A VARIETY OF SOCIETAL CHANGES have led to a shrinking American middle class, both numerically and financially. According to Chapter 16 of the textbook, lower-class Americans are in even worse shape. In contrast, those in the upper class now account for about a fifth of the U.S. population but receive half the nation’s income. This was not always the case. Following World War II, the progressive income tax (Links to an external site.) enacted by Congress and a healthy manufacturing sector had contributed to a booming economy and a growing middle class. In the period after World War II, tax policy had put downward-pressure on high incomes, keeping the gap between high earners and others from growing. The gap widened with the implementation of supply-side economics (Links to an external site.), with tax cuts for business and high-income earners, beginning in the 1980s.
Watch this Time Magazine video, ‘Links to an external site.A Look At Income Inequality In The United States’Links to an external site. (4-minutes)
Analyze the following graphic from Chapter 16 (click to enlarge) Download (click to enlarge) illustrating real income, adjusted for inflation, over a 40-year period based on U.S. Census data:
Inflation Adjusted Annual Income Chart.jpg
In this short essay, summarize the trend of income disparity in America over the last 40-years. What is your viewpoint on potential policy initiatives to narrow the income gap? In conclusion, what types of public policy could help narrow income disparity?
