Is Wealth Inequality in the United States becoming an

Economic or a Social Issue?

Hudson E. Aikins

Independence High School

1.3.2021

English 12 DE

Mr. Flake
 Abstract

The topic of this paper is about Wealth Inequality as it pertains to the United States. Wealth

Inequality has been a huge topic over the years as the socio-economic structures have changed

dramatically over the past 40 years. My investigation was to see whether these problems were

just actual economic issues or are they social issues between the working-class and the

ultra-wealthy. In order to gather a constructive conclusion, I gathered both qualitative and

quantitative information that supports both sides of the argument. Background research also had

to be done in order to see why this is even an issue to begin with. The quantitative data supports

issues such as lower pay, increased cost of living, & a higher percentage of taxed income

amongst the majority of Americans. The qualitative data show different metrics. Americans are

living in the most technologically advanced period in history and are experiencing greater global

efficiencies in most areas of life. High concentrations of wealth are in the handful of American

families, however there has been no evidence of a reduction in innovation and

technological/economic growth. The real issues come from whether many Americans whose low

paying jobs are being phased out because of these advancements will agree that their voice is

being heard by their respective governments. Also concerns that high-concentrations of wealth

with very little diversity amongst the people how own this capital will be a cause for concern.

Overall the evidence supports that Wealth inequality in the United States is leading to more of a

social issue, with varying unproven concerns of economic instability.

 In September 2017 the US Federal Reserve reported that the wealthiest 1% of Americans

own an incredible 38.5% of the nation's wealth. It is important to understand that wealth and

income are two separate things. Income is acknowledged normally as receiving money, either

from work or investment, and Wealth is an abundance of valuable assets or possessions that

could be sold in exchange for fiat currency (dollar, euro, sterling pound, etc). Because of this

general ideology, humans today have created basic wealth classes such as “rich” and “poor,”

which can be seen throughout history when Nobles, Kings, Queens, and Emperors controlled

astronomical figures of wealth while the general population, could barely get access to food,

clean-water and shelter. Fast-Forward thousands of years later and we are starting to see more of

the same, if not worse. Wealth Inequality is one of the most hotly debated topics in the world,

and many resolutions to this problem end up on both extremes. One side may advocate for less

taxes and government intervention as they believe market forces and business can solve the

problem, while the other side may demand higher taxes on the wealthy, and more government

intervention in order to help those who can not afford basic necessities such as food, water,

education and housing. Even though it might be entertaining to watch one side of an extreme

attack the other, at the end of the day the problem continues to get worse and worse, with no end

in sight. Even with the recent developments in robotic automation threatening to evict millions of

jobs, there are new industries of higher-paying, more technical jobs which would require

different skill sets to the ones of today from the ones we are used to today. Many corporate

executives are starting to implement this shift to automation as lower labor costs means higher

profit lines, and more money in the pockets of shareholders and long-term job security, but that

introduces a whole new set of problems, moral and economic. With both sides of this argument

identified, many ask the question, “Is wealth inequality actually a problem?” More so is wealth
inequality an economic problem or a social issue? As Wealth inequality in the United States has

increased over the years, it has sadly become more a social issue rather than an economic issue in

the United States because of the disappearance of the middle class, the role of the government as

it pertains to the US Constitution, and the rise of globalization in the world. By understanding

how each of these factors influence the social aspects of wealth inequality, I will be defining

“social issues” in the question as what the Basic Human Rights Document created by the United

Nations, and the magnitude (population) of which the issue has affected people.

