Suggest some solutions to the problem of poverty – and discuss how poverty is related (or not) to the kind of inequitable income distribution we...

Background

Income inequality is defined as the “disposable income” in a household in a given year and includes revenue received regularly from work activities or investments. Income inequality explains the unequal distribution of income across the population.

According to an article by Inequality.org, the distribution of average income figures in the United States, for the year 2015, shows large variations. The country’s top 0.1% averages an income of about $6747439, almost 198 times the...

Background

Income inequality is defined as the “disposable income” in a household in a given year and includes revenue received regularly from work activities or investments. Income inequality explains the unequal distribution of income across the population.

According to an article by Inequality.org, the distribution of average income figures in the United States, for the year 2015, shows large variations. The country’s top 0.1% averages an income of about $6747439, almost 198 times the average income of the bottom 90%. 

Further information from the US Census Bureau gives the year 2015 an income Gini Index of 0.479, not different from the previous year, 2014, and showing a quite high level of income inequality. For the same year 2015, the US Census Bureau states a poverty rate of 13.5%, compared to 14.8% in 2014.

Results

Impact of Income Inequality on Poverty

Elise Gould in her article “Inequality is the Main Cause of Persistent Poverty” states “educational upgrading” and “overall income growth” as some of the things that have helped reduce poverty levels in the country. However, she notes the lack of equality in income growth that has instead increased poverty levels; high income inequality is spurred by “inequality of pre-tax, pre-transfer and market incomes.” To offset poverty rates, it would be important to reduce the growth of income inequality by pushing up the income of those people in the lower earning brackets of the society.

Solutions to Reduce Poverty

According to the Center for American Progress, some of the steps that can be taken to reduce growing poverty levels in the United States include the following:

• Job creation


• Increase of minimum wage levels


• Increase of “earned income tax credit” for those workers without children


• Support for equitable wages across genders


• Support for paid leave

I hope that this helps in answering your questions.