What Are The Reasons Of Income Inequality

35% of the American work forces make less than $10 per hour, which in the United States of America is a wage below the poverty line. They are the people you see everyday: the cashiers in that grocery store, the fast food workers and a lot more. However, those top 1% workers in America who are on top of the corporate ladder earned a lot more than the bottom 35%. You must be thinking yourself, what are the reasons of income inequality?

Everything has been blamed. Cheap labor from china, illegal immigrants, the outsourcing of the big corporate company such as Wal-Mart and a lot more. This year, 2009 is worse for the lower income workers. More than 35 million workers earned less than $10 per hour and a lot more who used be making that amount are now unemployed causing the income inequality gap in America to grow bigger.

Giant corporations are often the black sheep of this matter. They were claimed to be greedy, only thinking about profits and not the workers but the reality here is that the United States companies are competing with China and India who pay their workers much more lesser than United States. This situation caused the outsourcing of jobs overseas. Statistically, America lost 20% of its factory jobs since 2000 and this amount are increasing every year.

Some companies are public listed and the managers of the companies are on constant pressure from the stockholders for larger profit. Where as payroll is concern, it is the largest expenses item in a company’s financial report. Therefore, the company will put in a lot of effort in keeping the expenses low in order to keep a high profit.

They now hire more contract and temporary workers. Wal-Mart, which is the nation’s largest employer, has set a new standard in reducing the employee pay and benefits such as health care and pension.

In 2007, the minimum wage decided by the government is at $5.15 an hour. The government tax policies are mostly helping the investors instead the low wage earners. Technology also increases the gap of the income inequality. As more advanced machines are now produced and used in the factory, it actually replaced the workers. However, for those who are trained to operate the machines can actually demand higher wages.

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