While in developed nationspoverty is often seen as either a personal or a structural defect, in developing nations
the issue of poverty is more profound due to the lack of governmental
funds. Some theories on poverty in the developing world focus on cultural
characteristics as a retardant of further development. Other theories
focus on social and political aspects that perpetuate poverty;
perceptions of the poor have a significant impact on the design and
execution of programs to alleviate poverty.
When it comes to poverty in the United States,
there are two main lines of thought. The most common line of thought
within the U.S. is that a person is poor because of personal traits.
These traits in turn have caused the person to fail. Supposed traits
range from personality characteristics, such as laziness, to educational
levels. Despite this range, it is always viewed as the individual's
personal failure not to climb out of poverty. This thought pattern stems
from the idea of meritocracy
and its entrenchment within U.S. thought. Meritocracy, according to
Katherine S. Newman is "the view that those who are worthy are rewarded
and those who fail to reap rewards must also lack self-worth."
This does not mean that all followers of meritocracy believe that a
person in poverty deserves their low standard of living. Rather the
underlying ideas of personal failure show in the resistance to social
and economic programs such as welfare; a poor individual's lack of
prosperity shows a personal failure and should not be compensated (or
justified) by the state.
Poverty as a structural failing
Rank, Yoon, and Hirschl (2003)
present a contrary argument to the idea that personal failings are the
cause of poverty. The argument presented is that poverty in the United
States is the result of "failings at the structural level."
Key social and economic structural failings which contribute heavily to
poverty within the U.S. are identified in the article. The first is a
failure of the job market to provide a proper number of jobs which pay
enough to keep families out of poverty. Even if unemployment is low, the
labor market may be saturated with low-paying, part-time work that
lacks benefits (thus limiting the number of full-time, good paying
jobs). Rank, Yoon and Hirschl examined the Survey of Income and Program Participation
(SIPP), a longitudinal study on employment and income. Using the 1999
official poverty line of $17,029 for a family of four, it was found that
9.4% of persons working full-time and 14.9% of persons working at least
part-time did not earn enough annually to keep them above the poverty
line.
One study
showed that 29% of families in The United States could go six months or
longer during a hardship with no income. Over 50% of respondents said
around two months with no income and another 20% said they could not go
longer than two weeks.
Low minimum wage, combined with part-time jobs which offer no benefits,
have contributed to the labor market's inability to produce enough jobs
which can keep a family out of poverty is an example of an economic
structural failure.
Rank, Yoon and Hirschl point to the minimal amount of social safety nets
found within the U.S. as a social structural failure and a major
contributor to poverty in the U.S. Other industrialized nations devote
more resources to assisting the poor than the U.S.
As a result of this difference poverty is reduced in nations which
devote more to poverty reduction measure and programs. Rank et al. use a
table to drive this point home. The table shows that in 1994, the
actual rate of poverty (what the rate would be without government
interventions) in the U.S. was 29%. When compared to actual rates in
Canada (29%), Finland (33%), France (39%), Germany (29%), the Netherlands (30%), Norway (27%), Sweden (36%) and the United Kingdom
(38%), the United States rate is low. But when government measures and
programs are included, the rate of reduction in poverty in the United
States is low (38%). Canada
and the United Kingdom had the lowest reduction rates outside of the
U.S. at 66%, while Sweden, Finland and Norway had reduction rates
greater than 80%.
Additionally, filial responsibility laws are usually not enforced, resulting in parents of adult children remaining more impoverished than otherwise.
Causes of poverty in developing nations
Poverty as cultural characteristics
Development plays a central role to poverty reduction in third world
countries. Some authors feel that the national mindset itself plays a
role in the ability of a country to develop and to thus reduce poverty. Mariano Grondona (2000)
outlines twenty "cultural factors" which, depending on the culture's
view of each, can be indicators as to whether the cultural environment
is favorable or resistant to development. In turn Lawrence E. Harrison (2000) identifies ten "values" which, like Grondona's factors, can be indicative of the nation's developmental environment. Finally, Stace Lindsay (2000)
claims the differences between development-prone and
development-resistant nations is attributed to mental models (which,
like values, influence the decisions humans make). Mental models are
also cultural creations. Grondona, Harrison and Lindsay all feel that
without development-orientated values and mindsets, nations will find it
difficult if not impossible to develop efficiently, and that some sort
of cultural change will be needed in these nations in order to reduce
poverty.
In "A Cultural Typology of Economic Development", from the book Culture Matters,
Mariano Grondona claims development is a matter of decisions. These
decisions, whether they are favorable to economic development or not,
are made within the context of culture. All cultural values considered
together create "value systems". These systems heavily influence the way
decisions are made as well as the reactions and outcomes of said
decisions. In the same book, Stace Lindsay's chapter claims the
decisions individuals make are a result of mental models. These mental
models influence all aspects of human action. Like Grondona's value
systems, these mental models which dictate a nations stance toward
development and hence its ability to deal with poverty.
Grondona presents two ideal value systems (mental models), one of which has values only favoring development, the other only with value which resist development.
Real value systems fluctuate and fall somewhere between the two poles,
but developed countries tend to bunch near one end, while undeveloped countries
bunch near the other. Grondona goes on to identify twenty cultural
factors on which the two value systems stand in opposition. These
factors include such things as the dominant religion; the role of the
individual in society; the value placed on work; concepts of wealth,
competition, justice and time; and the role of education. In "Promoting
Progressive Cultural Change", also from Culture Matters, Lawrence
E. Harrison identifies values, like Grondona's factors, which differ
between "progressive" cultures and "static" cultures. Religion, value of
work, overall justice and time orientation are included in his list,
but Harrison also adds frugality and community as important factors.
Stace Lindsay also presents "patterns of thought" which differ
between nations that stand at opposite poles of the developmental scale.
Lindsay focuses more on economic aspects such as the form of capital
focused upon and market characteristics. Key themes which emerge from
these lists as characteristic of developmental cultures are: trust in
the individual with a fostering of individual strengths; the ability for
free thinking in an open, safe environment; importance of
questioning/innovation; law is supreme and holds the power; future
orientated time frame with an emphasis on achievable, practical goals;
meritocracy; an autonomous mindset within the larger world; strong work
ethic is highly valued and rewarded; a microeconomic focus; and a value
that is non-economic, but not anti-economic, which is always wanting.
Characteristics of the ideal non-developmental value system are:
suppression of the individual through control of information and
censorship; present/past time orientation with emphasis on grandiose,
often unachievable, goals; macroeconomic
focus; access to leaders allowing for easier and greater corruption;
unstable distribution of law and justice (family and its connections
matter most); and a passive mindset within the larger world.
Grondona, Harrison, and Lindsay all feel that at least some
aspects of development-resistant cultures need to change in order to
allow under-developed nations (and cultural minorities within developed
nations) to develop effectively. According to their argument, poverty is
fueled by cultural characteristics within under-developed nations, and
in order for poverty to be brought under control, said nations must move
down the development path.
