United States of Inequality. Aspects of Inequality in the USA Today

Table of contents

List of Illustrations

List of Abbreviations

Introduction: Inequality - A Recent Topic

1 Definition of Inequality

2 Aspects of Inequality in the USA today
2.1 Education
2.2 Health Care
2.3 Political Participation and Representation
2.4 Labor Markets and Other Sources of Income

3 The Vicious Cycle of Inequality

4 An Example of Inequality: Appalachian Poverty
4.1 Causes of Appalachian Poverty
4.2 Effects of Appalachian Poverty

Conclusion: Possible Ways Out of Inequality

Appendix
A) Percent Distribution of Reasons for Not Voting
B) Types of Residence by Family Income

Bibliography

List of Illustrations

Figure 1: Average After-Tax Income by Income Group, 1979-2007

Figure 2: Percentage of Children Attending College by Family Income in 2009

Figure 3: Reported Votes in Percent of Those Over 18 in the Elections of Nov. 2010 by Family Income

Figure 4: Distance of Travelling to Work Figure 5: The Vicious Cycle of Inequality Figure 6: Map of the Appalachian Region

List of Abbreviations

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Introduction: Inequality - A Recent Topic

If you switched on your TV on September 17th 2011 to watch the 8 o'clock news, there is no doubt you have heard about a movement called “Occupy Wall Street”. A group of people started occupying Zuccotti Park in New York’s financial district in Lower Manhattan.¹ But what is this all about? According to the movement’s website², the aim is to denounce the tremendous inequality dividing the USA’s population and to fight against the corruption and greed of the Top 1%.

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Figure 1: Average After-Tax Income by Income Group, 1979-2007³

The distribution of income among the income groups has drastically changed over time. While the income of the bottom 99% of people increased only slightly, that of the Top 1% skyrocketed, creating a massive divergence.⁴

This is the main problem that the Occupy Wall Street movement addresses, which is not only up-to-date in the USA, but also in many other countries of the world.

Additionally, apart from income there are also other important aspects to inequality like education and health care that are required to form a bigger context, which is the goal of this thesis.

1 Definition of Inequality

To be able to examine inequality it is necessary to define what is to be understood as “inequality” in the proper context.

In general, inequality can be defined as “difference in size, degree, circumstances, etc.”⁵ or simply as the “lack of equality”.⁶

More specifically, this thesis takes a closer look at “social inequality”:

“Social inequality refers to the ways in which socially-defined categories of persons (according to characteristics such as gender, age, ‘class’ and ethnicity) are differentially positioned with regard to access to a variety of social ‘goods’, such as the labour market and other sources of income, the education and healthcare systems, and forms of political representation and participation.”⁷

2 Aspects of Inequality in the USA today

As already mentioned in its definition, social inequality is composed of a variety of aspects. In this section some of these aspects will be examined further. Though there are many viewpoints from which this can be accomplished, like a geographical or ethnical view, this work focusses on the inequality between income groups.

2.1 Education

Education is expensive. Therefore, low income students are less likely to go as far in educational attainment as their wealthier peers. A good example is the percentage of students attending college by family income.

The lower the income of a family is, the less likely its children are to attend college. This is due to the great cost of college: on average, a year at a public two-year community college adds up to about $12,000 for a commuter student if you count in lodging, transportation and other expenses.⁸ The cost for prestigious private colleges that deliver the best quality education⁹ is even higher. This means that higher education is “reserved” for those students whose parents are in the upper income brackets.

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Figure 2: Percentage of Children Attending College by Family Income in 2009

When children from low income families want to attend college they usually have to work one or more jobs to pay for their education. About 8% of full-time undergraduates work 35 hours or more¹⁰, which often has a negative effect on their college performance. It reduces their time to study, prepare classes or to visit the library. Class schedules and course choices are also negatively affected. Additionally, this makes it more likely for them to drop out of school.¹¹

These financial problems result in a great disadvantage for young people in the low income groups compared to those whose families earn more.

2.2 Health Care

Recently, the health care system of the USA has undergone a profound change. The “Patient Protection and Affordable Care Act” (PPACA) was signed by President Barack Obama on March 23, 2010.¹² By these amendments, health insurance will be made available to 32 million more American residents. A federal social insurance program called “Medicaid” will be at the disposal of all Americans up to 133% of the federal poverty level. Additionally, subsidies for insurance premiums of lower income citizens will be provided. Businesses will receive financial incentives to offer health care benefits to their staff. These are only a few of the many changes.¹³

Nevertheless, an estimated 23 million residents¹⁴ will still not be able to get insurance because they are not eligible for the Medicaid program or feel it is still too expensive for them.¹⁵ Many low income families and individuals will be forced to spend about 10% percent of their income on health insurance.¹⁶ This may create new financial problems for America’s poor if no other measures to help low income citizens acquire health insurance are taken. These people are likely to keep accumulating medical debt.¹⁷

Additionally, health care is more expensive in the USA than in any other country in the world. In 2008, the per capita expenditures on health were as high as 7,164 PPP int. $.¹⁸ This nourishes the disparities in access to health care between the income groups.

In conclusion, quality health care is not affordable for everyone in the USA; unlike the wealthy who enjoy a high standard of medical care. Though the PPACA is a decent start at changing this, there is still a lot of work to be done.

2.3 Political Participation and Representation

Inequality in the USA is also apparent if you have a look at who is able to attain political office and elect representatives that reflect the majority of Americans.

In November 2010 elections for the Senate and the House of Representatives took place.¹⁹ The reported votes grouped by family income show drastically that those who have less income often do not exercise their right to vote. As result, political decisions are mostly based on the opinions of the wealthy.

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Figure 3: Reported Votes in Percent of Those Over 18 in the Elections of Nov. 2010 by Family Income

But why is that so? The main reason for not voting is the same for all income groups: they were simply too busy and could not fit it into their schedule. Also, the second most named reason for not voting, independently from income, is that they were not interested in voting.

For those who have an annual income of less than $ 40,000 an illness or disability is often what keeps them from voting. Additionally, transportation problems were named approximately 5.5 times more frequently by them than by those in the higher income groups.

Health and transportation problems have less impact on the voting behavior of those who earn more than that. More often, people from these income groups stated that their reason for not voting was that they were out of town or just forgot about it.²⁰

On the whole, serious economic and medical reasons keep low income citizens from voting, whereas more personal reasons “hinder” the wealthier ones.

[...]

¹ Cf. BBC 2011

² http://occupywallst.org/

³ Program on Inequality and the Common Good 2011

⁴ Cf. Schutz 2011, p.139

⁵ Oxford University Press 2011

⁶ Ibid.

⁷ CEELBAS 2009

⁸ Cf. American Council on Education n.d.

⁹ Cf. Schutz, p.129

¹⁰ Cf. Perna 2010

¹¹ Cf. Orszag / Orzag / Whitmore 2001

¹² Cf. U.S. Department of Health & Human Services 2010

¹³ Cf. Doctors for Global Health 2010

¹⁴ Cf. Congressional Budget Office 2010

¹⁵ Cf. Trumbull 2010

¹⁶ Cf. Doctors for Global Health 2010

¹⁷ Cf. Prinzel 2011

¹⁸ Cf. WHO 2011

¹⁹ Cf. Gill 2010

²⁰ See Appendix p. V