The United States is a place of diversity where multiple ethnicities live and come from different locations or even migrated to the state. As people started migrating from multiple locations it started separating people into social classes and to this day the same social classes are getting worse and worse. As the richer continue on and becoming even more wealthier than they can even imagine and the less fortunate become less fortunate, our economy is having multiple effects from this separation in social class and they are damaging our economy.


To begin, Kuznet’s hypothesis was correct that inequality was shaped like a U-shape and it started high in the 20th century then it was low in the middle years and back to highs and continue rising since the 1970s. As the lower class live in a pre-industrial society, most people live in subsistence level meaning it is just enough to survive. Meanwhile the higher classes live better off and continue rising and having more accessible.
First, the lower class affects the economy in multiple ways. It could it affect the economy with “trust” by hurting businesses and making businesses impose higher “transaction costs”. (Keeley 67). It even affects the economy with high crime rates for multiple reasons, especially due to poverty, “Being in poverty often leads to high levels of stress. An overwhelming desire to meet certain basic needs becomes the highest priority. Over time, if those needs cannot be met, then some individuals will commit robberies, burglaries, and other forms of them”(Regoli). In this quote it shows how poverty creates reasons to turn to crime in order to meet those basic needs to even survive. It affects the economy by making multiple areas dangerous and even decreasing GDP especially if items that could have been sold to help provide information are stolen and never retrieved meaning it would not even count that year. It even increases the crime rate in richer areas since people who are less fortunate have no other choice but to rob from the fortunate people who can afford it. It affects the prices of the area since new coming families and different groups of people would want to live in a certain area where they believe it is safe yet it becomes even more pricier due to security reason unmotivating them to even want to live there or even pass by the area, “A 2016 London School of Economics study, for instance, found that greater income gaps between neighboring U.S. neighborhoods led to more property crime in the richer neighborhoods” (Ingraham). Lower income areas are even affected in the school industries within those areas. They are limited on education and even resources to go to school, “The main mechanism through which inequality affects growth is by undermining education opportunities for children from poor socio-economic backgrounds, lowering social mobility and hampering skills development,” (Ingraham). It would affect the economy by not receiving the best of people, especially not advancing in technology or in multiple areas since the majority of people will not be able to even understand what is going on or how certain things work. It creates less productive employees which eventually means lower wages and overall lower participation in the whole economy. Inequality in general will hurt the whole economy for the long run that is why there has been multiple organizations that are created to help out the economy or even protect us the OECD: “But the near-unanimity in the studies above, particularly pertaining to rich countries with high levels of inequality, presents a compelling case that inequality will be harmful to all of us in the long run. That’s why organizations like the OECD, the International Monetary Fund and the World Bank are increasingly sounding the alarm on this issue: Skyrocketing inequality hurts everyone regardless of economic status,” (Ingraham). The lower class is even affected by inequality in the health department. Since lower class families are not allowed to be able to purchase foods that they need with low wages they are more vulnerable to diseases, high mortality rates, high healthcare cost, and going deeper into poverty, “The result of a substantial poor population, a defining feature of economic inequality, is a less effective lower-income work force, higher disease and mortality rates, higher health care costs, and progressively deepening poverty for afflicted groups” (Birdsong). The economy is affected by this by having a lower work force and even increasing the overall mortality rates in the United States, also without a workforce products will not be created or it will be scarce. For example, if farmers were to have poor health and they would eventually pass away those crops that were being farmed will be scarce and limited making it competitive and unaffordable to low income people. It also creates more obese people by making fast food affordable to low income families which then take advantage of their deals for example, the two for six dollars McRib special from McDonald’s a corporation aiming for low prices for people with low income could buy these fast food products that will eventually hurt them in the long run. There are multiple fast food restaurants that have cheap prices for they can be affordable and even if it makes it affordable it is going to hurt the workforce of the economy by making workers obese and giving them a higher risk of diseases and eventually killing them by feeding them junk.
