To understand the Wealth Gap, let’s look at the following steps:
1. Imagine all of America’s wealth (about 76 trillion USD) as a pie cut into fourths.
2. the wealthiest 10% holds about 70 trillion of that 76 trillion so they would get 3 of those 4 pieces.
3. The lower class only holds 2 trillion of the original 76 trillion, so they would only get a sliver of the remaining piece.
How is this fair?
The Wealth Gap: Then and Today
Let’s Make a Change!
The top 1% ‘s median income is growing at an unprecedented rate, and if we wait too long to initiate reform, wealth concentration will have already become so disproportionate that it will be nearly impossible to fix. So, what can we do?
What can be done on the federal level?
First and foremost, we need to increase the minimum wage. Studies estimate that an increase in wages for lowest-paid workers could benefit almost 5 million people and add roughly $2 billion to the country’s overall income (Adams, 1). Fortunately, this is already in the works, as Biden plans to pass an executive order to raise the federal minimum wage to $15 an hour by 2025.
Once we have established a more livable minimum wage, we need to begin thinking about reforms to our federal tax code. Specifically, we need to address the inequity created by the capital gains tax treatment. The current policy on capital gains puts more value on income earned through investments than income earned through work. And because much of the top 1% ‘s wealth is attained through investments, they benefit substantially from this policy while the lower class lacks the financial means to invest and are therefore excluded from those benefits. To fix this, we need to dramatically reduce the tax discount on capital gains by requiring individuals to pay the same rates on investment income and wages.
What can be done on the personal level?
One of the most effective ways to promote economic equality is to stop putting all of our money into already large enterprises and start investing in under-represented people and communities. Netflix, for example, has invested about $120 million dollars in under-resourced colleges, specifically Historically Black Colleges (Jackson, 1). This investment will have a lifelong impact on the schools and their students. So, when faced with the option to purchase a product from a trillion-dollar enterprise such as Amazon, or a local small business, I always choose the latter.
At the same time, I encourage everyone to donate to organizations fighting against income inequality. Strike Debt, for example, is a “movement of debt resistors” who have eradicated roughly 1.8 billion dollars in debt since 2015. They do this by buying debt off of families in need and therefore need significant funds to keep their project in operation. So, donating $10 annually would help keep the organization running, which would be impactful in closing the wealth gap. And, if you are from the Bay Area like I am, you can actually volunteer with Strike Debt’s Bay Area team!
I also think we must work within our own communities to lift up those who are most hurt by economic inequality. In the Bay Area, for example, we have a homeless population of just under 30,000. And although I alone could not provide permanent housing or drastically improve their economic conditions, I have made it a mission of mine to alleviate some of their struggles through an organization a friend and I are currently founding. We plan to provide resources such as educational books, warm clothing, food, and toys to homeless children throughout our county. Throughout this planning process, however, we have learned that sustainable change takes time. Creating a concrete and viable action plan, especially during COVID has presented unexpected challenges, but we now know we need to stick with it to have our desired outcome.
If you want to learn more, check out this TED Talk by Dr. Jan Tobochnik!