Poverty as a label
Various theorists believe the way poverty is approached, defined, and thus thought about, plays a role in its perpetuation. Maia Green (2006)
explains that modern development literature tends to view poverty as
agency filled. When poverty is prescribed agency, poverty becomes
something that happens to people. Poverty absorbs people into itself and
the people, in turn, become a part of poverty, devoid of their human
characteristics. In the same way, poverty, according to Green, is viewed
as an object in which all social relations (and persons involved) are
obscured. Issues such as structural failings (see earlier section),
institutionalized inequalities, or corruption may lie at the heart of a
region's poverty, but these are obscured by broad statements about
poverty. Arjun Appadurai
writes of the "terms of recognition" (drawn from Charles Taylor's
'points of recognition'), which are given the poor and are what allows
poverty to take on this generalized autonomous form.
The terms are "given" to the poor because the poor lack social and
economic capital, and thus have little to no influence on how they are
represented and/or perceived in the larger community. Furthermore, the
term "poverty" is often used in a generalized matter. This further
removes the poor from defining their situation as the broadness of the
term covers differences in histories and causes of local inequalities.
Solutions or plans for reduction of poverty often fail precisely because
the context of a region's poverty is removed and local conditions are
not considered.
The specific ways in which the poor and poverty are recognized
frame them in a negative light. In development literature, poverty
becomes something to be eradicated, or, attacked.
It is always portrayed as a singular problem to be fixed. When a
negative view of poverty (as an animate object) is fostered, it can
often lead to an extension of negativity to those who are experiencing
it. This in turn can lead to justification of inequalities through the
idea of the deserving poor. Even if thought patterns do not go as far as
justification, the negative light poverty is viewed in, according to
Appadurai, does much to ensure little change in the policies of
redistribution.
Poverty as restriction of opportunities
The
environment of poverty is one marked with unstable conditions and a
lack of capital (both social and economical) which together create the
vulnerability characteristic of poverty.
Because a person's daily life is lived within the person's environment,
a person's environment determines daily decisions and actions based on
what is present and what is not. Dipkanar Chakravarti argues that the
poor's daily practice of navigating the world of poverty generates a
fluency in the poverty environment but a near illiteracy in the
environment of the larger society. Thus, when a poor person enters into
transactions and interactions with the social norm, that person's
understanding of it is limited, and thus decisions revert to decisions
most effective in the poverty environment. Through this a sort of cycle
is born in which the "dimensions of poverty are not merely additive, but
are interacting and reinforcing in nature."
According to Arjun Appadurai (2004),
the key to the environment of poverty, which causes the poor to enter
into this cycle, is the poor's lack of capacities. Appardurai's idea of
capacity relates to Albert Hirschman's ideas of "voice" and "exit" which
are ways in which people can decline aspects of their environment; to
voice displeasure and aim for change or to leave said aspect of
environment.
Thus, a person in poverty lacks adequate voice and exit (capacities)
with which they can change their position. Appadurai specifically deals
with the capacity to aspire and its role in the continuation of poverty
and its environment. Aspirations are formed through social life and its
interactions. Thus, it can be said, that one's aspirations are
influenced by one's environment. Appadurai claims that the better off
one is, the more chances one has to not only reach aspirations but to
also see the pathways which lead to the fulfillment of aspirations. By
actively practicing the use of their capacity of aspiration the elite
not only expand their aspiration horizon but also solidify their ability
to reach aspirations by learning the easiest and most efficient paths
through said practice. On the other hand, the poor's horizon of
aspiration is much closer and less steady than that of the elite.
Thus, the capacity to aspire requires practice, and, as
Chakravarti argues, when a capacity (or decision making process) is not
refined through practice it falters and often fails. The unstable life
of poverty often limits the poor's aspiration levels to those of
necessity (such as having food to feed ones family) and in turn
reinforces the lowered aspiration levels (someone who is busy studying,
instead of looking for ways to get enough food, will not survive long in
the poverty environment). Because the capacity to aspire (or lack
thereof) reinforces and perpetuates the cycle of poverty, Appadurai
claims that expanding the poor's aspiration horizon will help the poor
to find both voice and exit. Ways of doing this include changing the
terms of recognition (see previous section) and/or creating programs
which provide the poor with an arena in which to practice capacities. An
example of one such arena may be a housing development built for the
poor, by the poor. Through this, the poor are able to not only show
their abilities but to also gain practice dealing with governmental
agencies and society at large. Through collaborative projects, the poor
are able to expand their aspiration level above and beyond tomorrow's
meal to the cultivation of skills and the entrance into the larger
market.
Affluence refers to an individual's or household's economical and financial advantage in comparison to others. It may be assessed through either income or wealth.
In absolute terms affluence is a relatively widespread phenomenon
in the United States, with over 30% of households having an income
exceeding $100,000 per year and over 30% of households having a net
worth exceeding $250,000, as of 2019.
However, when looked at in relative terms, wealth is highly
concentrated: the bottom 50% of Americans only share 2% of total
household wealth while the top 1% hold 35% of that wealth.
In the United States, as of 2019, the median household income is
$60,030 per year and the median household net worth is $97,300, while
the mean household income is $89,930 per year and the mean household net
worth is $692,100.
Annual income of U.S. families is near its highest throughout the 35-64 age group.
Accumulated net worth of U.S. families peaks in the 65-74 year age group.
While income is often seen as a type of wealth in colloquial language
use, wealth and income are two substantially different measures of
economic prosperity. Wealth is the total value of net possessions of an
individual or household, while income is the total inflow of monetary
assets over a given time period. Hence the change in wealth over that
time period is equal to the income minus the expenditures in that
period. Income is a so-called "flow" variable, while wealth is a so-called "stock" variable.
Income as a metric
Breakdowns of individuals and households with incomes exceeding $60,000 as of 2005The image contains several charts related to U.S. wealth inequality. While U.S. net worth roughly doubled from 2000 to 2016, the gains went primarily to the wealthy.
Income is commonly used to measure affluence, although this is a relative indicator: a middle class
person with a personal income of $77,500 annually and a billionaire may
both be referred to as affluent, depending on reference groups. An
average American with a median income of $32,000 ($39,000 for those employed full-time between the ages of 25 and 64)
when used as a reference group would justify the personal income in the
tenth percentile of $77,500 being described as affluent, but if this earner were compared to an executive of a Fortune 500 company, then the description would not apply.Accordingly, marketing firms and investment houses classify those with household incomes exceeding $250,000 as mass affluent, while the threshold upper class is most commonly defined as the top 1% with household incomes commonly exceeding $525,000 annually.
According to the U.S. Census Bureau, 42% of U.S. households have two income earners, thus making households' income levels higher than personal income levels; the percent of married-couple families with children where both parents work is 59.1%.
In 2005, the economic survey revealed the following income distribution for households and individuals:
The top 5% of individuals had six-figure incomes (exceeding $100,000); the top 10% of individuals had incomes exceeding $75,000;
The top 5% of households, three quarters of whom had two income
earners, had incomes of $166,200 (about 10 times the 2009 US minimum
wage, for one income earner, and about 5 times the 2009 US minimum wage
for two income earners) or higher, with the top 10% having incomes well in excess of $100,000.
