Five Socioeconomic Issues Contributing to an Income Imbalance

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The social climate in the U.S. is changing at a breakneck pace. Economic, political, and societal disruptions are coming together to create new challenges in the social work field. In many ways, these issues are coming together in the form of an income imbalance within the country. Economic disparity has risen to the point that some experts are wondering if it is beginning to deflate the economy instead of drive competition. In a report from Fast Company, David Autor, an MIT labor market economist, said economies that become too imbalanced start to create dynasties.

“You can have too much inequality or too little,” Autor told the news source. “The concern about inequality is where economic dynamism gives way to dynasticism, and inequality becomes self-reinforcing: If you don’t ‘choose the right parents,’ you’re stuck in the bottom forever.”

Regardless of one’s personal beliefs regarding the state of the economy, the continued discussion around inequality highlights the social challenges existing within the nation. Social workers have an opportunity to help communities and individuals struggling in this economic climate, and doing so begins with understanding some of the background issues contributing to economic inequality. These are:

Modern America is a place where larger and larger portions of the population are becoming worried about their ability to find food and shelter. A Gallup study found that concern about food or shelter currently ranks at least as high as it ever has in the U.S., and is possibly at its highest point ever. Approximately 67 percent of Americans with household incomes below $30,000 per year ranked hunger and homelessness as something they are “worried a great deal about.” Hunger and homeless was ranked as a greater source of fear than crime/violence, access to health care, drug use and terrorism.

Low-income households were the most likely to be worried about hunger and homelessness, the study found. However, Americans in general are worrying much more about the issue than they have in the past. To some degree, this could be a cyclical awareness of a social justice issue, but it is leading to increased pressure on government agencies to combat hunger and homelessness.

Working with the homeless or supporting families struggling with a shortage of food or poor housing presents a variety of challenges for social workers. Continued education, including seeking a master’s degree in social work, could prove instrumental for those interested in understanding the full scope of basic food and shelter fears and their effects on households. Social workers who want to help low-income households can’t ignore the impact that hunger and homelessness are having in the United States.

Income disparity
For decades, the socioeconomic climate in the U.S. has been stabilized by a strong middle class. A large middle class has traditionally served as an example of hope for low-income households. This vision of possibility is diminishing in light of increased income inequality across the nation. In a recent recap of how the U.S. changed through President Obama’s time in office until present day, Pew Research pointed out that income inequality is now at the worst it has been since 1928.

To demonstrate this inequality, Pew Research pointed to a report it published in 2013. In that document, the research organization brought up data from an oft-cited project by Emmanuel Saez, an economics professor at UC-Berkeley. Saez explored U.S. incomes based on tax return data going back to the early 20th century. He found that income disparity has been rising considerably in recent years, overturning an extended period of stability in the country. Once we’ve explored the overarching trends he discovered, we’ll look at some more contemporary data to see what may have changed since his research was completed. The study found that:

  • In 1928, the top one percent of earners garnered 23.9 percent of pre-tax income in the nation. Conversely, 90 percent of the nation shared 50.7 percent of the income
  • In 1944, those figures had balanced to the point that the one percent obtained approximately 11.3 percent of the nation’s income, with 90 percent of the population obtaining 67.5 percent of pre-tax fiscal resources
  • This balanced economic situation lasted until the 1970s, when the percentage of the income obtained by the one percent began to spike. The crash of the dot-com era led to a short-term advance for the 90 percent, but it didn’t last long
  • In 2012, the one percent of top earners gained 22.5 percent of pre-tax income. While this is not as high as it was in 1928, the upper class beyond that 1 percent obtained a high enough portion of the income to drive the share left for the 90 percent down to 49.6 percent. This was the first time ever, within the time frame of Saez’s research, that the 90 percent group of the population was sharing less than half of the nation’s income
  • Each year, the U.S. Census Bureau releases a comprehensive “Income and Poverty in the United States” report. Its last study covers 2015, and it found that small improvements were seen among most major demographic groups. Poverty rates declined by approximately 1.2 percent while real median household incomes grew by just over 5 percent

For social workers, the rising income disparity combined with other key socioeconomic issues – including the aforementioned fear of hunger and homelessness – presents a wide range of challenges and opportunities.

  • Wage inequality
    Recently released research from Pew Research indicates that a gender gap still exists in the United States. As of the end of 2015, the median hourly earnings of women was approximately 83 percent of the equivalent wage for men. This represents a significant step forward over years past, but shows continued inequality in the economy. The good news, however, is that the gender gap does not seem to be as bad with younger workers. Women aged between 25 and 34 were found to make a median hourly wage totally 90 percent of what men earn.

  • The digital divide
    The economic issues already discussed become particularly problematic as individuals become more dependent on digital technologies in the professional world. This dependency poses a major problem as poorer households have significantly less access to computing solutions and internet connectivity than their wealthier counterparts. A study from Pew Research found that access to contemporary technologies is limited among low-income households, with solutions that have become extremely widespread for the wealthy and even middle class proving fairly uncommon among the poor. This is especially evident among solutions that are increasingly viewed as necessary, such as smartphones, traditional computing devices and broadband internet.

    • Smartphones are ubiquitous among households with annual incomes between $30,000 and $99,999, with 81 percent of individuals in that demographic owning such a device. That figure rises to 95 percent in households making more than $100,000 annually. For low-income households (those making less than $30,000 annually), just 64 percent own smartphones
    • Many low-income households are replacing desktop and laptop computers with smartphones, creating a situation in which just 54 percent of those households own such a device. That figure rises to 87 percent for middle-income households and 97 percent for the wealthy
    • A similar disparity is in place for home broadband access, with just 53 percent of low-income households having such solutions in place, compared to 80 percent for middle-income households and 94 percent for top-earners

    The digital divide creates challenges with access to education and employment opportunities, and social workers can serve as advocates in their communities to help foster an environment of equality.

  • Access to health care
    In the Gallup study mentioned earlier, access to affordable health care proved the most prolific area of concerns among Americans when all income groups are taken into consideration. All told, 57 percent of those polled said they “worried a great deal” about access to health care. Furthermore, the partisan divide in government is making it a difficult issue to address.

    Access to health care is becoming an incredibly divisive and complicated issue, and it is further muddled by the underlying income disparity and race relation issues across the country. A report from the World Economic Forum explained that the income disparity in the U.S. is reflected in a health care industry in which access to care is split along economic lines.

    Becoming part of the solution

    Social workers can’t necessarily change society, but they can help the individuals and communities struggling as a result of income inequality. However, driving change depends on not only being aware of the problems facing individuals and families, but also on the varied ways of helping them overcome their circumstances and live a healthy, productive life. Breaking socioeconomic barriers begins with learning the underlying causes and personal implications of these issues. Seeking a master’s in social work can help you along the way. The online master of social work program at Rutgers University is among the national leaders in the sector. Contact us to learn how we can prepare you to tackle the challenges facing our country.

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