What Can We Do About Income Inequality In The USA?

[Smallsteps]

Smallsteps what does any of that have to do with income inequality? That refers strictly to what people earn, not how they spend it.

it is all connected..... income/wealth ...... and what you DO with money matters. NOT just how much you make.
I have seen many who make a decent wage but with zero idea and making poor choices..... they end up chasing their tails.
Often setting up a basic foundation of money management eliminates many issues.
This seems to be routinely overlooked, Some simply think it is about per hour amounts. They offer excuses all along........ that you CAN"T do this or that on that wage even though there ARE people doing those things on those wages.

Some people you could pay $100 an hour yet they would find a way to not have 2 dimes to rub together.
Handling money is IMO almost more important than how much you make per hour ect.

I have seen people stick with dead end jobs ..... I know they have marketable skills and could do better for themselves but for whatever (insert reason here) they stay at a job that is not advancing them..... if they are good money managers that may be an issue they can overcome.

I have seen others seek out jobs/ careers that they heard pays well even if they have no skill or feeling for ........ often ( I have seen) washout because they dislike the work or it is NOT a good fit and start again chasing another job or company they heard pay well.

I once had a job in a place that half the employees were union / half not the hourly wage was slightly different and the benefits as well .......MOST of the union side was kept PT (often to avoid some having enough hours per month to qualify for insurance) and so I did the math where full time on the other side and adding in pros and cons of the benefits and felt that the 2 dollar difference was worth making a change.
Some of my co-workers were like "i am not taking a CUT at all ".....so their 24 hrs X wage were ending up regularly much less then my 40 hrs x my wage.
They were too hung up on the per hour figure.
Also the non-union side often had OT. Another item was a night differential that some thought they only should work days yet the night shift was worth more per hour.
All of these people were the loudest ones complaining about NOT making enough.

[amarowsky]

I think tooo much inequality will end ing pitchforks of the Poverty/Middle vs. Middle/upper class. That is the ultimate "worst case scenario" outcome. And math would denote that the higher the inequality the quicker it would come to an end once that monster get's out of it's box and "redistributes wealthy by sword, rather than pen".

I don't know the answer either.... I do think replacing most/a lot of the welfare systems w/ something similar to a UBI/Reverse Income Tax, would help reduce a lot of desperation and fraudulent activity from welfare claimers. (Idea being, they will no longer get penalized for taking a job while under the support of welfare). Which fundamentally seems like a better way to bootstrap some people out of poverty, or at least out of desperation.

I use to think the gov't was completely inept at spending any money or fulfilling any services. But it was re-positioned to me in the form of state services, and I had my mind changed. Our property taxes are not cheap, in my area they tend to be $200-500 per month. But keep in mind this does cover a TON of services (library, schoools, roads, water, police, fire, waste management waste/recycle/yard waste, recreational facilities, snow removal, etc.....) . If I were to shop out all of those services, and keep my taxes what would my situation look like? Even If I lucked out and it was a bit cheaper, i would still have to burn the calories to call 10 different freggin companies and shop around to compete, and eventually waste a ton of time (saving a dime or quarter, instead of making a buck in my opinion).

I think gov't decisions are less effective when they're deciding "How" tax money should be used. So if you reduce that inefficiency, I think it has more upside than downside. I mean, what are the wealthy really worried about? If the equal distributed money, eventually turns to inequality again. What is the harm in enabling the system? The lower 70% will just consume the services owned by the top 30%. If anything... this would just act as a turbo charger, because we know the poverty class is not as adept at saving. So their only consequence is some more consumption and the Edge of survival has dulled a bit for them,, so they can live w/ a bit less desperation. This would only be a temporary delay of wealth to the top, it's merely "trickle up" and we know the money is like reverse gravity, it' tends to drift upward when it leaves the hand of the lowest on the totem pole.

Again, it's merely an option, that gives EVERY american a Soft(er) llanding when they lose their job (to AI, layoff efficiency, or failure to compete in a workplace). I don't know many other ideas or solutions out there that seem to raise the tide in the entire US harbor,, like UBI/Reverse income tax. But I think it's a good idea to help temporarily flatten out the inequality gap. Atleast until we figure out something better....

(I am saying this as a business owner, and person who's primary lively hood is currently through equity ownership). So I have more to lose than the average person, but I also realize how easy it is to Thrive and prosper, when you have the discipline to not stay on the "Hedonistic Treadmill of over-consumption". So I will glady give some back... I dont need it, and I sure as hell can't take it with me.

[disneysteve]

I do think replacing most/a lot of the welfare systems w/ something similar to a UBI/Reverse Income Tax, would help reduce a lot of desperation and fraudulent activity from welfare claimers. (Idea being, they will no longer get penalized for taking a job while under the support of welfare).

Many people who oppose UBI say it would discourage people from working if you just gave them money for nothing. They ignore the fact that our current system does exactly that. If you earn $1 over the limit for benefits, you lose 100% of your benefits. That's a powerful disincentive to working. UBI would remove that penalty.