The top 0.12% of households had incomes exceeding $1,600,000 annually.
Households may also be differentiated among each other, depending on
whether or not they have one or multiple income earners (the high female participation in the economy means that many households have two working members). For example, in 2005 the median household income for a two income earner households was $67,000 while the median income for an individual employed full-time with a graduate degree was in excess of $60,000, demonstrating that nearly half of individuals with a graduate degree have earnings comparable with most dual income households.
By another measure – the number of square feet per person in the
home – the average home in the United States has more than 700 square
feet per person, 50% – 100% more than in other high-income countries
(though this indicator may be regarded as an accident of geography,
climate and social preference, both within the US and beyond it) but
this metric indicates even those in the lowest income percentiles enjoy
more living space than the middle classes in most European nations. Similarly ownership levels of 'gadgets' and access to amenities are exceptionally high compared to many other countries.
Overall, the term affluent may be applied to a variety of
individuals, households, or other entities, depending on context. Data
from the U.S. Census Bureau serves as the main guideline for defining
affluence. U.S. government data not only reveal the nation's income distribution but also the demographic characteristics of those to whom the term "affluent", may be applied.
Wealth
Wealth in the United States is commonly measured in terms of net worth, which is the sum of all assets, including the market value of real estate, like a home, minus all liabilities. The United States is the wealthiest country in the world.
U.S. Household and non-profit Net Worth 1959 – 2016, nominal and real (2016 dollars). It reached a record $93trillion in Q4 2016.
For example, a household in possession of an $800,000 house, $5,000
in mutual funds, $30,000 in cars, $20,000 worth of stock in their own
company, and a $45,000 IRA would have assets totaling $900,000. Assuming
that this household would have a $250,000 mortgage, $40,000 in car
loans, and $10,000 in credit card debt, its debts would total $300,000.
Subtracting the debts from the worth of this household's assets (900,000
− $300,000 = $600,000), this household would have a net worth of
$600,000. Net worth can vary with fluctuations in value of the
underlying assets.
As one would expect, households with greater income often have
the highest net worths, though high income cannot be taken as an always
accurate indicator of net worth. Overall the number of wealthier
households is on the rise, with baby boomers hitting the highs of their careers. In addition, wealth is unevenly distributed, with the wealthiest 25% of US households owning 87% of the wealth in the United States, which was $54.2 trillion in 2009.
U.S. household and non-profit organization net worth rose from
$44.2 trillion in Q1 2000 to a pre-recession peak of $67.7 trillion in
Q3 2007. It then fell $13.1 trillion to $54.6 trillion in Q1 2009 due to
the subprime mortgage crisis. It then recovered, rising consistently to $86.8 trillion by Q4 2015. This is nearly double the 2000 level.
Mechanisms to gain wealth
Assets
are known as the raw materials of wealth, and they consist primarily of
stocks and other financial and non-financial property, particularly
homeownership.
While tangible assets are unequally distributed, financial assets are
much more unequal. In 2004, the top 1% controlled 50.3% of the financial
assets while the bottom 90% held only 14.4% of the total US financial
assets.
These discrepancies exist because the many wealth building tools
established by the Federal Government work better for high earners.
These include 401k plans, 403b plans, and IRAs.
Traditional IRAs, 401k and 403b plans are tax shelters created for
working individuals. These plans allow for tax sheltered (or pre-tax)
contributions of earned income directly to tax sheltered savings
accounts. Annual contributions are capped to ensure that high earners
cannot enjoy the tax benefit disproportionately. The Roth IRA is another tool that can help create wealth in the working and middle classes.
Assets in Roth IRAs grow tax free; interests, dividends, and
capital gains are all exempt from income taxes. Contributions to Roth
IRAs are limited to those with annual incomes less than the threshold
established yearly by the IRS. The benefits of these plans, however, are
only available to workers and families whose incomes and expenses allow
them excess funds to commit for a long period, typically until the
investor reaches age 59½. The effect of these tools are further limited
by the contribution limits placed on them.
Affluence and economic standing within society are often expressed in
terms of percentile ranking. The economic ranking is conducted either
in terms of giving lower thresholds for a designated group (e.g. the top
5%, 10%, 15%, etc.) or in terms of the percentage of
households/individuals with incomes above a certain threshold (e.g.
above $75,000, $100,000, $150,000, etc.). The table below presents 2006
income data in terms of the lower thresholds for the given percentages
(e.g. the top 25.6% of households had incomes exceeding $80,000,
compared to $47,000 for the top quarter of individuals).
Household income changes over time, with income gains being substantially larger for the upper percentiles than for the lower percentiles. All areas of the income strata have seen their incomes rise since the late 1960s, especially during the late 1990s.
The overall increase in household income is not the result of an
increase in the percentage of households with more than one income
earner. In fact, the lowest 50% population have become very poorsharing just 2% of wealth in spite of modern social practice of more
than one working person, mostly women in the household. But the myth is
highly prevalent and promoted by media. The standard of living of a
1960s single working parent can only be afforded today when both parents
work due to disproportionate distribution of wealth today:
In about 2003, Elizabeth Warren
said that "the typical middle-class household in the United States is
no longer a one-earner family, with one parent in the workforce and one
at home full-time. Instead, the majority of families with small children
now have both parents rising at dawn to commute to jobs so they can
both pull in paychecks... Today the median income for a fully employed
male is ...nearly $800 less than his counterpart of a generation ago.
The only real increase in wages for a family has come from the second
paycheck earned by a working mother."
Two income-earner households are more common among the top quintile
of households than the general population: 2006 U.S. Census Bureau data
indicates that over three quarters, 76%, of households in the top
quintile, with annual incomes
exceeding $91,200, had two or more income earners compared to just 42%
among the general population and a small minority in the bottom three quintiles. As a result, much of the rising income
inequity between the upper and lower percentiles can be explained
through the increasing percentage of households with two or more
incomes.
Data
2003
2000
1997
1994
1991
1988
1985
1982
1979
1976
1973
1970
1967
20th percentile
$17,984
$19,142
$17,601
$16,484
$16,580
$17,006
$16,306
$15,548
$16,457
$15,615
$15,844
$15,126
$14,002
Median (50th)
$43,318
$44,853
$42,294
$39,613
$39,679
$40,678
$38,510
$36,811
$38,649
$36,155
$37,700
$35,832
$33,338
80th percentile
$86,867
$87,341
$81,719
$77,154
$74,759
$75,593
$71,433
$66,920
$68,318
$63,247
$64,500
$60,148
$55,265
95th percentile
$154,120
$155,121
$144,636
$134,835
$126,969
$127,958
$119,459
$111,516
$111,445
$100,839
$102,243
$95,090
$88,678
Source: U.S. Census Bureau (2004): "Income, Poverty, and Health
Insurance Coverage in the United States: 2003", p. 36 et seq. All
figures are inflation-adjusted and given in 2003 dollars.
