The Consequences of Economic Inequality by Taylor Rayl

Economic inequality is not a problem the United States is unfamiliar with. Its roots reach back all the way to the Great Depression. This inequality has obvious consequences for the country economically but if you look deeper into the issue you will see the possibilities for personal effects. These personal consequences have a very wide range. The difference in classes and wages and the social aspects all contribute to something bigger. The available opportunities and well being of the people in the United States is deeply affected by this issue of economic inequality. Economic inequality does not only hurt people’s wallets, its damage can run much deeper than that.

Image from A Civil American Debate

Where did the Inequality Begin?

This problem is rooted all the way back to the 1920s, “history shows a clear link between inequality and instability” as stated in Why economic inequality leads to Collapse. Around this time there was a shift in economic theory. This change in theory was accompanied with a steady rise of inequality. The poor were not the only ones suffering. The middle class was also affected in a big way by often being left behind. The effects of “these trends not only ushered in increasingly divided societies; they also proved to be an economic time-bomb. Widening inequality became a key - if largely unrecognized - ingredient in the growing fragility of the economy and played a central role in the build-up to the credit crunch and the subsequent recession”(Lansley 166). This is a problem we have been dealing with for a very long time. Now we see this issue resurfacing in our country again today, but the gaps are getting larger. If you observe the graph above you can see just how large the gap really is and how the incomes of the wealthy grow faster. Wages have been raised but not just for one class, because of this the gaps still remain. When the country was going through this before “the lesson …was that unequal enrichment provokes asset bubbles, excessive demand for debt and, finally, economic failure. Now we are painfully learning that again.” (Why economic inequality leads to Collapse). The past provides us with evidence that economic inequality does not bring good things, but some do not consider the extent of these consequences.

Is the American Dream Slipping Away?
The American Dream. This is a concept we have been taught about from early childhood. It is what most people use as the basis of their definition of “success”.   This dream provides hope for future generations to better themselves and have more opportunities than the ones before them. It also gave those from other countries hope that they could come here and make something of themselves. The idea of this dream was ultimately to be successful, healthy and find happiness. The American dream has provided many with hope and the drive to do more, but could this inequality threaten all of that? In his article for CNN Dean Obeidallah even went as far as saying “if we continue down this path of greater income inequality…the unthinkable could occur: the death of the American dream”. There are many parts that compose the American Dream. These include social, health, and educational aspects of life. All these things are keys to achieving the American Dream. If they begin to fade or weaken them parts of the dream will go with it. It might be a little unrealistic to say it would disappear all together but the chances of people striving for and reaching the dream will decrease if the inequality continues to increase.

How Does Inequality Effect Health?

There are a few ways inequality can affect one’s health. One way is by causing mental illness. Depression is a large problem in our nation right now. Statistics from Why Greater Equality Makes Us Stronger show that “huge numbers of people in the United States hold prescriptions for anti-depressants…huge numbers of Americans, in other words, are feeling plenty of pain”. Some blame this on the fast pace of modern life. But as some researchers dig deeper into this they realize life in the fast lane might not be to blame, it could actually be inequality. The inequality puts stress on people in many ways. A study shown in Income Inequality, and Its Cost done by epidemiologists, people who study the health of populations, showed that the “reason for the disparity was the greater inequalities in the United States and heavier stresses resulting from them”.  The gaps created by income and wealth divide people and create stress. People are not reaching the highest status and have to watch others surpass them. This is bound to make people feel less than others. These feeling are going to become more frequent as the gaps grow larger. The bigger the gap the higher people have to clime to escape the social label they currently fall under. The pressure of succeeding or status insecurity can cause this stress to keep growing and lead to one’s health suffering. Life expectancy is another issue that comes up when discussing the effects of inequality. There were also studies done by epidemiologists about this subject as well. The studies showed that “people in more equal societies simply live longer, healthier, and just happier lives than people in more unequal societies” (Why Greater Equality Makes Us Stronger). These studies explored many aspects of life. Some of the things observed in these studies were who lived the longest, where were there higher levels of obesity, and who had the most mental illness. All these factors caused by inequality effect a nations life expectancy. The expectancy is lower because of the consequences of this inequality. The United States has the label of one of the most unequal major nations. This means the quality of life in America is not ranked very high. The stress created by the inequality is damaging the quality of life in this country.

