The Widening Income Gap Between Rich and Poor

___The rich are getting richer, and the poor are getting poorer? Wrong! The gap between the incomes may be widening, but the poor are getting richer also.

___Why is the gap widening? The rich make and spend money more efficiently than the poor. The poor may not have a vehicle, so they shop at the most convenient store. The rich usually have more than one vehicle and can shop where their dollars are most effectively and frugally spent. Compare food prices at a “convenience” store and a Costco. Customers pay a membership fee at a Costco because they will save more than the fee during the membership period. The income of the poor (welfare or Social Security) is relatively static compared to the open-ended income of the rich. The cost of necessities (food, medicine, basic clothing and basic housing) is not that different for the poor and the rich, but it is a far greater percentage of the poor's income. The rich will be able to save and invest a large portion of their income thus increasing their future incomes. They can buy designer clothing and live in mansions. The poor borrow money at title pawn stores or “sub-prime lenders” at more than 36% interest. Many borrow with credit cards and make “minimum payments.” If the rich have to borrow money, then they do so at “prime rates” or lower.

___Income usually increases with the amount of education that a person has. A person can typically avoid poverty by staying in school and applying him/herself. A teenage girl who becomes pregnant and drops out of school before graduation, will typically not become rich. A blue-collar worker with a single skill will typically be unemployed at some time in the global economy - which requires flexibility to perform whatever task is required. Many industrial workers have been replaced by automation and the demands of total quality control. In 1776 most Americans earned some income from growing food and crops. By 2016, most food and crops were grown by about 2% of the population. Change happens, and we must develop the skills needed to adapt and prosper.

___Many (like the Tubmans of Augusta) freed their slaves and paid for their passage back to Africa. The Economist says that in 2006 the per-capita GDP in the United States was $37,240. In Liberia, where the freed slaves were sent, the per-capita GDP was $900. The “poor” in America would be considered “rich” in Liberia!