Income distribution over time
Relative
income growth, organized by percentile classes, normalized to 1970
levels. Graph accounts for both income growth, and the hidden decline in
the progressivity of the tax code at the top, the wealthiest earners
having seen their effective tax rates steadily fall.
Same data as adjacent chart, but plotted on logarithmic scale to show absolute dollar amounts.
According to the Congressional Budget Office,
between 1979 and 2007 incomes of the top 1% of Americans grew by an
average of 275%. During the same time period, the 60% of Americans in
the middle of the income scale saw their income rise by 40%. From 1992
to 2007 the top 400 income earners in the U.S. saw their income increase
392% and their average tax rate reduced by 37%. In 2009, the average income of the top 1% was $960,000 with a minimum income of $343,927.
During the economic expansion between 2002 and 2007, the income
of the top 1% grew 10 times faster than the income of the bottom 90%.
In this period 66% of total income gains went to the 1%, who in 2007 had
a larger share of total income than at any time since 1928. According to PolitiFact and others, the top 400 wealthiest Americans "have more wealth than half of all Americans combined." Inherited wealth may help explain why many Americans who have become rich may have had a "substantial head start". In September 2012, according to the Institute for Policy Studies, "over 60 percent" of the Forbes richest 400 Americans "grew up in substantial privilege".
If a family has a positive net worth then it has more wealth than
the combined net worth of over 30.6 million American families. This is
because the bottom 25% of American families have a negative combined net
worth.
Complications in interpreting income statistics
Interpreting these income statistics is complicated by several
factors: membership in the top 1% changes from year to year, the IRS
made large changes in the definition of adjusted gross income in 1987,
and numbers for particular income ranges may be distorted by outliers
(in the top segment) and failure to include transfer payments (in the
lower segments).
Regarding Income Mobility, the IRS occasionally studies income
data from actual households over time, usually over one decade. Their
results underestimate income mobility by excluding those under age 25,
the most mobile population, from their studies.
Many people
look only at annual reported income data split into income quintiles.
It is erroneous to assume that individual households remain in the same
quintile over time, just as it usually is when using aggregate data. A
majority of households in the top income quintile in one year, for
example, will have moved to a lower quintile within a decade. Three out
of four households in the top 0.01% of income will no longer be in that
small group ten years later. In summary, half of all of U.S. households
move from one income quintile to a different income quintile every
decade. And actual households who started a decade in the lowest
quintile of income, when tracked over the next ten years, will have
proportionally more income growth than actual households who started the
decade in the highest quintile of income. Thus, when comparing
income/wealth quintile distributions from different time periods,
generalizations can only be made with regards to the households in
aggregate for each quintile, and can not be made to any individual
households over the same time period (i.e. assuming the wealth value has
been appropriately adjusted for differences in time, one cannot infer
that a decrease in total wealth percentage for one quintile over time
means that the households from that quintile have lost wealth as
individuals, but only that total wealth percentage has decreased for
those in that quintile at the time of measurement).
Top 20% income vs. the bottom 20% income households:
The average number of people with jobs in a top income quintile
household is two, while a majority of bottom-income-quintile households
have no-one employed.
If there are two adult income earners in a household who are
married, their incomes are combined on tax forms. This is very common
among top-quintile-income households. The lowest-quintile households,
however, include a lot more single-person households, or two unmarried
working adults living together and sharing expenses, but reporting their
incomes to the IRS as if they were two separate households.
75%...80%
of actual income for bottom-quintile-households consists of specific
transfer payments from social or relief programs (aka "welfare" and
other benefits), which payments are not included in IRS data as income.
The top income quintile gets a very small percentage of their actual
income from transfer payments.
The IRS
warns against comparisons of pre-1987 and post-1987 income data due to
significant changes in the definition of adjusted gross income (AGI)
that made top-quintile households appear to have large reported income
gains, when in fact there was no change to their income at all. In
addition to AGI changes,
large marginal tax rate reductions during the Reagan Administration
caused another large change in tax reporting. A lot of corporate income
formerly reported on corporate tax returns
was switched to lower-tax-rate individual tax returns (as Subchapter S
corporations). This reporting change appeared to boost top-quintile
income, when in fact their incomes had not changed. As a result, the top
income quintile for households today includes a lot of corporate income
previously reported in corporate tax returns, while Subchapter S
corporations that lose money, are likely to be included in the
bottom-income-quintile households. Income comparisons that compare
pre-1987 to post-1987 income, are very common, but they are also biased,
according to the IRS, and should be ignored.
Impact of age and experience: people that are older and have more
experience, tend to have considerably larger incomes than younger and
inexperienced workers. Normalizing for age and experience is rarely an
effective statistical compensation, as each elderly citizen began as
inexperienced.
The average personal wealth of people in the top 1% is more than a thousand times that of people in bottom 50%.
The logarithmic scale shows how wealth has increased for all percentile groups, though moreso for wealthier people.
According to an analysis that excludes pensions and social security,
the richest 1% of the American population in 2007 owned 34.6% of the
country's total wealth, and the next 19% owned 50.5%. Thus, the top 20%
of Americans owned 85% of the country's wealth and the bottom 80% of the
population owned 15%. Financial inequality was greater than inequality
in total wealth, with the top 1% of the population owning 42.7%, the
next 19% of Americans owning 50.3%, and the bottom 80% owning 7%.
However, according to the federal reserve, "For most households,
pensions and Social Security are the most important sources of income
during retirement, and the promised benefit stream constitutes a sizable
fraction of household wealth" and "including pensions and Social
Security in net worth makes the distribution more even".
When including household wealth from pensions and social security, the
richest 1% of the American population in 1992 owned 16% of the country's
total wealth, as opposed to 32% when excluding pensions and social
security.
After the Great Recession
which started in 2007, the share of total wealth owned by the top 1% of
the population grew from 34.6% to 37.1%, and that owned by the top 20%
of Americans grew from 85% to 87.7%. The Great Recession also caused a
drop of 36.1% in median household wealth but a drop of only 11.1% for
the top 1%.
Economists and related experts have described America's growing income inequality as "deeply worrying", unjust, a danger to democracy/social stability, and a sign of national decline. Yale professor Robert Shiller,
who was among three Americans who won the Nobel prize for economics in
2013, said after receiving the award, "The most important problem that
we are facing now today, I think, is rising inequality in the United
States and elsewhere in the world."
Changes in wealth
1989–2001
When
observing the changes in the wealth among American households, one can
note an increase in wealthier individuals and a decrease in the number
of poor households, while net worth increased most substantially in
semi-wealthy and wealthy households. Overall the percentage of
households with a negative net worth (more debt than assets) declined
from 9.5% in 1989 to 4.1% in 2001.
The percentage of net worths ranging from $500,000 to one million doubled while the percentage of millionaires tripled.
From 1995 to 2004, there was tremendous growth among household wealth,
as it nearly doubled from $21.9 trillion to $43.6 trillion, but the
wealthiest quartile of the economic distribution made up 89% of this
growth. During this time frame, wealth became increasingly unequal, and the wealthiest 25% became even wealthier.
