The Long-Term Effects Of Growing Wealth Inequality on Economic Mobility In The U.S.

The distribution of total family wealth from 1989 to 2022.

In recent years, many people in the United States have been a victim of wealth inequality. Even though this problem has been occurring for a couple of decades now, especially after the Industrial Revolution period, it has been stressed more by speakers and politicians in the last ten years. So, why is this happening, and what will it do?

Wealth Inequality: The Important Facts

The data on wealth inequality in the U.S. is very astonishing. According to the Peter G. Peterson Foundation, the wealthiest 10% of households saw their share of the nation’s total wealth increase from 61% to 70% in only a couple of decades. The middle 40% and bottom 50% of households, meanwhile, have seen their share of wealth decline slowly over time because of the increasing concentration of wealth among a few people at the top. This trend is not just a short-term change but a shift over decades. 

The factors contributing to wealth inequality include wages not proportional to inflation and profits from businesses, the increasing cost of living, less access to education, and systemic barriers to wealth accumulation. But the key cause of the issue is the growing concentration of wealth in a small portion of the population. With such a large amount of national wealth concentrated in the hands of just a few people, it becomes very hard for others to access the resources needed to improve their economic status.

The Impact on Economic Mobility

Economic mobility refers to the ability of individuals to move up or down income/wealth classes. In an ideal society, a person’s economic status would be mostly determined by effort, talent, and hard work, and not by their family background, generational riches, or circumstances of birth. 

One of the most significant ways wealth inequality affects economic mobility is through access to education. Families with wealth can send their children to better schools, have tutoring and more extracurricular opportunities, and basically ensure that they have the skills and qualifications necessary to succeed in higher-paying jobs. On the other hand, families without wealth often face challenges in accessing quality education, which is shockingly essential for securing better-paying jobs in the current economy. This lack of access to good education creates a cycle of poverty that sometimes even goes on forever, where the children of lower-income families struggle to break free from their financial situation.

Wealth inequality also impacts access to healthcare. Wealthier individuals can afford better healthcare and live in healthier environments, which enables them to remain productive and continue to grow their wealth. Those from low-income families, however, are more likely to face health challenges due to limited access to quality care and unhealthy living conditions, which, in turn, can negatively affect their ability to work or attend school. This may not seem like a big issue, but it can have big negative impacts in the long term, especially for younger people.

Another significant barrier when it comes to economic mobility is wealth accumulation. People from wealthier backgrounds often inherit assets, including property or stocks, that provide them with a lot of extra income or stability. The lower 50% of Americans have little to no assets and oftentimes live paycheck to paycheck, which leads to almost none of their money or assets going down to their children or family. With no money left over, they are often left unable to invest in businesses or real estate, hindering their ability to create wealth and move up economically.

Conclusion

The growing wealth gap in the United States has far-reaching implications for economic mobility. It is not something that we just need to be aware of; it’s something we have to take immediate action on. The severity of these problems might not be known to us today, but as we grow older, if we choose not to treat wealth inequality as a problem, we will see its profound impacts on countries around the world. As wealth continues to pile up at the top, opportunities for upward mobility are becoming fewer for the middle-income and low-income brackets.