It also would remove a lot of bureaucracy from the system. You wouldn't need hundreds or thousands of state and Federal employees administering a variety of public assistance programs. You'd just need the Treasury to send those checks out every month. And if we also get universal healthcare, that would make the system even more streamlined.

[amarowsky]

Many people who oppose UBI say it would discourage people from working if you just gave them money for nothing. They ignore the fact that our current system does exactly that. If you earn $1 over the limit for benefits, you lose 100% of your benefits. That's a powerful disincentive to working. UBI would remove that penalty.

It also would remove a lot of bureaucracy from the system. You wouldn't need hundreds or thousands of state and Federal employees administering a variety of public assistance programs. You'd just need the Treasury to send those checks out every month. And if we also get universal healthcare, that would make the system even more streamlined.

I agree. I think it's worth a try (at least in some fashion...) and I'm sure the $$$ #'s need to be massaged to find the most effective # that would take the "edge of survival in american based civilized society".

I love the idea of finanically motivating and supporting those efforts that are not directly profit creating. Best and most ubiquitous example being: Stay at home mothers/fathers/caregivers. These are the people who support, guide, teach, and raise our future participants in our economy. More importantly (economically) our future consumers (in the eyes of civilization success). It seems we ought to be doing what we can to motivate the importance of this kind of industry. Especially because there is almost no way to value it, if you take a "short term profit" mentality. This is literally an 18 year investment (and were each one of these at one point).

On the other hand, those that are working at a more typical industry (blue or white collar), if your industry happens to be removed due to innovation, you are given a soft landing. And do not have to immediately scramble to figure out what job you're willing to accept to fill the gap of income. (In some cases this may take a LONG time to pivot to new career, as technology and subsidies make some industries unbalanced. And human capital is losing value in those industries due to automation & innovation). This provides a defense against that, while we use our time to consider how to make these humans valuable again. (<---- this may be a heavy optimistic view at technology's future capability... But it can't be ignored. Even a Luddite would acknowledge you can make more cars, consumer electronics, food, smarter forecasts, etc... w/ Technology added into the mix).

For anyone interested google "Open AI GPT3 Demo".... It's frightening how powerful this technology is.... If used for good or evil, you can see how this could go off the rails if other protections are not there to re balance how this could lever someones power and ambition. They use two pretty solid examples at how "programmers" and "lawyers" may not be as useful in the future. One example is how it crafts a reasonably complex program/website in some brief moments.... And the other is how the AI can "cut though" legalize, and give someone the actual semantics of what is being said. Effectively democratizing a significant portion of the legal profession (doc review is a huge thing, and undeserved... This could depress the need for these type of lawyers and paralegals in the future). Not all that many industries are completely safe if tech reaches it's forecasted potential.

In the immediate, it would give safe landing for alot of jobs people dont seem to "organically enjoy"... Like pushing paper as a middle man for many industries (tons of gov't welfare like jobs, medical billing, insurance billing, medical finance companies, education financial aid jobs, call center people, data input folks, and etc...". These type of jobs that are either a stroke of a pen (disband the industry as it creates no direct value*, speaking very generally here) or made obsolete through more organized & automated systems. (I was a corporate account manager selling parts to Toyota, it was clear that the lions share of my account management could be dramatically reduced by a few cleverly organized and purposed algorithms and computer systems).

This does seem like a decent way to give everyone a lot less to worry about (survival wise) and more time to worry about what completes them (find something they can gain satisfaction from). I think, inherently, most people when given the option, would prefer "to pave their way, rather than be supplemented until death". I just think the barrier to opportunity & lack of general education of "what will get you where" is what is making most people live a life of poverty. And in my opinion, we are choosing to let this impoverished group remain at the size it is. I think we can significantly reduce it if we are willing to take a few risks on changes.

Slapping a poor person on the hand (by taking away subsides) for them trying to work..... defeats the purpose completely.... (poor motivator and solution to the problem at hand. We ought to try something different)

[disneysteve]

I love the idea of finanically motivating and supporting those efforts that are not directly profit creating. Best and most ubiquitous example being: Stay at home mothers/fathers/caregivers.

Look at what's happening right now. Millions of Americans lost their jobs. At the very same time, millions of school children have switched to remote learning. Many parents (women more than men, minorities more than whites,)can't return to work even if jobs become available because they've got nobody to watch their kids. If there was a UBI check coming monthly, that wouldn't be nearly as big a hardship for all of those families. Instead, they got one stimulus check and that was it. A lot good that did. It helped for a few weeks maybe and then they were right back where they started.

[corn18]

Money is a mindset
I think it was Jim Rohn who said that if you took all of the money in the world and evenly distributed it to everyone in the world, within 2 years inequality would be right back to the way it was before

This is one of those chicken and egg questions.
Does bad behavior lead to income inequality or is it the other way around?

Government can't do much effectively or efficiently.
Simply throwing more money at a problem and creating more and larger social programs probably won't fix anything.
It can be argued that social programs have caused a lot of the problems that we see in this country.