According to U.S. Census Bureau statistics, this 'upward shift'
is most likely the result of a booming housing market which caused
homeowners to experience tremendous increases in home equity.
Life-cycles have also attributed to the rising wealth among Americans.
With more and more baby-boomers reaching the climax of their careers and
the middle-aged population making up a larger segment of the population
now than ever before, more and more households have achieved
comfortable levels of wealth.
Zhu Xiao Di (2004) notes, that household wealth usually peaks around
families headed by people in their 50s, and as a result, the baby boomer
generation reached this age range at the time of the analysis.
After 2007
Household
net worth fell from 2007 to 2009 by a total of $17.5 trillion or 25.5%.
This was the equivalent loss of one year of GDP.
By the fourth quarter of 2010, the household net worth had recovered by a
growth of 1.3 percent to a total of $56.8 trillion. An additional
growth of 15.7 percent is needed just to bring the value to where it was
before the recession started in December 2007. In 2014 a record breaking net worth of $80.7 trillion was achieved.
According to the University of Chicago, the top 1% is primarily made
up of owner-managers of small to medium-sized businesses of which the
most profitable are physician's and dentist's offices, professional and
technical services, specialty trade contracting, legal services. The
typical business has $7 million in sales and 57 employees. With a 10%
profit margin, this will place two business partners in the top 1%.
The remainder of the top 1% tends to be the classic professions:
medicine, dentistry, law, engineering, finance, and corporate executive
management.
A correlation has been shown between increases in income and
increases in worker satisfaction. Increasing worker satisfaction,
however, is not solely a result of the increase in income: workers in
more complex and higher level occupations tend to have attained higher levels of education and thus are more likely to have a greater degree of autonomy in the workplace.
Additionally, higher level workers with advanced degrees are hired to
share their personal knowledge, to conceptualize, and to consult.
Higher-level workers typically suffer less job alienation and reap not
only external benefits in terms of income from their jobs, but also
enjoy high levels of intrinsic motivation and satisfaction.
In the United States, the highest earning occupational group is referred to as white collar professionals.
Individuals in this occupational classification tend to report the
highest job satisfaction and highest incomes. Defining income based on
title of a profession can be misleading, given that a professional title
may indicate the type of education received, but does not always
correlate with the actual day to day income-generating endeavors that
are pursued.
Some sources cite the profession of physician in the United States as the highest paying, Physician (MD and DO) and Dentist (DMD and DDS)
compensation ranks as the highest median annual earnings of all
professions. Median annual earnings ranged from $149,310 for general
dentists and $156,010 for family physicians to $321,686 for anesthesiologists. Surgeons post a median annual income of $282,504.
However, the annual salary for Chief Executive Officer (C.E.O.) is
projected quite differently based on source: Salary.com reports a median
salary of $634,941, while the U.S. Department of Labor in May 2004 reported the median as $140,350.
This is primarily due to a methodological difference in terms of which
companies were surveyed. Overall annual earnings among the nation's top
25 professions ranged from the $70,000s to the $300,000s.
In addition to physicians, lawyers, physicists, and nuclear
engineers were all among the nation's 20 highest paid occupations with
incomes in excess of $78,410. Some of the other occupations in the high five-figure range were economists with a median of $72,780, mathematicians with $81,240, financial managers with $81,880, and software publishers with median annual earnings of $73,060.
The median annual earnings of wage-and-salary pharmacists in May 2006
were $94,520. The median annual earnings of wage-and-salary engineers in
November 2011 were $90,000. The middle 50 percent earned between
$83,180 and $108,140 a year (as in the Occupational Outlook Handbook,
2008–09 Edition by the U.S. Bureau of Labor Statistics).
Ivy-Plus
admissions rates vary with the income of the students' parents, with
the acceptance rate of the top 0.1% income percentile being almost twice
as much as other students.
Educational attainment plays a major factor in determining an
individual's economic disposition. Personal income varied greatly
according to an individual's education, as did household income.
Incomes for those employed, full-time, year-round and over the
age of twenty-five ranged from $20,826 ($17,422 if including those who
worked part-time)
for those with less than a ninth grade education to $100,000 for those
with professional degrees ($82,473 if including those who work part-time). The median income for individuals with doctorates was $79,401 ($70,853 if including those who work part-time).
These statistics reveal that the majority of those employed
full-time with professional or doctoral degrees are among the overall
top 10% (15% if including those who work part-time) of income earners.
Of those with a master's degree, nearly 50% were among the top quarter
of income earners (top third if including those who work part-time).
Religion
Individuals
of a broad variety of religious backgrounds have become wealthy in
America. However, the majority of these individuals follow Mainline Protestant denominations; Episcopalians and Presbyterians are most prevalent. According to a 2016 study by the Pew Research Center, Jewish
again ranked as the most financially successful religious group in the
United States, with 44% of Jews living in households with incomes of at
least $100,000, followed by Hindu (36%), Episcopalians (35%), and Presbyterians (32%). Owing to their numbers, more Catholics (13.3 million) reside in households with a yearly income of $100,000 or more than any other religious group.
According to the same study there is a correlation between education and income, about 77% of American Hindus have an undergraduate degree and according to a study in 2020, they are earning the highest with median income $137,000, followed by Jews (59%), Episcopalians (56%), and Presbyterians (47%).
Percent of households with six figure incomes and individuals with incomes in the top 10%, exceeding $77,500
Recent U.S. Census Bureau publications indicate a strong correlation between race and affluence. In the top household income quintile (households with incomes exceeding $91,200), Asian Americans and Whites were over represented, whereas Hispanics and African Americans were underrepresented.
In 2006, the household income for Asian Americans was, at $61,094, by far the highest, exceeding that of Whites ($48,554) by 26%.
Over a quarter, 27.5%, of Asian American households had incomes
exceeding $100,000, and another 40% had incomes of over $75,000.
Among White households, who remained near the national median,
18.3% had six figure incomes, while 28.9% had incomes exceeding $75,000.
The percentages of households with incomes exceeding $100,000 and
$75,000 were far below the national medians for Hispanic and African
American households. Among Hispanic households, for example, only 9% had six figure incomes, and 17% had incomes exceeding $75,000. The race gap remained when considering personal income. In 2005, roughly 11% of Asian Americans and 7% of White individuals had six figure incomes, compared to 2.6% among Hispanics and 2.3% among African Americans.
The racial breakdowns of income brackets further illustrate the racial disparities associated with affluence. in 2005, 81.8% of all 114 million households were White (including White Hispanics), 12.2% were African American, 10.9% were Hispanic and 3.7% were Asian American.
While White households are always near the national median
due to Whites being by far the most prevalent racial demographic, the
percentages of minority households with incomes exceeding $100,000
strayed considerably from their percentage of the overall population: Asian Americans,
who represent the smallest surveyed racial demographic in the overall
population, were found to be the prevalent minority among six figure
income households.
