Redistributing Wealth in the Middle Class

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The middle class makes up for the largest part of the US, and therefore it is imperative for it to flourish in order to keep improving as a country. The problem is that most middle class families are working full-time jobs, and still find themselves strained financially. By redistributing wealth in the United States, the middle class would stop struggling as much.This would help the economy succeed as a whole. As Robert Reich stated in The New York Times, “"Redistribution" has become a dirty word, conjuring up worthy "makers" forced to hand over hard-earned income to undeserving "takers." But as low-wage work proliferates in America, so-called takers are working as hard if not harder than anyone else, often at more than one job. Yet they are still not making it because the twin forces of globalization and technological change have reduced their bargaining power and undermined their economic standing, while bestowing ever greater benefits on a comparative few with the right education and connections (and whose parents are often best able to secure these advantages for them).”

Though there is much controversy over how a better distribution of wealth could happen, two of the ways I believe would help are by raising the federal minimum wage, and by increasing the taxes for the top 10% of earners. Consumer spending is roughly 70% of the U.S. economy, but with a current minimum wage of $7.25 an hour, the middle class is hesitant to spend money on things they do not absolutely need. Many cannot afford to spend money on anything besides their basic necessities. This hurts the economy overall because major companies rely on the amount of consumer spending to make their profit.

Annie Lowrey in the New York Times expanded on the severity of this issue by stating, “In 2010 the top 10% of earners took home more than half of the country’s total income---The highest recorded level ever...The top 1 percent took more than one-fifth of the income earned by Americans, one of the highest levels on record since 1913, when the government instituted an income tax.” Even though overall the economy is doing better than ever, the people overall are not. If you think about it, the 10% of wealthiest people in the United States can only buy so many pairs of designer jeans, toothpaste, pillows, etc. But if that 10% has more than half of the country’s income, it is not surprizing that consumer sales in the US are decreasing.

In 1968, the minimum wage was $1.60 an hour, which today is worth $10.56. Now products are much more expensive than they were then, and by comparison we are making less. By raising the minimum wage, the middle class would have more money to spend, which would boost the economy’s wealth and consumer spending. “Let's declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty...This single step would raise the incomes of millions of working families ... For businesses across the country, it would mean customers with more money in their pockets." said Obama, who is pushing to raise the federal minimum wage to $9 dollars an hour.

Raising the taxes on the richest people in the US would also help boost the economy. It was long believed that keeping low taxes for the rich would help the economy because they would use their wealth to keep expanding their businesses, and therefore create jobs, and increasing inflation. Thought this might once have been the case, studies (on Forbes) have shown otherwise. During his presidency George Bush cut taxes on the wealthy. While the effects of this are hard to measure because there were so many variables involved in how the economy did, one thing is clear: President Bush was not successful at improving the economy’s growth.

Taxing the top 10% more would help improve the economy because when middle class people are given money, they are most likely going to spend it. This results in more money being spent on consumerism, which creates a higher demand for products. When there is a higher demand for products wealthy company owners are more likely to hire more people to meet product demands. This would also mean they would lose less on sales.

By raising the minimum wage and/or taxing the wealthiest people in the United States, we as a country will succeed. There will no longer be middle class families who can not afford the bare minimum needed to get by. In summation a large portion of America is struggling financially, and there is 2 key things that need to be done; raising the taxes on the top 10%, and raising the Federal minimum wage.