Income Inequality in America
Western Connecticut State University
Income Inequality in America
“The proliferate gap separating the penniless from the gilded”
Kristen Dakin
ECO 101: Principles of Microeconomics
Professor David Barber
April 7th, 2014
The exponentially growing gap that separates the affluent from the rest of society in America has become a truly daunting statistic. According to data collected by the IRS, the World Top Economics Database asserted that in 2010, the top .01%, which calculates into one in 10,000 people, held a 4.6% share of that year’s income. The average income of $24 million per individual in the top .01% is $23,970,000 more than the average income of the bottom 90%, which is $30,000. In the subsequent parts of this paper I aim to analyze the grounds of extreme income inequality as well as the severity of the consequences that it has on the economy and the American people. First and foremost, let us take a look at the blessed few that constitute the .01%, .1% or even the 1% in American society. The majority of these individuals are the top corporate officials of multi-national, multi-billion dollar companies, such as General Motors, General Electric, MasterCard, Bank of America, American Express, and International Business Machines to name a few. During the last several decades, executive compensation has reached scandalous levels at certain corporations. Originally, during the 1950s and 1960s, the pay of top executives remained steady with an increase of less than 1% annually, according to economists at the Massachusetts Institute of Technology. However, over the next three decades, the earnings of the top 1% increased threefold (Inequality). According to a study done by the Congressional Budget Office, “after adjusting for inflation, the after-tax income of the top 1% jumped 139% from 1979 to 2001, whereas the income of the middle fifth rose by just 17%, to $43,700, and the income of the poorest fifth rose
Income Inequality in America
“The proliferate gap separating the penniless from the gilded”
Kristen Dakin
ECO 101: Principles of Microeconomics
Professor David Barber
April 7th, 2014
The exponentially growing gap that separates the affluent from the rest of society in America has become a truly daunting statistic. According to data collected by the IRS, the World Top Economics Database asserted that in 2010, the top .01%, which calculates into one in 10,000 people, held a 4.6% share of that year’s income. The average income of $24 million per individual in the top .01% is $23,970,000 more than the average income of the bottom 90%, which is $30,000. In the subsequent parts of this paper I aim to analyze the grounds of extreme income inequality as well as the severity of the consequences that it has on the economy and the American people. First and foremost, let us take a look at the blessed few that constitute the .01%, .1% or even the 1% in American society. The majority of these individuals are the top corporate officials of multi-national, multi-billion dollar companies, such as General Motors, General Electric, MasterCard, Bank of America, American Express, and International Business Machines to name a few. During the last several decades, executive compensation has reached scandalous levels at certain corporations. Originally, during the 1950s and 1960s, the pay of top executives remained steady with an increase of less than 1% annually, according to economists at the Massachusetts Institute of Technology. However, over the next three decades, the earnings of the top 1% increased threefold (Inequality). According to a study done by the Congressional Budget Office, “after adjusting for inflation, the after-tax income of the top 1% jumped 139% from 1979 to 2001, whereas the income of the middle fifth rose by just 17%, to $43,700, and the income of the poorest fifth rose