The middle class is what many economists believe is the one of the backbones to any

great developed nation. It signals a belief of wealth and stability in a nation and its citizens and

allows individuals in an economic system to engage in any activity which may please them

without the worry of having enough food on the table or being able to pay for the monthly

mortgage. An example of this would be the United States (US) in the 1950’s to 1960’s. Even

with the Cold War reaching its highest tensions, the US government did everything in its power

to enable its citizens with the resources they needed to give them an edge over the USSR. Many

of these efforts were focused in the fields of STEM (Science, Technology, Engineering &

Mathematics), Manufacturing & Construction, as well as the unfailing American

Entrepreneurship. Now we enter the US in the present day. According to PewResearch (2020)

the American unemployment rate was at, “3.5% in November 2019.” These levels of

unemployment have been the lowest since the Post World War II era, one of the greatest

economic expansions in human history. The same data also shows that Americans after each

recession have rebounded in wealth and have gotten even wealth as state and federal intervention

allowed for many to recover from their financial lows. But as I said before this does not mean
there were not some setbacks. For example, in the same PewResearch analysis, the median

income for American households has only increased from $50,200 in 1970 to $74,600 in 2018

(when adjusted for inflation). Inflation means when the price of goods and services increase

across the board in an economy. Inflation is not just limited to your grocery store trip costing $50

instead of $47 dollars last year, but it also applies to assets such as Real Estate, Stocks & Bonds

and commodities. There are multiple reasons explaining why inflation is good for any economy

however, there are also negative consequences as well. Looking back to the period in which data

was taken, it showed the growth of wages was less than a 1% increase each year from 1970 to

2018. This is important because if the growth in wages is less than the inflation of money that

means the average American worker is earning less money for what they can afford, a

phenomenon known as “purchasing power.” $50,000 back in 1950 was a lot of money as the

goods and services back then were much cheaper so the money in people’s hands could go buy

much more. If the purchasing power is decreasing over time, it does matter if wages have

increased by $20,000, this data shows Americans are getting paid less money than what they can

buy, which is a recipe for the disappearance of the middle class. For reference The US Federal

Reserve (the Central Bank of America) outlines that they try to make the inflation rate around

2-3% annually. But all of these economic factors have not stopped the US economy from

reaching new levels each and every year despite having fierce competition from other countries

such as China. A Youtube Channel called, Economics Explained (2020), went into great detail

on why a common counter-argument is that compensation for a few is very high might be very

but for many it's very low. He states, “If the role of chief engineer and huge civil projects

attracted a 7-figure income, you might find that many people go to school for many years to get

the technical knowledge they need to perform that task. Huge compensation might not make
people’s performance better day-to-day but it does make people far more motivated to attain the

skills they need to perform a role tomorrow.”

So Americans have started to notice these effects which have brought a lot of social

unrest over the job market, healthcare and other areas of life. If these aspects of life are getting

more expensive, but their wages are not increasing, they all of a sudden can not afford the

lifestyles which would be deemed, “middle class.” But what does the middle class need? The US

Constitution when created in 1787 only had 10 Amendments known as the “Bill of Rights.”

Many conservative politicians believe that the constitution is guiding principles and limits to

what the government can and can not do for its citizens. A government website, Archive.gov was

made to break down the Bill of Rights to its simplest form in order for people to understand the

role of government in the US. Many of the amendments pertain to legal and criminal justice

topics, however the first amendment is probably the most known amendment and is relevant to

the issue of wealth inequality. According to Archive.gov (2020), the First Amendment,

“.....provides several rights protections: to express ideas through speech and the press, to

assemble or gather with a group to protest or for other reasons, and to ask the government to fix

problems.” The key part here is, “to ask the government to fix problems.” This is where many

problems arise because as much of the constitution, it’s very subjective. What does the US

government constitute as a problem. There are certain issues like crime and terrorism which can

be identified pretty easily, however a problem such as wealth inequality is up for debate. The US

was founded mainly on the principles of laissez-faire or “without interference,” and for the

majority of time this has worked but for issues such as wealth inequality, many people in power

don’t really feel the negative effects more so the positives of it. If many people in power are
already rich and wealthy (which they are), they stand to gain the most benefits from the policies

and systems they put in place. But many citizens do not know that many of the roles that the

federal government have today were not in places decades ago because they were not needed. In

order for the United States government to keep true to their fundamental values and beliefs, the

issues of wealth inequality are solely becoming a social issue. Yes some may argue that the

