In the Documentary Inequality for All, scholar Robert Reich investigates the wobbling facts on unequal distribution of wealth between the hierarchy of today’s society(rich,middle,poor) and its devastating effects on the American economy. Particularly, he focuses on the fact that our middle class, which contributes to 70% of our economy, is being limited in its growth by the wealthy that make up as little as only 1% of society, but income wise they make more money than half of the country. He begins the documentary by explaining that in the late 1970’s inequality became a major issue, not particularly on the basis of a declining economy, in contrast he also clarifies that there was steady ride of the GDP (gross domestic product). The majority faces this problem due to the unrivaled income of the American workforce in comparison to the exaggerated prices of health-care, college, housing and day to day living costs. Expenditure and wages are two statistics that go hand in hand. If expenditures increase for American households, so must the wages of workers, instead many saw a decrease or stagnation of wages throughout the economic breakdown and even to this date.
Reich describes this decline as a “huge gap”, and this very gap between income and rising economy has become a concern to all Americans that belong to our middle class. This economy got swept into a “vicious” cycle as explained by Reich, a cycle in which the decline of wages spelled doom for consumer spending, which led to a unsettling and troublesome economy for all. At first the majority of middle class relied on borrowing from banks to help them through their struggle of balancing high living costs and low income. Another coping mechanism that kept the middle class by the ropes was that the women of the country began stepping into the workforce to share the burden of responsibilities of their households. However, these efforts did not amount to much in the face of two critical issues; globalization and new technology. This hidden comradery has been responsible for being a faithful contributor to the flattening wages since the 1970’s. The captain of the online shopping platform Amazon.com, is a great example and one such company that is responsible for erasing many small businesses off the face of the market. Online businesses do provide efficiency and customer satisfaction, but these businesses have fewer jobs when compared to businesses in the past that performed the same task as Amazon does, but had many more workers, thus, had many more jobs.
With higher living standards and not enough lucrative income the middle class struggles with only enough to make it to the next day while the wealthy keep piling up unbelievable amounts of money. With accreting inequality on the middle class, they are forced to battling hurdles that make their efforts of moving up the ladder in life all the more difficult. Reich implores that the attention of the masses needs to be shifted towards the working class, foremost with their education. Prepping our workforce to specialize and become well-educated, will help them thrive and also add to a vision of a thriving stable economy; making education affordable and investing on the masses will not only spell success for the middle class society, but also the rich alike that employs majority of its workforce from the middle and poor classes. Education empowers us all.
The rich elites of our society seem to have this misconception that they do enough since they provide jobs, and think that if it weren’t for their role of creating jobs, that our economy would be in the slumps. They use this very notion to argue on issues of being taxed too much and that the “job creators” are being attacked. In retrospect, they are not making any efforts towards making the economy better or dare I say “equal”(ideally) for all. The rich making over six figure salaries a year manage to pay 15% on taxes while the average middle class male/female that makes anywhere from $25,000 to $75,000 a year gets taxed double, paying an average of 30% or more on their taxes.
In the U.S., when income inequality was at its lowest (1950s), the top marginal tax rate was highest (91%). Prior to the Reagan administration, the top rate was always above 70%. The current rate is now 39.6%, and income inequality is at all-time highs. Currently, as Warren Buffett explains, the “tax code is tilted towards the rich and away from the middle class.” It’s actually upside-down – those with more pay fewer taxes, than people with less. Though the top rate for wage-based income is 39.6%, the rate for income from investments (capital gains) is only 20%. That means wealthy people pay a lower tax rate than the rest of us. Examples from the film include Buffett, whose tax rate is about 17%, while the people who work in his office were paying an average of 32%; Mitt Romney paid 13.9% while Ladd and Nancy Rasmussen paid 33% (or more); and Nick Hanauer paid 11% on an eight-figure income. Hanauer says, “When you give rich people tax breaks, all in the name of job creation, all that really happens is that the fat cats get fatter, and of course that’s what’s happened over the last 30 years. It’s the signature feature of the economy.”