The Income Gap Between Rich and Poor

The Growing Income Gap between the Rich and Poor

In the United States the income gap between the rich and the poor is at an all time high. This fact is very strange to me because I hear President Bush claim that there are so many new jobs available, the unemployment rate is down, interest rates are low, and inflation is going down. These two claims seem contradictory to me, and in my paper I will hope to find out why the income gap is so high when President Bush claims the economy is doing so well. First I will try to explore why the income gap is so high when there are so many jobs available for those who are unemployed.

According to David Leonhardt a writer for the New York Times, the problem is that the jobs available for the poor are not paying them enough money to stay alive. David's article was called Out of a Job and No Longer Looking, in this article he says that the poor people are "unwilling to take new jobs that pay for less, so a rising and growing number of them instead depend on a government check to get by". We can clearly see if they are just getting money from the government to get by, this would be an immediate cause for a fluctuation in the income gap. According to David the number of poor people that are not looking for a job, and waiting for a welfare check is rising.

David Leonhardt also states that "millions of people, particularly men, have dropped out of the labor force over the last decade, apparently unable to find work that pays near what they once earned in the blue-collar jobs that have moved to lower wage countries". A number of companies are moving to countries where they can get cheap labor, and this is leaving a number of people without jobs. The sad part is when these companies break up there are only a few supervisors, and CEO's that are out of work, but there are a number of blue collar workers that are out of jobs. The supervisors and CEO's tend to find another job faster than the regular workers because there is less competition in their field, because when they are applying for a job there are fewer candidates. On the other hand there are a number of blue collar workers available, and companies exploit this to their advantage and try to pay the workers the least amount possible. Today the real level of unemployment for men is higher than in the recession of the early 80's. The worst part is that men from the ages of 18-29 spent 11 percent of the year not working.

Katherine Newman an author in the Harvard Magazines says "given the illegal economic opportunities (mainly drugs) and welfare, coupled with the low wages and seemingly unpleasant working conditions in the legal sector, why would anyone work in a Burger Barn". Newman believes that the problem is not that there aren't any jobs available for the poor; the issue is the conditions of these jobs. With all the other things poor people can do to make money, they just don't want to work in a blue collar job. According to Newman the new hot job market doesn't mean inner-city residents are finding it easy to get a job. It is the skilled and educated people of the suburbs that are finding jobs easy. It is generally the people that are already well off and have certain skills to do a job who move on to a better job for a better salary. According to Katherine the rich people are moving on to better jobs to make them even richer. The unskilled poor people are giving up because they don't like the jobs that are available to them. The poor people much prefer to depend on welfare or doing illegal activities than to work at a fast food restaurant. Welfare can only do so much for a family, if the poor people continue to depend on welfare they will never be able to get ahead and move up in the economy. Newman also mentions that the poor people of the ghettos are starting to give up looking for a job, because they feel there is nothing is available. In the ghettos most of the businesses are turning to illegal immigrants to get the job done, because the other people refuse to.

According to an article in the New York Times called Wealthy Helped by Wall Street, Find Ways to Escape Profit Taxes, the rich people are evading their taxes and continuing to get more money and pay fewer taxes. For years now wealthy Americans have been able to avoid paying capital gain taxes, simply by not selling their assets. Of all American's only 8 percent reported a gain in the capital gains. There is a bigger problem with these numbers, because of the 8 percent of people that are reporting capital gains most of them make under $60,000 dollars a year. These people are making their capital gain from investments and mutual funds. It is a shame that these are the people that report their gains and get taxed for them, while the rich people have much more capital gains with stocks, and real estate, but yet they don't report these things so they don't get taxed for them.

James M. Hunt a successful business owner pocketed about 45 million dollars of profit when he sold his business to his employees. He didn't not have to pay not one cent of capital gain tax. He took advantage of Section 1042, where it says that when an owner of a private business sells it to his employees, no capital taxes are owed. William E. Simon also took advantage of this clause when he sold Avis Car Rental to his employees. Simon ended up pocketing about 700 million dollars profit. As we can see the rich people do their research when it comes to taxes and paying back the government. Even though the rich people make more money, that doesn't necessarily mean that all of them are paying the government more money. Most rich people are using dishonest strategies to stay on top of the ladder. It is a shame that the poor people who are honest about all there profits get penalized the most.

Michael Weinstein a columnist for the New York Times wrote an article called When Work is Not Enough. This article is about a woman named Theresa Sanders who is 42 and a mother of two children. She was unable to read, and now she was out of a job. She didn't know where to turn; she collected welfare for about a dozen years. In 1996 a new welfare law was passed with very strict laws determining how long you can collect welfare. Ms. Sanders was now forced to look for a new job, she joined a group on the West Side of Chicago called the Greater West Town Development Project. It was there that she took an intensive 14 hour course in woodworking. After Theresa finished this course she now could look for a job. After an extensive job search Theresa finally decided to work for a factory that makes harps, and violins. Finding this job didn't make her life better though, because the pay Theresa gets at this job does not support her and her two kids, and with the new law passed