No easy answer here

Truth. The financially stupid remain stupid even with a lot more money. Ask me how I know.

[amarowsky]

Truth. The financially stupid remain stupid even with a lot more money. Ask me how I know.

Any idea's to offer to improve the situation for these "perennially financially stupid people"?

I think we all recognize that humanity comes with flaws (flaws = attributes of personality that make them fail to understand 2020 financial decisions). What is the solution to rise the tide in our harbor as a country? It's probably safe to say 95% of people have at least (1) of these in their family. And they don't want them on the street, dead, destitute, or generally miserable. Given a healthy person should not "want that" for anyone.... What would be a better idea than our current system? (Personally I think there is a decent amount of room for improvement. But I may just be naive, and maybe the current system is nearly perfect.... But I highly doubt that. )

[Smallsteps]

Truth. The financially stupid remain stupid even with a lot more money. Ask me how I know.

I will ask how you know? ....... i am sure there is a interesting example in your mind.

[disneysteve]

I will ask how you know? ....... i am sure there is a interesting example in your mind.

He's referring to himself.

That said, however, clearly education matters. corn18 is a perfect example of how people can change if they are motivated to do so and have the information and support to make better decisions.

[corn18]

He's referring to himself.

That said, however, clearly education matters. corn18 is a perfect example of how people can change if they are motivated to do so and have the information and support to make better decisions.

Winner! I had to want to change before I could change. When I came to this forum, I wanted to change but didn’t really know how. And I resisted when everyone told me how. Reading The Millionaire Next Door changed everything. Maybe that should be required reading in high school.

[disneysteve]

Reading The Millionaire Next Door changed everything. Maybe that should be required reading in high school.

Not a bad idea.

Though as I've said many times, high school is much too late. We need to start teaching financial literacy and personal finance in first grade and from then on. Grade-appropriate lessons need to happen. I started our "Dad's Financial Academy" lessons with our daughter when she was in elementary school. Then when she was 9 when I had her start balancing our checkbook and I used that activity as a jumping off point for discussions about the costs involved in life - car, home, utilities, medical, food, travel, etc. Also that incorporated funding investments.

A personal finance class in high school is good but if they have already had 17 years of bad examples and forming bad habits, it's tough to change them at that point.

[Fishindude77]

We need to start teaching financial literacy and personal finance in first grade and from then on. Grade-appropriate lessons need to happen.

A personal finance class in high school is good but if they have already had 17 years of bad examples and forming bad habits, it's tough to change them at that point.

100% Agreement !

[amarowsky]

educating people + removing the social taboo of discussing finances needs to be focused on.... It's negligence to say, "it's not proper to talk about finances in public" <--- which was common place with the generations before my time (I'm 33). And this type of social avoidance, masked as "etiquette" lets people walk into the jaws of debt in the most intrepid fashion.

I think everyone being more educated on this is an excellent 1st step. However... Keep in mind, I think it is only possible to "get pretty close" with education. No matter how you teach, inform, enlighten, and empower everyone, you will still have our typical folks who act impulsively and in some cases spend with reckless abandonment for consideration of their future self. Assuming 1 in 100 people you meet is a moron (pretty safe estimate) it'll still leave us with 3.3 million in that category. This may be the folks we need to "help themselves" to fit into society. As I don't think you can get everyone to merge into the same lane and stay there w/o some support.

The nice part is, after education, it seems like we would need MUCH MUCH less support. From a super quick (and broad) google, it said about 21% of people are on gov't support. Seems like , with proper education, and more effective poverty support we could do much better than 21%. (although if it was UBI it would shift from 21% --> 100%, but cut most of the spending that is required to enable the former 21% i.e. - the tons of committees', boards, and associates required to choose how the empoverished spend their money & qualify them for it).

The point of the 1% mention, is that education I think could close the 21% (need support gap) to somewhere much closer to the Humanity Hard 1% Rule (i know it's not a hard rule, but it's more honest than everyone being perfectly financially capable). Maybe we could drop 21% --> 15% with education, and the UBI could help leverage that gain to be even more.

(Reason I think the above, is from that Data from both the Alaskan Soverign Wealth funds & Social security's impact on bringing a % of their targeted populations out of poverty. If I recall right, I think SS had like a 7-10% ability to raise the elderly out of poverty & I think the alaska one was much more modest like 3%-6%(ish?) was raised out of poverty from the mere $1-3k annual benefit). These are successful data points, but at much smaller groups of the country (compared to the whole).

Any thoughts? (Education seems paramount, but an experiment of trickle up.... for once.... I think may sweeten those educational fruits )

[LivingAlmostLarge]

With UBI and not cancelling help because of earnings would probably help stabilize families and change long term outcomes. Kids will have stability and parents perhaps can help keep them away from unwanted pregnancies and drug and alcohol abuse. It will probably help raise people up easier than just expecting a greater income inequality to be fine long term.