Among the nearly twenty million households with six figure incomes, 86.9% were White, 5.9% were Asian American, 5.6% were Hispanic and 5.5% were African American. Among the general individual population with earnings, 82.1% were White, 12.7% were Hispanic, 11.0% were African American and 4.6% were Asian American.
Of the top 10% of income earners, those nearly 15 million
individuals with incomes exceeding $77,500, Whites and Asians were once
again over-represented with the percentages of African Americans and
Hispanics trailing behind considerably. Of the top 10% of earners, 86.7%
were White.
Asian Americans were the prevalent minority, constituting 6.8% of top
10% income earners, nearly twice the percentage of Asian Americans among
the general population.
Hispanics, who were the prevalent minority in the general population of income earners, constituted only 5.2% of those in the top 10%, with African Americans being the least represented with 5.1%.
Race
Overall median
High school
Some college
College graduate
Bachelor's degree
Master's degree
Doctoral degree
Total population
All, age 25+
32,140
26,505
31,054
49,303
43,143
52,390
70,853
Full-time workers, age 25–64
39,509
31,610
37,150
56,027
50,959
61,324
79,292
White alone
All, age 25+
33,030
27,311
31,564
49,972
43,833
52,318
71,268
Full-time workers, age 25–64
40,422
32,427
38,481
56,903
51,543
61,441
77,906
Asian alone
All, age 25+
36,152
25,285
29,982
51,481
42,466
61,452
69,653
Full-time workers, age 25–64
42,109
27,041
33,120
60,532
51,040
71,316
91,430
African American
All, age 25+
27,101
22,379
27,648
44,534
41,572
48,266
61,894
Full-time workers, age 25–64
32,021
26,230
32,392
47,758
45,505
52,858
N/A
Hispanic or Latino
All, age 25+
23,613
22,941
28,698
41,596
37,819
50,901
67,274
Full-time workers, age 25–64
27,266
26,461
33,120
46,594
41,831
53,880
N/A
Source: U.S. Census Bureau, 2006
Status and stratification
Economic well-being is often associated with high societal status, yet income and economic compensation
are a function of scarcity and act as only one of a number of
indicators of social class. It is in the interest of all of society that
open positions are adequately filled with a competent occupant enticed
to do his or her best. As a result, an occupation that requires a scarce skill, the attainment of which is often documented through an educational degree, and entrusts its occupant with a high degree of influence will generally offer high economic compensation.
To put it another way, the high income is intended to ensure that
the desired individuals obtain the necessary skills (e.g. medical or
graduate school) and complete their tasks with the necessary vigor
but differences in income may, however, be found among occupations of
similar sociological nature: the median annual earnings of a physician
were in excess of $150,000 in May 2004, compared to $95,000 for an
attorney.
Both occupations require finely tuned and scarce skill sets and both
are essential to the well-being of society, yet physicians out-earned
attorneys and other upper middle class professionals by a wide margin as their skill-sets are deemed especially scarce.
Overall, high status positions tend to be those requiring a
scarce skill and are therefore commonly far better compensated than
those in the middle of the occupational strata.
...It is essential that the duties
of the positions be performed with the diligence that their importance
requires. Inevitably, then, a society must have, first, some kind of
rewards that it can use as inducements, and, second, some way of
distributing these rewards differently according to positions. The
rewards and their distribution become part of the social order... If the
rights and perquisites of different positions in a society must be
unequal, then society must be stratified... Hence every society... must
differentiate persons... and must therefore possess a certain amount of
institutionalized inequality.
— Kingsley Davis & Wilbert E. Moore, "Some Principles of Stratification", republished in Social Class and Stratification
It is important to note that the above is an ideal type,
a simplified model of reality using optimal circumstances. In reality
other factors such as discrimination based on race, ethnicity and gender
as well as aggressive political lobbying by certain professional
organizations also influence personal income. An individual's personal
career decisions, as well as his or her personal connections within the
nation's economic institutions, are also likely to have an effect on
income, status and whether or not an individual may be referred to as affluent.
In contemporary America it is a combination of all these factors,
with scarcity remaining by far the most prominent one, which determine a
person's economic compensation. Due to higher status professions
requiring advanced and thus less commonly found skill sets (including
the ability to supervise and work with a considerable autonomy), these
professions are better compensated through the means of income, making
high status individuals affluent, depending on reference group.
While the two paragraphs above only describe the relationship
between status and personal income, household income is also often used
to infer status. As a result, the dual income phenomenon presents yet
another problem in equating affluence with high societal status. As mentioned earlier in the article, 42% of households have two or more income earners, and 76% of households with six figure incomes have two or more income earners. Furthermore, people are most likely to marry their professional and societal equals.
It therefore becomes apparent that the majority of households with incomes
exceeding the six figure mark are the result of an economic as well as
personal union between two economic equals. Today, two nurses, each
making $55,000 a year, can easily out-earn a single attorney who makes
the median of $95,000 annually.
Despite household income rising drastically through the union of two
economic equals, neither individual has advanced his or her function and
position within society. Yet the household (not the individual) may
have become more affluent, assuming an increase in household members does not offset the dual-income derived gains.
Top-level executives, high-rung politicians, heirs. Ivy League education common.
Upper class (1%)
Top-level executives, celebrities, heirs; income of $500,000+ common. Ivy league education common.
The super-rich (0.9%)
Multi-millionaires whose incomes commonly exceed $3.5 million or
more; includes celebrities and powerful executives/politicians. Ivy
League education common.
Upper middle class (15%)
Highly-educated (often with graduate degrees), most
commonly salaried, professionals and middle management with large work
autonomy.
Upper middle class (15%)
Highly-educated (often with graduate degrees)
professionals & managers with household incomes varying from the
high 5-figure range to commonly above $100,000.
The rich (5%)
Households with net worth of $1 million or more; largely in the form of home equity. Generally have college degrees.
Middle class (plurality/ majority?; ca. 46%)
College-educated workers with considerably
higher-than-average incomes and compensation; a man making $57,000 and a
woman making $40,000 may be typical.
Lower middle class (30%)
Semi-professionals and craftsmen with a roughly average standard of
living. Most have some college education and are white-collar.
Lower middle class (32%)
Semi-professionals and craftsmen with some work
autonomy; household incomes commonly range from $35,000 to $75,000.
Typically, some college education.
Working class (30%)
Clerical and most blue-collar workers whose work is
highly routinized. Standard of living varies depending on number of
income earners, but is commonly just adequate. High school education.
Working class (32%)
Clerical, pink- and blue-collar workers with often low
job security; common household incomes range from $16,000 to $30,000.
High school education.
Working class (ca. 40–45%)
Blue-collar workers and those whose jobs are highly
routinized with low economic security; a man making $40,000 and a woman
making $26,000 may be typical. High school education.
Working poor (13%)
Service, low-rung clerical and some blue-collar workers.
High economic insecurity and risk of poverty. Some high school
education.
Lower class (ca. 14–20%)
Those who occupy poorly-paid positions or rely on government transfers. Some high school education.
