Record High DOW Highlights Income Disparity

On Tuesday, the DOW-Jones closed at a record high of 14,164.53. This broke the previously-set 2007 record and is being seen by many as a sign of American resurgence and recovery from the fiscal disaster of 2008-09. While the record high DOW is an optimistic sign, American household income is still lower than it was before the financial crisis. Such trends are drawing more attention to the issue of income and wealth disparity in the United States and abroad.

The story that these statistics tell is one of a huge gap, indicating a disparity in income, wealth, and expectations regarding the economy. Wealth disparity between the very rich and the working poor has grown larger. While there are other positive signs for the US economy, such as a decline in the average amount of debt, the gap in income may lead to a government structure that caters more to the wealthiest Americans instead of to the interest of Americans in all income groups.

The GINI coefficient is a measure of income inequality in a society; it works on a scale where the closer the coefficient is to 0, the more equal a society. The highest, most unequal number the scale reaches to is 100. The most recent figures show the United States with a GINI coefficient of 45. At the same time, countries like Swaziland and Zambia have GINI coefficients over 50, signifying an even less balanced distribution of wealth. The GINI coefficient is often closely related to the amount of people living in poverty in a given country, and high GINI coefficients often reflect a situation in which very few are extraordinarily wealthy while millions live in poverty.

Understanding our current situation may help us understand the unbelievable difference in income around the developing world and help us shrink those gaps by supporting efforts to strengthen industry and provide more opportunities for those at the bottom of the economic ladder to escape poverty.

– Kevin Sullivan
Sources: The Atlantic, CIA World Factbook

Raise the Minimum Wage, Inflation is Real!In his State of the Union address, President Obama has called for a national increase in the minimum wage standard of the country. The President has proposed to raise the minimum wage to $9 from its current $7.25. The newly proposed amount would also have safeguards to account for inflation, which the current standard does not.

This demand comes at a time when the National Center for Law and Economic Justice supports that one in seven Americans lives in poverty, with one in sixteen Americans living in deep poverty. Poverty, of course, exacerbates tension and has been linked to decreased social mobility, increased rates of violence, and increased likelihood of being a young parent.

Addressing poverty, both at home and abroad, is a key, central way to better the standard of living for millions as the better able families are to support themselves, the more efficient the employee, the better the consumer, and the more stable the economy.

CNNMoney, however, has debunked the myth that raising the minimum wage in America is the only element necessary to raise a family out of poverty. For a family of four making at least $9/hr, and while taking advantage of several key tax breaks, Tami Luhby of CNNMoney writes that the new rate would be barely enough to lift the family above the poverty line, and hardly enough to raise their standard of living by much in light of the U.S.’s dependence on a tax code that has been decried as “broken” by many.

While raising the minimum wage would be a step in the right direction towards addressing poverty in the United States, advocates for economic justice argue that helping people find higher-paying jobs is another, more effective, means of fighting poverty.

– Nina Narang

Sources: NCLEJ, CNNMoney
Photo: Occupy