What Are The Negative Effects Of Income Inequality

Income inequality is undoubtedly one of the largest corrosive forces toward a decent economy in the United States. Affluent Americans are getting dramatically richer while poor suffering people, with limited resources, struggle to achieve their dreams. Income inequality is defined as the extent to which income is distributed in an uneven manner. In the United States, income inequality has steadily ripped apart the middle class for almost 30 years. While continuously destroying a once prosperous middle class, income inequality has also limited economic growth. On the topic of extreme income inequality Dani Rodrik of the Institute for Advanced Study in Princeton stated, “Inequality could impair growth if those with low incomes suffer poor health and low productivity as a result, or if, as evidence suggests, the poor struggle to finance investments in education. Inequality could also threaten public confidence in growth-boosting policies like free trade”.

Lack of equity in the company’s workers are employed has increased income disparity. The richest 10% of
While some economists believe significant incommensurate wages are needed to propel growth, rising inequality has prompted change in the that belief. With recent studies showing that Americans are willing to borrow massive amounts of money to prop up their product consumption. This leads to financial instability and creates threats to the United States economic growth, as seen in the 2008 stock market crash. Ben Bernanke and Larry Summers argue that “inequality may also contribute to the world's "savings glut", since the rich are less likely to spend an additional dollar than the poor. As savings pile up, interest rates fall, boosting asset prices, encouraging borrowing and making it more difficult for central banks to manage the