Meanwhile, wealthier people help put a bad reputation. If you were to be a business owner who has low wages, you will not make much money off of it since workers can not afford your products making business slow and affected the economy by their stocks and in different ways: “While that’s obviously bad news for poor families, it also hurts those at the top. If you’re a billionaire owner of a retail or manufacturing company, you want people to be able to afford the stuff you’re selling. Henry Ford offered his workers high wages not out of any altruistic impulse but because he wanted them to buy his cars” (Ingraham).
Inequality even increases political inequality in a majority of ways. Political powers will tend to go to the wealthy group even if it is smaller, “When wealth distribution becomes concentrated in a small number of hands, political power tends to become skewed in favor of that small wealthy group. High-income groups are able and incentivized to manipulate government in their favor through both legal processes and through corrupt practices. Impoverished or working class groups are simultaneously less able to become educated or participate in the political process as economic means become increasingly scarce” (Birdsong). This quote explains how Political groups or even political figures are biased and will pick on their favor the legal way or even the corrupt way. This would damage the economy by choosing bad decisions that will eventually hurt the economy as a whole and create multiple problems, for example, if a politician were to help out an oil company and choose that company due to favoritism it could create a problem since we do not really know their true intentions and could even possible hurt people by creating an oil spill and destroying nature and creating a bad health zone for people who live nearby that area. It will even damage the economy by getting rid of free market competition where the economy could benefit from competition. The economic growth is being damaged by all the overall causes of inequality and data is scarce to see why economic growth is being damaged.
Overall, inequality of wealth and poor people are affecting the economy in multiple ways. Even if it does not seem like a major deal it is. It creates problems like crimes in all areas, even creating health problems to people who cannot even afford to take their children to get daily checkups. For the wealthier they are able to afford all these luxuries and necessities making it more scarce to people who cannot afford multiple objects and even if they could they are in competition for supplies since they could be scarce. Even it could corrupt the politicians or political groups to choose certain corporations or people in their favor making it less fair and corrupt.

Work Cited
Chief, Editor in. “How Poverty Influences Crime Rates.” Vittana.org, https://vittana.org/how-poverty-influences-crime-rates. This website talks about how poverty takes a place in unequal pay. It states that sometimes people don’t have the chance to even get a job. Also how if you’re in the poverty area you are more tended to go steal for survival. Finally, how wealthier areas are usually the ones to be attacked due to the survival of people of poverty.
Ingraham, Christopher. “Analysis | How Rising Inequality Hurts Everyone, Even the Rich.” The Washington Post, WP Company, 27 Apr. 2019, https://www.washingtonpost.com/news/wonk/wp/2018/02/06/how-rising-inequality-hurts-everyone-even-the-rich/. This Washington post talks about how the rich even get hurt by unequal pay. Saying that most people cannot afford it since 1% of the world are wealthy people meaning most of the community or Earth cannot afford certain things. An example could be like Henry Ford having to raise wages in order for his own workers to be able to afford his vehicles. This website also talks about different subjects related to unequal pay.
“Is Growing Inequality Hurting Our Economies?” Equitable Growth, 10 Apr. 2018, https://equitablegrowth.org/is-growing-inequality-hurting-our-economies/. This website talks about how our own economy is also damaged by unequal pay. How multiple families cannot afford certain things making capital per GDP less and showing that instead of going up we are going down. Insurance markets are even damaged by the wealthy due to unevenness and economic activity. Overall, this website talks about how the economy hurts through unequal pay.
Sevenpillarsinstitute.org, https://sevenpillarsinstitute.org/consequences-economic-inequality/. This website simply gave multiple examples of how income inequality affects the economy and even the government. Used multiple examples of campaigns and crooked people in the government choosing certain things for their favors. As well as poverty families doing what they have to do. Finally, how health is also affected by unequal pay since they cannot afford much.
Keeley, Brian (2015),”How does income inequality affect our lives?”, in Income Inequality: The Gap Between Rich and Poor, OECD Publishing, Paris. Thus book simply talked about the separation of income inequality. It stated multiple examples and how things can get affected. Some good and bads from income inequality. Overall it did not provide much information.