Question

Why has the distribution of income become more unequal in the last 30 years?

Answer 1

Income inequality is rising over the past 30 years in USA. Share of rise in GDP is being cornered by the few people and other are still languishing and experiencing inadequate rise in wage rate. It is estimated that top 5 % people in US accounts for 38 % consumption and it has risen over last three decades. American has no longer distinction of being affluent middle class. Following factors are responsible for rising income inequality:

• Slow growth rate in wage rate is prime cause of income inequality. After 1970, productivities and wage rise have been stagnated.
• Demand for high skills jobs has further increased inequality significantly. Such class is paid premium salary over the low skilled workers. Further, rise in use of automation has killed hundreds of jobs for low skilled workers.
• Competition in international market has further reduced demand for domestic output and that has reduced number of jobs in market.

Such large change in income distribution is threat to political and economic stability of country. It would pose threat to democratic system as rise in income inequality is against the democratically held views of justice and equality.