federal government does have a role in these macroeconomic issues when it comes to healthcare,

affordable housing & employment but that does not mean they effectively have to. The states

largely are responsible for the citizens within its boundaries and creating national regulations at

this point would need a fundamental change in the constitution. There are benefits to inequality,

even some social aspects that have helped society. If we look at a major social issue which is

healthcare, the UN World-Bank has shown that the average American is living 9 more years

compared to the 1960's which has shown a fundamental increase in the technology and

infrastructure created because of this inequality. All sides to this argument do believe that there

needs to be inequality to allow motivation to progress in society but many argue that they do not

want large pockets of wealth to be in the hands of a few people at the expense of exploiting

others and not treating them fairly. Does this mean there are ultra-wealthy individuals that do

help add value to society in a meaningful way, of-course but there are a fair share of people who

make business by taking advantage of human psychology not market forces. A prime example of

this would be Google. Google is worth $1 Trillion and it’s highest revenue product is its search

engine. People may ask, “Google is free to use, so how do they make money,” which is true. You

don’t have to pay a subscription every month to search on Google, but they make money in

another controversial way, advertising. What users acknowledge each time they search on

Google, is for $0 a day they can get ownership to what you search, where you search, where you
live, how old you are, and bunch of somewhat sensitive information and give advertisers the

chance at more personalized ads to fit your tastes. In the eyes of people analyzing wealth

inequality the Google Executives are astronomically rich and Google has made so many more

people richer each and every day by using its service and making it accessible to everyone all

over the world. The world’s increase in efficiency just from Google being created can not even

be calculated but then their market size which easily can be calculated automatically makes them

an enemy since they are a monopoly in that market. Does that mean the government sees this as

an economic problem. For a long time no and to a certain extent no, which just adds fuel to the

fire over the debate with wealth inequality. But as Google and other multinational conglomerates

offer solutions to help us become more efficient and productive in our daily lives, a phenomenon

known as “Globalization”, is becoming a leading reason why wealth inequality is becoming

more of a social problem.

The United Nations (UN), known as one of the most respected international organizations

in the world, defined the Economic, Social and Cultural Rights all humans are entitled to. They

stated, “The International Covenant on Economic, Social and Cultural Rights….The human

rights that the Covenant seeks to promote and protect include: the right to work in just and

favourable conditions; the right to social protection, to an adequate standard of living and to the

highest attainable standards of physical and mental well-being; the right to education and the

enjoyment of benefits of cultural freedom and scientific progress.” Many of the rights listed by

the UN are already upheld by a lot of the developed countries around the world. However, what

many countries see as it pertains to this documentation is that their standards of living far exceed

what the UN “requires” them to do. Globalization is a reason why these standards of living are
reaching levels that can not be attained by the common citizen. As many countries work together

on an international level for manufacturing, trade, labor, and agriculture many nations are

starting to see that economic benefits are astronomical in the sense that, they don’t have to grow

their own food, hire labor their own citizens, and have direct access to markets abroad. But they

are releasing the massive jobs losses due to cheaper labor and costs, trade wars due to

geopolitical disputes & and automation technology getting rid of the need for low-skill jobs

which have employed the majority of the US and global population for centuries. The US has

one of the most active foreign policies in human history and in order to maintain its status as the

“lone global superpower” it must give up some of its agendas domestically in order to maintain

power internationally. In many cases this causes unfavorable trade deals for something of

favorability such as military installation and bases in other countries. Globalization as a whole

has impacted the human race in ways which can not be calculated, but clearly can be seen to

everyone who is affected by it. American farmers who now have to compete with rising labor

costs in America and cheap labor in Africa, South America and Asia are starting to lose their

jobs that were already paying them little money to be able to support themselves. The global

talent pool also means that many people will have to compete with talent outside your home

country which many people believe lower incomes as corporations see a more qualified base of

talent further supporting the wealth inequality divide for low to mid-skilled jobs and further

increase the profit lines of investors and corporations.

