Why We Want to Reduce Poverty, Not Inequality

If American society could either reduce the absolute level of poverty or reduce inequality, which should it do and why?

While reducing inequality will close the disparity gap in the long run, it will do nothing to benefit those at the bottom of the ladder. Simply put, choosing to reduce inequality seemingly has the advantages of stimulating economic growth and equalizing distributions of income. However, in that scenario the poor receive nothing more because they are left in the same state with the same income level—same goes for those at the top. Therefore, specifically targeting the poverty level is more effective in alleviating poverty and reducing the economic disparities in American society.

As history has proven, post-WWII from the 1950s to 1960s saw widening disparities and the most equal distribution of growth (Lecture, 1/20). While reducing inequality will encourage economic growth, reducing the absolute level of poverty is the better solution to help those living in poverty. To reduce inequality and encourage economic expansion would merely place those at the bottom in a worse off situation and those at the top with even greater capital income. From 2003 to 2006, the level of inequality stood at a record high since 1928, and income growth generated even greater inequality in the economy (Mishel et al., 95). Since most of capital income goes to those at the top of the ladder, their growing high income directly results in the increase of economic disparity. As Mishel's study found, the breakdown of income inequality was such that in 1979 the top 1% received 34.2% of all capital income and by 2005 it rose to 65.3%, nearly doubling their share over the years. On the other end, those at the bottom received 36.7% in 1979 and 15.1% in 2005 (Mishel et al., 78). As demonstrated, the poor remain disadvantaged even in an expanding economy of income growth.

Moreover, attempting to reduce inequality would also prevent greater economic mobility for the society. Because of the declines in their capital income overtime, the poorer families at the bottom would in turn face the challenges of moving up the economic ladder. The Mishel et al. study of working America concluded that “rising inequality has made it harder for families to get ahead, both in an absolute and relative sense” (Mishel et al., 95). Thus, reducing the absolute level of poverty will have a positive impact on the working class and the poor in American society.

All in all, in order to address the issues of growing poverty and lift the poor from the bottom of the ladder, American societies must choose to reduce the absolute levels of poverty as opposed to reducing economic inequality. The 2000s saw how the economy's expanding income growth made the well off more well off and the poor even poorer in terms of capital income. In contrast, to target only the poor and reduce absolute poverty will have the greatest effect in closing the disparity gap. That solution will both effectively assist the poor and ensure that the well off are not affected in the process. Because gaps are widening across the nation (and almost everywhere for that matter) reducing poverty will also allow the poor to work their way up and increase economic mobility in the society.