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Facts to Consider Regarding Income and Inequality

Income inequality is a primary concern for the Democratic Party. The president himself has spoken on the subject recently, saying he would “refocus” his efforts on alleviating income inequality through measures like the minimum wage and extended unemployment benefits.

The subject of income is often heated with flaring emotions. Concepts like fairness and justice are uttered in tandem with poverty and inequality. One would understandably hear the debate and think the world is full of high-income earners who make money at the expense of those with lower incomes. However, there are facts that should provide perspective and perhaps temper passions.

1) When talking about high-income earners (or the wealthy—not the same thing, but people use them interchangeably sometimes), we are typically talking about people at different stages of life. Common sense should tell anyone that a person in his twenties is unlikely to earn as much income as a person in his late fifties. Simply put, on average, aging typically brings higher income.

2) Income reflects a series of choices. Not everyone chooses a path that leads to a high income. For instance, some people pursue careers that they might enjoy but pay average or even below average salaries. Others might not pursue a career, at all, and might instead jump from one industry to another.

3) Most people do not remain in the same income categories in perpetuity. While millions of people are classified as poor at a given time, the fact is that most of these folks move out of this category at some point in life. Another tandem fact is that high income earners often do not remain as such for very long.

4) Incomes are not distributed—they are paid directly for services. When a person works a job, he or she is exchanging time and effort/skill for money. The employer is willing to pay the employee and the employee is willing to trade his or her time for money. That does not mean that either party is necessarily happy or that the arrangement is ideal, but the fact is that jobs are offered and they are accepted; so income is paid directly. Politicians often speak of an unequal distribution of income as if it is distributed among the people by some central force, but this is not so.

Each of these realities should give debaters on both sides of the issue some perspective. The acknowledgement of each might also enrich the debate so that policymakers and individuals can make wiser future decisions.