Does this mean there is no solution to the problem of wealth-inequality? Of course not.

Many economists, social justice workers and politicians are working towards solutions such as

Universal basic income, wealth taxes, making higher education mandatory and free, the list goes
on and on. But all these solutions only solve parts of the problem and often lead to many

unanswered questions over who pays for all this, the people who are eligible and how this all

gets structured. But one thing is clear, wealth inequality is becoming a social problem, but is

clearly heading towards an economic problem, if mass unemployment is common and wealth

and income is hard to attain. The government doesn’t have unlimited resources and people who

suffer from wealth inequality, haven’t felt anything just yet.

Editing Reflection (SCAMPER)

In my introduction I saw some aspects of my writing which may have been overexplained or

unnecessary towards the flow of the argument. In the early part of my introduction I cleared up

the early aspects of talking about what is the difference between income and wealth. I compared

it in an unclear way so I changed aspects to make it more understandable by defining two classes

in medieval times: Kings, Queens and Nobles, and then Peasants. I deleted some sentences that

were rambling on this concept since I believe anybody reading this would understand what the

different visual aspects of wealth would be like. The second main thing I changed was how I

defined the term “purchasing power.” This part of my argument had sentences that were better

suited to be before or after another one. I also rewrote how it affected people on a macro level

with additional terms of inflation which the reader can later infer how over time this issue has led

to a social issue because people being able to afford less items will create more “tense” monetary

