Question

Analyze what else causes U.S. income inequality to widen.

Answer 1

Income inequality in the United States has increased over the past 30 years, as wealth has poured unequally to those at the very top of the revenue spectrum. Present economic literature highlights three explanatory causes of declining wages and increasing disparity in income: technology, industry, and institutions. The presence of multiple theories shows the complexity of pinning down causes of inequality.

Increasing trade between the US and the rest of the world, especially China, has increased the number of imports into the US economy, leading to job losses in the industries that originally manufactured those products in the US. Offshoring has impacted salaries and employment, too. Both of these trade trends result in decreasing wages, declining labor force participation, and low inflation-adjusted wage increase. Possible policy solutions for this phenomenon include those that would make American exports more competitive, like US dollar depreciation.

The policies of the U.S. government created an structural structure that contributed to greater inequality. Deregulation, de-unionization, tax reforms, federal monetary policies, the "shareholder revolt," and other policies since the late 1970s have reduced wages and jobs. This explanation would seem to call for policy changes to address inequality and declining wages, such as increasing unionization, better supervision of Wall Street, raising the minimum wage and maintaining a focus on full employment in monetary policy.

The Federal Reserve bears some of the blame for the last few years. Record-low interest rates were expected to stimulate the housing market , making homes more affordable. While this is the case, in recent years house prices have plummeted. The average American has still not enough money to purchase a house. This shortcoming is especially true for younger people who usually form new households. They 're trapped at home or with roommates without decent work