Underclass (12%)
Those with limited or no participation in the labor force. Reliant on government transfers. Some high school education.
The poor (ca. 12%)
Those living below the poverty line with limited to no participation
in the labor force; a household income of $18,000 may be typical. Some
high school education.
References: Gilbert, D. (2002) The American Class Structure: In An Age of Growing Inequality. Belmont, CA: Wadsworth, ISBN0534541100. (see also Gilbert Model);
Thompson, W. & Hickey, J. (2005). Society in Focus. Boston, MA: Pearson, Allyn & Bacon; Beeghley, L. (2004). The Structure of Social Stratification in the United States. Boston, MA: Pearson, Allyn & Bacon.
1 The upper middle class may also be referred to as "Professional class" Ehrenreich, B. (1989). The Inner Life of the Middle Class. NY, NY: Harper-Collins.
Extreme affluence
The wide income discrepancies within the top 1.5% of households
As of 2002, there were approximately 146,000 (0.1%) households with
incomes exceeding $1,500,000, while the top 0.01% or 11,000 households
had incomes exceeding $5,500,000. The 400 highest tax payers in the
nation had gross annual household incomes exceeding $87,000,000.
Household incomes for this group have risen more dramatically than for
any other. As a result, the gap between those who make less than one and
half million dollars annually (99.9% of households) and those who make
more (0.1%) has been steadily increasing, prompting The New York Times to proclaim that the "Richest Are Leaving Even the Rich Far Behind."
The income disparities within the top 1.5% are quite drastic.
While households in the top 1.5% of households had incomes exceeding
$250,000, 443% above the national median, their incomes were still 2200%
lower than those of the top 0.1% of households.
Wealth statistics
Family net worth
U.S. mean family net worth by percentile of net worth (1989–2007)
U.S. median family net worth by percentile of net worth (1989–2007)
The total value of all U.S. household wealth in 2000 was approximately $44 trillion. Prior to the Late-2000s recession
which began in December 2007 its value was at $65.9 trillion. After, it
plunged to $48.5 trillion during the first quarter of 2009. The total
household net worth rose 1.3% by the fourth quarter of 2009 to
$54.2 trillion, indicating the American economy is recovering.
Desert (/dɪˈzɜːrt/) in philosophy is the condition of being deserving of something, whether good or bad. It is sometimes called moral desert to clarify the intended usage and distinguish it from the dry desert biome. It is a concept often associated with justice: that good deeds should be rewarded and evil deeds punished.
Nomenclature
Both of the English words "deserve" and "desert" derive from the Old French deservir (modern French: desservir),
which has the same meaning. While "deserve" is common as a verb, the
noun result "desert" is rare in colloquial speech; it is almost
exclusively used in the phrase "just deserts" (e.g., "Although she was
not at first arrested for the crime, she later on received her just
deserts."). The alternate spelling "just desserts" is a pun on this
original term.
In ordinary usage, to deserve is to earn or merit a reward or
penalty. In moral philosophy, the additional distinction is generally
drawn that the result is morally relevant somehow. For example, a low
moral relevance example might be a person purchasing a lottery ticket
and winning the grand prize; they may be entitled to the money, and they
did pay for the ticket, but the moral connection is loose. A similar
example might be finding valuable resources such as oil or gold on
inherited land. Moderate examples might be that after working at a job,
the employee is paid, or after a well-done concert, the musician
receives a round of applause. Failing to pay for items or services (or
paying then not receiving them) would be considered a breach of contract
and expectations and has at least some moral heft. High moral
relevance examples can be more abstract and less related directly to the
actor's expectation, and often come up with punishments. For the job
example, perhaps a very valuable employee is paid their "true" worth
rather than their agreed upon salary: a bonus for someone
single-handedly providing the employer exceptional value, or their
salary is clawed back if the employee is an active negative for the
company (perhaps they are committing embezzlement). Evildoers have bad
things happen to them, even if not directly intended by a human justice
system; a freak accident that wounds or kills a criminal would be
considered by some to be some sort of deserved karmic justice.
Formulation
Desert claims may be generally expressed as: Thing X deserves Y in virtue of Z. For example, I (X) deserve a good grade on my test (Y) because I studied hard (Z); Cincinnati (X) deserves to be praised (Y) because it is a pretty city (Z). Some authors have added a further criterion, qualifying Z. That is, Agent X deserves Y in virtue of Z if X is responsible for Z (or, alternatively, if X is also deserving of Z).
Considering this stipulation, one does not deserve respect simply
because one is a human being, because one is not responsible for being a
human being (Z). Arguments such as this are contentious as they suggest
an untenability of intrinsic
desert claims—that is, claims wherein Z means simply to be X. Less
controversially, if one (X) uses steroids to win in a footrace, one is
said not to deserve to win (Y) because one is not responsible for, and
so does not deserve, one's enhanced physical abilities (Z).
Critique by John Rawls
One of the most controversial rejections of the concept of desert was made by the political philosopher John Rawls.
Rawls, writing in the mid to late twentieth century, claimed that a
person cannot claim credit for being born with greater natural
endowments (such as superior intelligence or athletic abilities), as it
is purely the result of the "natural lottery". Therefore, that person
does not morally deserve the fruits of his or her talents and/or
efforts, such as a good job or a high salary. However, Rawls was careful
to explain that, even though he dismissed the concept of moral Desert,
people can still legitimately expect to receive the benefits of their
efforts and/or talents. The distinction here lies between Desert and, in
Rawls' own words, "Legitimate Expectations".
Rawls' remarks about natural endowments provoked an often-referred response by Robert Nozick.
Nozick claimed that to treat peoples' natural talents as collective
assets is to contradict the very basis of the deontological liberalism
Rawls wishes to defend, i.e., respect for the individual and the
distinction between persons.
Nozick argued that Rawls' suggestion that not only natural talents but
also virtues of character are undeserved aspects of ourselves for which
we cannot take credit, "...can succeed in blocking the introduction of a
person's autonomous choices and actions (and their results) only by
attributing everything noteworthy about the person completely to certain
sorts of 'external' factors. So denigrating a person's autonomy and
prime responsibility for his actions is a risky line to take for a
theory that otherwise wishes to buttress the dignity and self-respect of
autonomous beings."
Nozick's critique has been interpreted in different ways. The conventional understanding of it is as a libertarian
assessment of procedural justice, which maintains that while it might
be true that people's actions are wholly or partly determined by factors
that are morally arbitrary, this is irrelevant to assignments of
distributive shares.
Individuals are self-owners with inviolable rights in their bodies and
talents, and they have the freedom to take advantage of these regardless
of whether the self-owned properties are theirs for reasons that are
morally arbitrary or not.
Others have suggested that Rawls has entirely mistaken the very logic of desert.
