal pay. An increase in wages in turn would strengthen the economy by creating more consumption. By raising the minimum wage, lower and middle class people would be able to support themselves and their families. It would also increase the likelihood that families would spend any extra money earned, which would support the economy. In past years, parts of the United States have seen an increase in minimum wages, and the “states that have raised their minimum wage since 2013 have seen stronger earnings growth in low-wage jobs compared to states that have not raised their minimum wage” (White House). The federal minimum wage in the United States is currently $7.25 and the minimum wage in California is $11. Raising the minimum wage in California and the United States would result in partially closing the income gap and ensuring a living wage.

The growing problem of income inequality in the Bay Area and the United States cannot be ignored. Solutions like rent control, increasing the minimum wage and taxing the wealthy are just some of the ways of decreasing income inequality. By making these changes now, the United States can gradually create a healthy economy where all people can prosper.

If you would like to learn more about solutions to income inequality, click here.

Works Cited

Thank you for taking the time to read my web page! Feel free to post your feedback and discuss this topic in the area below. I would love to here your thoughts!

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COMMENTS: 13
  1. April 26, 2019 by Tia Jeffs

    Your page is very informative, with a lot of good stats and images to go with your page and make it more interesting. Great job!

  2. April 27, 2019 by Julia.Kashimura

    I really liked the inclusion of images with a lot of stats on it. The gif was also cool because I got to see the progression of income inequality. The cartoon image was also creative because it drew my attention when I first looked at this page.

  3. April 27, 2019 by Zoe Beach

    Hi Parker! Your page is super helpful and provided so much insight into income inequality not only nationwide but in California as well. Your moving bar graph was super cool and I definitely didn’t know that the average home cost in California was $400,000. Piedmont is located within Oakland, so how is there so much income inequality between the two areas?

  4. April 28, 2019 by Michelle Fulbrook

    The video and images you did really shed some insight on the income gap and how bad the problem is today, not only in the US, but in Oakland.

  5. April 28, 2019 by Frank Cardaci

    A very good job of providing the background and historical perspective of this very serious problem that threatens the fabric of our society. Your solutions are clear and may provide some relief, but I believe that the government will provide the only solution through tax legislation.

  6. April 29, 2019 by Howard Mergelkamp

    Great topic, research and presentation. The data was very informative and the solutions well thought out. Clearly, this is a significant problem for the U.S. and needs to be proactively addressed before our society fractures.

  7. April 29, 2019 by Josephine Cardaci

    Good Job Parker! . I am glad to see your interest in wealth inequality which is definitely a national problem.

  8. April 29, 2019 by vicki trimbach

    Parker, I enjoyed reading your paper. It inspired me look up the minimum wage in NZ and Australia [the 2 other countries that I have lived in].
    As of 2019:
    NZ $17.70
    Aus $18.93
    If this type of wage was paid in the USA it would be transformational to the society. Combined with Medicare for all, many more people would be able to live without assistance such as food stamps and would have a substantially improved quality of life.

  9. April 29, 2019 by Jeff Farmer

    Hello Parker.

    There are many people who want to see this problem solved – but not in their neighborhood or town. Giving money to some non-profit is great but most wealthy people living in gated communities don’t want this kind of housing near them. In our little town (you know where….) we just went through a series of lawsuits to try and prevent this kind of housing. Though eventually unsuccessful it will result in higher home prices because the builder had to pay for these frivolous lawsuits. I believe NIMBYism (Not In My Backyard) is a serious social problem preventing solutions.

    I was pleased to see you use a lot of math supported by pretty pictures and GIFs!

  10. April 30, 2019 by greg matkosky

    A pretty comprehensive explanation presented in a simply written style, no easy feat considering the complexity of the subject. I particularly appreciate the solutions described at the end. You should send this to your congressman/woman. Thank you for making the effort to produce and share this web site. You’re the future, Parker. With that thought in mind, I feel better about it…

  11. April 30, 2019 by Kathy Kilburn

    Awesome work, Parker! The supporting data for your topic was presented well, and your use of links to provide additional information was a great way to continue to educate your reader about this ongoing problem.

  12. April 30, 2019 by Kyong Pak

    Great work, Parker! I really enjoyed your video, interactive survey and engaging infographics. You were able to clearly distill a complicated and sensitive topic, and I liked the local lens you took to grapple with such a pertinent issue. An inspiring presentation!

  13. May 03, 2019 by Susanna

    Hi! I thought your topic was really well-explained, starting from the history of income equality to the explanation of how it is still perpetuated today. I also loved how much media you included alongside the text, to make your presentation more engaging. In my opinion, despite the commonness of this issue of income equality, a lot of people tend to overlook it because they are so used to seeing the gap, so thank you for choosing to present on such an important issue.

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