What are the Social Consequences of Inequality?

This issue of stress does not just apply to the health problems; it also expands into the social aspect of life in America. The economic gaps have an inevitable effect on our relationships with others, “the wider the economic gap is between us, the more social status matters. The more social status matters, the morel likely we will feel shame and humiliation. The more stress these emotions evoke us, the weaker we get”( Why Greater Equality Makes Us Stronger). The inequality of society replaces the sense of community with suspicion and even fear. This is where the issue of lack of trust comes into play. As stated in the video above with Richard Wilkinson on how inequality harms societies, areas with greater equality have more trust in their society. With the gap between classes some find it hard to trust those not of the same social status as them. People choose friends who why feel are equal to them. It is rare to see someone of a higher social class have much to do with the lower classes and visa-versa. When those social bridges are crossed sometimes it is harder for the groups to trust each other. Because of the risk of being looked down on or judged based on social status the classes are socially split. More studies were done that showed the correlation between inequality and the effects on society. They considered teenage pregnancy and even criminal activity. These two happenings track particularly well with economic inequality. There was a study done linking and increase of teen pregnancies with inequality. In this study they found that the “teen birth rate was higher with greater poverty and income inequality…social mistrust was greater where poverty and income inequality were greater” (Bezruchka, Cawthon, Connell, Davis,  Heagerty1117-1126).  So the issue of teen pregnancy is connected back to the lack of trust inequality brings to a society. Criminal activity is also has its own link to inequality. Most “economic theories assume that the decision to commit a crime is driven by the potential criminal’s calculation of expected returns; in this framework, inequality may raise the expected returns from property crime. By contrast, social psychological perspectives emphasize the implications of inequality for perceptions of relative deprivation, which may lead to frustration and hostility and thence to crime” (Neckerman 343). You would assume that in a state of inequality a person would steal because they wanted what they do not have, but this observation by Neckerman denies that theory. This means that the hostility that people feel from the mistrust and the stress created leads people to commit these crimes. This makes society feel less safe, and that is yet another large component of the mistrust and the stress felt by the people.

Are there any Possible Solutions?

Economic inequality is not something that can be completely abolished; it is necessary for our country to continue to function properly. There can, however, be something done to lessen the gap between classes. One solution that has been considered is raising taxes on the wealthy. In her article Sally Kohn agrees with this because she along with many others believes “it's time to put more money in the pockets of working Americans so they can spend it, create demand and finally kick-start the economy”. Some identify this as creating a “class war”. It is not to punish the wealthy, but to find a way to stimulate the countries economy. In Raising Taxes on the Rich: Not Whether, but How evidence is shown that “cutting taxes for lower- and middle-income people and paying for it with higher taxes for higher-income people…is unambiguously stimulative”. So this solution has been found to actually be effective, it is not just a way to put all the problems on the wealthy. If it is for the betterment of the country sacrifices must be made. If this burden rested on the middle class the gap would never close and it would only continue to grow. There is even a growing population of wealthy people who are willing to pay higher taxes because they too believe it is necessary to help our country. This would not solve all the problems of economic inequality but it would be a start. Anything to reduce the gap between the classes would be helpful.


Economic inequality is not bad all together. It is necessary to have room for competition, but the gaps do not need to be so wide. The American dream is not about eliminating inequality all together, but it will make it possible to keep the dream alive and more attainable by decreasing the gaps between classes. This dream has been an important part of out society for generations and we should do everything in our power to make sure it maintains its importance. Everyone should so their part in trying to reduce the inequality in this country. This inequality can affect anyone at anytime and in many ways. Whether it is as simple as casting a vote or as radical as leading a protest everyone needs to make sure they contribute anyway they can to stop this inequality from growing and keep the American Dream alive. 

Works Cited

Bezruchka, Cawthon, Connell, Davis, Heagerty. “Teen births, income inequality,

and social capital: developing an understanding of the casual pathway.” Social

Science & Medicine Sept. 2004: 1117-1126. ScienceDirect.  

Lansley, Stewart. "How Soaring Inequality Contributed To The Crash." Soundings

            (13626620) 44 (2010): 165-178. Academic Search Complete. Web. 6 Feb.

            2012.

Neckerman, Kathryn M. and Florencia Torche. "Inequality:

            Causes and Consequences." Annual Review of Sociology

            33.1 (2007), 335-357.