situations.
 Annotated Bibliography

1) Keister, L., Zucman, G., Shapiro, T., Pfeffer, F., Bartels, L., Sherraden, M., . . . Scheve,
K. (2015, May). Rising Wealth Inequality: Causes, Consequences and Potential
Responses. Retrieved December 11, 2020, from
https://poverty.umich.edu/research-projects/policy-briefs/rising-wealth-inequality-causes-
consequences-and-potential-responses/
a) I plan to use this source to identify what is wealth inequality, why it is
happening and what are the consequences and potential solutions to
it. I need to first define wealth inequality for the reader so they
understand the research and argument that is being proposed.
Wealth inequality is a controversial subject but it is important to
understand it from both perspectives.
2) Schaeffer, K. (2020, May 31). 6 facts about economic inequality in the U.S. Retrieved
December 11, 2020, from
https://www.pewresearch.org/fact-tank/2020/02/07/6-facts-about-economic-inequality-in-t
he-u-s/
a) This source comes from Pewresearch. It is an independent
organization that uses statistics to gather information, in which can be
interpreted to answer questions. I plan to use this data to identify the
statistics of wealth inequality in the US and how it has been distributed
for the past years. By doing this I can present why the argument of
massive wealth accumulation is present.
3) Juliana Menasce Horowitz, R. (2020, August 17). Trends in U.S. income and wealth
inequality. Retrieved December 11, 2020, from
https://www.pewsocialtrends.org/2020/01/09/trends-in-income-and-wealth-inequality/
a) This source also comes from Pewresearch but it identifies wealth
inequality from more of an economic perspective. It shows income, job
market trends, and the growth to support evidence to why economic
professionals believe wealth inequality is a good thing and results for
better growth for everyone, not just the financial elite.
4) The distribution of wealth in the United States and implications for a net worth tax. (2019,
September 25). Retrieved December 11, 2020, from
https://equitablegrowth.org/the-distribution-of-wealth-in-the-united-states-and-implication
s-for-a-net-worth-tax/
a) This article is one of the first proposed solutions to wealth inequality. A
tax on wealth and the distribution of how that would be implemented.
This argument is normally proposed from the opponents of wealth
inequality, and has adequate data to support this proposition. It also
identifies tax trends on the wealthy compared to the “average”
american.
5) Vallejo, J. A., & Keister, L. A. (2019). Immigrants and wealth attainment: Migration,
inequality, and integration. Journal of Ethnic and Migration Studies, 46(18), 3745-3761.
doi:10.1080/1369183x.2019.1592872
a) This study aims to identify what questions we need to answer about
wealth inequality in the US as it pertains to immigration. Immigration
is a centuries old practice and also has been a heated issue in not just
the US, but the entire world. The study goes in-depth to how migration
and immigration can affect wealth accumulation for not just one but
two and three generations.
6) The Bill of Rights: What Does it Say? (2020, July 24). Retrieved December 13, 2020,
from https://www.archives.gov/founding-docs/bill-of-rights/what-does-it-say
a) Since I am studying wealth inequality in the US, it is important to
identify the constitution and to see if the government is not fulfilling
their duty to citizens as it pertains to the bill of rights. For many years
the US government was not fulfilling certain duties for its people due
to “a lack of clarification” which the supreme court has been aiming to
solve. This source states the first 10 amendments and how this could be
an argument from an economic and moral perspective.
7) Is Wealth Inequality Actually a Problem? (2020, July 09). Retrieved December 13, 2020,
from https://www.youtube.com/watch?v=swOpLpZaA78
a) This video goes in-depth to the economics of wealth inequality from a
solely economic basis. The presenter explicitly states how they have
identified the problem from an economic perspective, which to some
 commenters does not answer the question. This video supports the
complete argument from economists and financial elite about their
idea of wealth inequality.
8) Why This Billionaire Wants To Give Every Baby $6,750 to Solve The Retirement Crisis?
(2020, December 13). Retrieved December 13, 2020, from
https://youtu.be/o9XHKc22wGk
a) Another video from the same source above, reports on an interesting
solution hedge-fund billionaire Bill Ackman proposed. This solution
aims to solve wealth inequality from an economic perspective, both for
citizens and financial institutions. Through the use of the Stock-market
which has had major controversy in 2020, this source will provide
another solution from both sides of the wealth-inequality argument.
9) Human Rights. (n.d.). Retrieved December 13, 2020, from
https://www.un.org/en/sections/issues-depth/human-rights/
a) This source will be used for the moral perspective of wealth inequality.
The UN has provided their own basic human-rights “constitution” to
which the world has to, but in many cases does not follow. As it was
made more recent than other countries constitutions and national
laws this aims to set guidelines for what governments should provide
to their citizens.
10) Additional informationFundingWe acknowledge a grant from the National Science
Foundation [grant number SES-1322738] that supported this research. (n.d.).
Immigrants and wealth attainment: Migration, inequality, and integration. Retrieved
December 13, 2020, from
https://www.tandfonline.com/doi/full/10.1080/1369183X.2019.1592872
a) The source adds further perspective of wealth through immigration,
but also as a value of measurement for governments and individuals
alike to see equality within a system of government. Most governments
try to impose an equal opportunity for its citizens, as many
governments are democratic and capitalist. However, many citizens
look into wealth as an equal outcome and this source which would
support a moral perspective looks into wealth inequality through
racial, and equal outcome perspectives.
11) Writer, S. (2020, September 24). Universal basic income gains support in South Korea
after COVID. Retrieved December 13, 2020, from
https://asia.nikkei.com/Politics/Universal-basic-income-gains-support-in-South-Korea-aft
er-COVID
a) Basic universal income has been another solution that many
economists believe could be another solution to wealth inequality.
Income inequality and wealth inequality have similarities and
differences and being able to provide some income to citizens, might
reduce the deficits of wealth inequality. However, many opponents
believe a lack of financial literacy may hinder the effectiveness of the
proposal. This source will be both a moral and economic argument as
well as an economic counter argument.
12) Human Rights. (n.d.). Retrieved January 11, 2021, from
https://www.un.org/en/sections/issues-depth/human-rights/#:~:text=Human%
20rights%20are%20rights%20inherent,and%20education%2C%20and%20ma
ny%20more.
a) I use this source in order to define what “social issues” I argue. It’s
important for the reader to understand what social issues mean and
how governments specifically the US try to solve or help these issues.
The United Nations is well respected by every country in the world and
can be applied to many country’s constitutions.