Income Gap Hurricane Katrina Stuck

Income Gap

Hurricane Katrina stuck America hard and the realities came to the fore. The issues of poverty and discrimination that were synonymous with the developing world appeared on front pages in the newspapers not just in the United States but world over. People mocked at the so-called powerful nation for the poor treatment meted out to the poorest of poor in the United States. Majority of poor people with no means of availing transportation required for evacuation was left stranded in New Orleans. The story did not end here, as many people had to survive under worst of circumstances without proper food, water and sanitation. Violence and looting only aggravated the situation further. The issue of income gap or income inequality appeared more prominently then ever before.

United States & Inequality

The issue of inequality is well-known in the developing world but the question that has been raised time and again is the question of inequality in the United States of America.

If we look at history then we will come to know that the inequality was more defined in the beginning era in United States. The differences between the families living and working for plantations in South as compared to the wealthy household in the Northeast were very clear to the discerning eye. The issue of exploitation of African-American labor including women has also been well-known. However the difference in incomes have reduced over the years particularly after the World War II. The ensuing years show a steady decline in the income gap but the trend emerged again in the early 70s when income disparity started appearing again. "From the Civil War to the end of the nineteenth century, inequality appears to have increased even further" (Dovring, 1991). Since 1970s the income gap has been widening in the United States of America and poverty showed its worst faces in the era and century marked by most technologically advanced innovations. The issue of poverty has been doing the rounds and even presidents of their times including President Reagan have owned up to the fact that issue poverty and inequality is hard to fight.

Aftermath of Hurricane Katrina not only highlighted the plight of poor in the current scenario but many other issues related to and resulting from poverty have also been highlighted. Take for example, the issue of infant mortality that has been a cause of concern in the poorest of nations. America with all its power and glory faces the same issue today not with the same intensity as some poorest nations face but still issue like these have surfaced over the years in the most developed nation of the world. "Under Mr. Bush, the national infant mortality rate has risen for the first time since 1958. The U.S. ranks 43rd in the world in infant mortality, according to the C.I.A.'s World Factbook" (Kristof, 2005). The issue can also be seen in ethnic terms where survival of an African-American infant is more doubtful in the United States then other ethnicity.

Reasons Indicating Inequality

We need to now look at the reasons behind the growing inequality of income. Both economic and non-economic factors have been behind this process as a result of which poor are getting poorer and rich are getting richer. Economist suggest problems of demand and supply or wage settings as the causes for inequality but a lay man has different understanding of the causes of such a big problem. So, the public opinion is different. One of the reasons that people put forward is that of downsizing in corporate America. They argue that Corporations in order to make better balance sheets and greater profits have removed the elements of job security by eliminating jobs of middle America. "The results of a survey in 1996 by the Washington Post, the Henry J. Kaiser Family Foundation, and Harvard University reflected a total of 82% of the public, to varying degrees, believed businesses were at fault" (Ryscavage, 1999). The same survey was also given to a sample of economists and the results were drastically different from the public opinion that blames considerably businesses. The disparity in the opinions of public and the economist highlighted the role that media played to bridge the gap.

American Dream

Some people give the humane argument against materialistic pursuit of the society that forgot the norms of humanity and living and helping together. Here the concept of 'American Dream' becomes important consideration in order to understand the whole issue. "According to Mr. Schoeneck, 39, an accounting manager for an electrical utility, American dream is to earn a reasonable living and to be able to spend quality time with family and friends in a community that cares" (Scott and Leonhardt, 2005). Many people argued that if a person does not inherit wealth in the family from generation to generation then it is very heard to keep pace with the materialistic pursuit of the society. In order to the 'American Dream' many people had to work hard and toil.

Move Towards Service Industry

One reason put forward for inequality is the shift from goods-producing industries to service industries as employment shifted to service industry at a fast pace. It al started in the late 60s and extended till the period of depression in the early 80s. Even after the depression the growth of service industry was phenomenal. The wages paid by the manufacturing or goods producing industry was higher than the service industry. So, the income disparity also started with shift of labor in service industry. This shift had tremendous effect on the middle class in America. Also, the pay scales of mangers in the service industry were much higher than the ordinary workers further indicating income disparities.

Economic Depression

There have been many other explanations given which support that certain changes have triggered the income inequality dividing not just United States but the whole world among rich and poor while middle class started disappearing fast due to different changes taking place. Economic depression like the one in 80s also had a profound impact on the distribution of income resulting from unemployment created. Many argued that this impact would be short-term but the effects did not disappear and contributed to the whole situation.

International Business Practices

International competition and business scenario also became contributing factors in employment and wages. The ability of different countries to produce similar goods at lower costs mainly due to low cost labor also introduced the concept of outsourcing. "Businesses could earn a bigger profit producing them where business costs were lower, and where the workers would not demand overtime or sick leave" (Witte, 2004). So, demand side of labor became more of a cause than the supply side due to baby boomers or increase in women workforce etc. In lowering of wages.

Demographic and Social Changes