Three Factors That Lead To Income Inequality In The United States

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1. There are three factors that contribute to income inequality: technology, trade, and politics. Starting back in 1918, the rich took in a very large portion of the total income of the United States, decreasing growth and median wages, and in 1928, the economy peaked, before crashing (Reich 5). During the Great Prosperity, the nation grew fast, increasing median wages, which allowed the middle class to consume more. This created more jobs and increased demand. Then, in the 1970’s, the middle class stopped growing when the wages dropped due to an advance in technology, where computers and machines started taking American jobs and companies expanded oversees where labor would be cheaper. They then traded with them, saving more money on labor but taking away more American jobs. The middle class kept spending and around 1990, 55% of women with kids were working for a salary, bring in more income to families and allowing them to continue spending (Reich 7). However, once this spending became too much, citizens went into debt and the debt per household increased by a third over the next 17 years (Reich 7). While all this spending was happening, the government made the mistake of slashing government spending on buildings and roads. It also stopped supporting unemployed workers and allowed companies to punish workers who joined unions (Reich 11). In addition, the government cut the taxes of the top earners in half, bringing out the income inequality that the wealthier don’t have
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