TAMMY L. PARISE
FEBRUARY 17, 2013
Mastrianna (2010) speaks of income inequality as variations in earnings among individuals and households. He states that some income disparity is desirable for creating an incentive for individuals to invest in education and training and to take risks in employment and investment for greater rewards. Concerns are being voiced as to the income inequality in the United States due to the degree of inequality which is shown in the Lorenz Curve and Gini Index. (Pg. 189) Some of the causes of income inequality that have the greatest impact Mastrianna says are first, education. Education or lack thereof has a great effect on income inequality. In 2007, the median incomes of a high school dropout were $22,256, compared to $31.408 for a high school graduate and $51,324 for an individual with a bachelor’s degree. Over a work life an individual with a bachelors degree can earn at least one million dollars more than a high school drop out (based on 2007 dollars). Employment opportunities have also shifted toward medical, business, and other services that disproportionately employ college graduates. Rapid employment in restaurants and retailing explain the low wages of high school graduates. (Pgs. 189, 190) Second is technology, Mastrianna says that the use of computers in the workplace has increased and the estimate is that over 55 % of the labor force now uses computers on the job. These workers earn an average of 10-20 % more in wages than those who do not. Highly educated employees are also more likely to adjust to computers complexities than less educated employees. Consequently, income inequality is increased as the economy is becoming more technologically efficient. According to the AeA, the average technology worker earns $79,500 compared to $42,400 for all private sectors which will widen the income gap as more bright people head toward the information economy. (Pg 190) Thirdly Mastrianna mentions unions stating that the decline in the number of workers belonging to labor unions also contributes to income inequality. This decline in the organized workers is largely due to the loss in manufacturing jobs which leads to fewer jobs at a higher pay forcing many to work in lower paying service jobs which in turn adds to income disparity. (Pgs 190,191) Fourth, Mastrianna notes abilities. There are individuals that are gifted with talents such as the “smarts” to become doctors and lawyers, or have the physical abilities such as Tiger Woods to become a star athlete, or have artistic talents such as Angelina Jolie. These talents enable certain individuals to contribute substantially to total output but these high incomes have become a highly controversial issue during a time of income inequality. Especially when it comes to CEO’s collecting high salaries, bonuses, and stock options even when their companies fail while laying off thousands of workers. (191) Fifth Mastrianna points out wealth. Income from wealth is more unevenly distributed than income from labor he states. Wealth can be generated by its current owners as well as by previous generations through inheritance. The Bureau of the Census estimates that 84% of the nation’s wealth is held by 20% of households. The collapse of the housing bubble left many households with negative household equity or in bankruptcy. Updated figures may show that this phenomenon has served to further increase the uneven distribution of wealth. (Pgs 191, 192) Finally Mastrianna states that discrimination plays a part in income inequality among the races and sexes. The U.S. Census Bureau indicated in 2007 that the median income of all white, non-Hispanic households was $54,920, while for blacks it was $33,916, and for Hispanic households it was $38,679. Asian and Pacific Islanders had the highest household medians with $66,103. The U.S. Census Bureau...