If justice is getting what one is due, then the basis of desert must
ultimately be undeserved. However, desert is a relational concept that
expresses a relationship between a deserved
and a basis of desert. It simply destroys the character of desert to
demand, as Rawls does, that the basis of desert be itself deserved. For
example, if we say a man deserves some primary good because of some
quality or action "Y", we can always ask, as Rawls does, "but does he
deserve 'Y'?" and so on. We then either have an infinite regress of
bases of desert or arrive at some basis, some beginning point, which the
individual cannot claim to have deserved or to be responsible for, but
only to have or have been given by nature. After all, no human being
exists causa sui;
even to reduce the basis of claims to the very narrow one of life
itself reveals Rawls' difficulty: surely no one can "deserve" or "claim
credit for" their own existence.
To demand, as Rawls does, that no just claim rest on an
undeserved base simply means that we must cease speaking about justice,
for on the basis of that demand there can never be any just claims - not
even for equality.
Rawls' analysis of justice rests on a notion of desert which violates
the concept of desert and therefore does not provide a more precise
notion of the bases of desert, but rather dissolves entirely the concept
of desert and with it justice.
The many debates over justice in political life and in philosophy
concern the actual substantive question of what are the proper bases of
desert. That is, underlying every conception of justice must be a claim of right, a positive claim of desert.
The great failing of Rawls' argument is that he provides no substantive
basis for a claim right or desert; but this failing is, paradoxically,
also the source of the great appeal or excitement about Rawls' theory.
His approach seems to avoid the difficulties of the traditional debates
and the value questions they necessarily raise and yet seems to enable
him to discuss normative questions such as justice.
Jean Hampton
Another, more unconventional interpretation of Nozick's critique is proposed by Jean Hampton.
She points out that there seems to be a subterranean assumption in
Nozick's rejection of Rawls' account of natural endowments as collective
assets. This assumption is the idea that the choices individuals make
regarding how they will use their labor and their property are ones for
which they should be held responsible. People who do not work hard and
invest imprudently should be held responsible for those choices and not
receive assistance from an egalitarian welfare state. If they do work
hard and invest well however, they should also be held responsible for
those choices and allowed to reap the benefits from their strivings.
Hampton asks the question "whether the ground of Nozick's conception of
absolute rights is not only a conception of liberty but also a
conception of moral responsibility that is […] closely associated to our
notion of liberty."
There are other political philosophers who endorse the position
Hampton outlines. Their main observation is that sometimes people who
are badly off might be so because of their own irresponsible conduct,
and the charge is that theories favoring policies of redistribution of wealth from the rich to the poor ignore this crucial point, i.e. that people might be unequally deserving because of their actions.
Consequences
Sometimes the claim is that the redistributive systems often favored by egalitarian
political theorists might have disastrous consequences in that they
promote sloth and allow free riding on the productive by the lazy. These
arguments are instrumental in their appeal to undeservingness.
They refer to the allegedly bad consequences of a redistributive social
system and do not necessarily involve any reference to the moral
worthiness of those who make greater efforts, wiser investments, and so
on.
At other times however, the argument invokes a moral ideal
holding desert valuable for its own sake. On this view, helping the
undeserving and failing to help the deserving is deemed intrinsically unfair regardless of further consequences.
For example, the charge against Rawls is that people actually might
deserve the gains flowing from their natural endowments, or at least
those they achieve by striving conscientiously.
Converse
Deserving
something generally builds from some action and what should ideally
result from it. Many people invert this process, consciously or
unconsciously. A trivial example might be "lawbreakers deserve to go to
jail", with the logical converse being "people in jail must have been lawbreakers." This may often be true but ignores the possibility of a miscarriage of justice where an entirely innocent person might be suffering. At its extremes, the converse can lead to victim blaming,
where when a terrible event happens to someone, an observer concludes
that it is merely just retribution for some misdeed in the past. The just-world hypothesis
is the worldview that "everything happens for a reason", and that
seemingly random events are actually morally fitting, if perhaps on a
delayed timescale.
Political issues
Across
the board, a number of industries are stratified across the genders.
This is the result of a variety of factors. These include differences in
education choices, preferred job and industry, work experience, number
of hours worked, and breaks in employment (such as for bearing and
raising children). Men also typically go into higher paid and higher
risk jobs when compared to women. These factors result in 60% to 75%
difference between men's and women's average aggregate wages or salaries,
depending on the source. Various explanations for the remaining 25% to
40% have been suggested, including women's lower willingness and ability
to negotiate salary and sexual discrimination. According to the European Commission direct discrimination only explains a small part of gender wage differences.
Larry Summers
estimated in 2007 that the lower 80% of families were receiving $664
billion less income than they would be with a 1979 income distribution,
or approximately $7,000 per family. Not receiving this income may have led many families to increase their debt burden, a significant factor in the 2007–2009 subprime mortgage crisis,
as highly leveraged homeowners suffered a much larger reduction in
their net worth during the crisis. Further, since lower income families
tend to spend relatively more of their income than higher income
families, shifting more of the income to wealthier families may slow
economic growth.
According to a 2020 study, global earnings inequality has decreased
substantially since 1970. During the 2000s and 2010s, the share of
earnings by the world's poorest half doubled. Two researchers claim that global income inequality is decreasing due to strong economic growth in developing countries. According to a January 2020 report by the United Nations Department of Economic and Social Affairs, economic inequality between states had declined, but intrastate inequality has increased for 70% of the world population over the period 1990–2015.
In 2015, the OECD reported in 2015 that income inequality is higher
than it has ever been within OECD member nations and is at increased
levels in many emerging economies. According to a June 2015 report by the International Monetary Fund (IMF):
Widening
income inequality is the defining challenge of our time. In advanced
economies, the gap between the rich and poor is at its highest level in
decades. Inequality trends have been more mixed in emerging markets and
developing countries (EMDCs), with some countries experiencing declining
inequality, but pervasive inequities in access to education, health
care, and finance remain.
A study by the Brandeis University Institute on Assets and Social Policy which followed the same sets of families for 25 years found that there are vast differences in wealth across racial groups
in the United States. The wealth gap between Caucasian and
African-American families studied nearly tripled, from $85,000 in 1984
to $236,500 in 2009. The study concluded that factors contributing to
the inequality included years of home ownership (27%), household income
(20%), education (5%), and familial financial support and/or inheritance
(5%). In an analysis of the American Opportunity Accounts Act, a bill to introduce Baby Bonds, Morningstar reported that by 2019 white families had more than seven times the wealth of the average Black family, according to the Survey of Consumer Finances.
A 2020 report by Oxfam and the Stockholm Environment Institute
says that the wealthiest 10% of the global population were responsible
for more than half of global carbon dioxide emissions from 1990 to 2015,
which increased by 60%. According to a 2020 report by the UNEP, overconsumption by the rich is a significant driver of the climate crisis,
and the wealthiest 1% of the world's population are responsible for
more than double the greenhouse gas emissions of the poorest 50%
combined. Inger Andersen,
in the foreword to the report, said "this elite will need to reduce
their footprint by a factor of 30 to stay in line with the Paris
Agreement targets."
A 2022 report by Oxfam found that the business investments of the
wealthiest 125 billionaires emit 393 million metric tonnes of greenhouse
gas emissions annually.
