Wages,+Taxes,+and+Wealth+Disparity+-+Carol,+Seohyun,+Rachel,+and+Sarah

by Sarah Bock, Rachel Lee, Seohyun Kim, Carol Choo 1. What exactly is wrong in your area?

**Low Wages** Despite the harsh working conditions, the wages for the workers were absurdly low and inadequate for sustaining their daily lives. Earning approximately $600 per year for their wages, workers suffered from the high prices of products and tariffs. Adding on, the working hours proved to be a poor reflection of the wages they earned in the factories. Without official standards for working hours nor wages, workers had to appreciate even these wages without complaints; if not, they would immediately get replaced by the cheap-labor immigrants or other desperate workers who were seeking for jobs. These low wages were a result of the lack of skilled laborers, as the employers felt no obligation nor need to pay these unskilled workers with high wages. Due to the lack of education programs and the time to receive such education for such skills, unskilled laborers continued to strive. __ Primary Source: (Riis, Jacob: How the Other Half Lives) __

// To take the case of the saleswomen for illustration: The investigation of the Working Women's Society disclosed the fact that wages averaging from$2 to $4.50 a week were reduced by excessive fines, the employers placing a value upon time lost that is not //// given to services rendered." A little girl, who received two dollars a week, made cash-sales amounting to $167 in a single day, while the receipts of a fifteen-dollar male clerk in the same department footed up only $195; yet for some trivial mistake the girl was fined sixty cents out of her two dollars. The practice prevailed in some stores of dividing the fines between the superintendent and the time-keeper at the end of the year. In one instance they amounted to $3,000, and "the superintendent was heard to charge the timekeeper with not being strict enough in his duties." One of the causes for fine in a certain large store was sitting down. The law requiring seats for saleswomen, generally ignored, was obeyed faithfully in this establishment. The seats were there, but the girls were fined when found using them. //

High Tariffs on Everyone
Adding on to the burden of low wages and high working hours, high tariffs were imposed on almost all products under various laws such as the Dingley-Tariff Bill and the McKinley tariff in 1890. These tariffs were unanimously imposed on all classes without consideration of their differences in incomes nor living standards. However, the wealthy class actually escaped these tariffs with lobbying and illegal actions with their money. As a result, the lower classes ended up in paying these tariffs in daily products whereas the wealthy avoided these stringent tariffs. These high tariffs also resulted in the low purchasing power of consumers, especially in the lower class, as they could not afford the tariffs which followed the products in the market. **Wealth Disparity**  The gap between the poor and the rich was phenomenal. With differences in luxuries, working conditions, income, wages, houses, and social representations, the social classes were sharply distinguished from one another. These wealth imbalances were caused by the unequal income distribution problems in which the corporations and stockholders gained high profits from their monopoly of businesses while the workers and other competitors merely depended on these wealthy owners. Despite the high profit of businesses, wages did not rise, and through trusts and lobbies, this wealth even got worse throughout the progressive era. Moreover, the problem of having no specific tax imposed stringent limits on workers, whereas the barons freely gained high wealth from the companies without any requirements.

2. What can be done about this problem? Although the United States government of the 20th century would have had to try to their best to reduce the wealth gap among American citizens, wealth gap is a quite inevitable problem in a democratic society. Unlike a communistic society, in which everyone receives the same reward for his/her work, a democratic, capitalistic society grants different rewards for people of different skills, knowledge, and other factors. As are result, it is unavoidable that a person of no skill or education receives lower wages than a person who is well educated and skilled; the cycle continues to widen the wealth gap between "the poor" and "the wealthy." However, the government still has to seek ways to lessen the severity of wealth gap and income inequality in the American society. Although it is impossible to completely get rid of wealth gap in the society, obvious economic advantages to the wealthy, which increases the wealth gap even more, should be prevented by the American government.

3. Comprehensive Plan

The absolute cause of low wages is the lack of education for the poor. Because the poor don't get high quality education, they can never become skilled workers, who can either strive for higher social positions or gain higher wages at work. Unskilled laborers have almost no power at their work places because they can be replaced by immigrant workers or other unskilled workers at any time; they are not worth much to the employers. Yet, if primary education is encouraged and provided for even the poor, they can learn instead of work from their early ages, and become skilled laborers. Because skilled labor force is crucial for most American companies of the 20th century, the poor who had become skilled workers, would be able to raise their social status and earn higher wages. Additionally, if people get proper education, they would be more knowledgeable of the working conditions they have the right to receive from their employers, and become more strategic at requiring their basic needs from the often selfish employers of companies.
 * Wages: Improved Primary Education **

To increase the pool of skilled laborers, education is key. However, only a limited number of children were able to attend school in the 20th Century United States. The policy that we are suggesting implements an expansion of primary education throughout the nation. This is the first step to take to promote equality, but in order to truly ensure equal chances for all men and decrease the wealth disparity, there is a dire need for higher education in colleges such as the University of Chicago, Cornell University, or Columbia University. Schools and teachers should educate children and encourage children to pursue a higher education in order to climb the social ladder of America. When all are educated, more are able to compete for skilled jobs and therefore, lessen the growing wealth disparity.
 * Wealth Disparity: Higher Education **

One main reason that students are not gaining a higher education is because they don’t have the economic capacity to pay for for college. Thus, we suggest that a small amount of federal funds to be set aside to offer scholarships for outstanding students throughout the country. The government should also encourage big colleges to set up their own scholarship programs. For the government-implemented scholarship, each school would be allowed to nominate one student to be considered for the scholarship, but not required to. The student’s name must be submitted with their performance report and a letter from a teacher from the school. Washington would then decide the student who will gain the scholarship based on the student’s past achievements and potential capability. By offering more opportunities of education to poor students, the wealth disparity can be slowly closed, because not only the wealthy are gaining the privilege of higher education and being employed in the high skilled and high paying jobs.
 * Wealth Disparity: Scholarship Programs **

The root of the problem regarding the taxation is that people do not have same income, and therefore people find it “unfair” to pay the same amount of tax. Workers in the factory will almost never be able to earn as much as the owner of a company, yet they have to contribute the same amount to the government. This idea can arise complaints, and it surely did so. The wealthy has more income than the poor, and to demand the same amount of tax would not be the best solution to taxation.
 * Root of the Problem: Unequal Income **

**Solution to the Inequality** Prior to the Progressive Era, the federal government collected most of its money from custom duties and taxes on goods. Since, the federal government cannot have a complete control over how much each individual earns, implementing an income tax would be an appropriate solution. Graduated income tax would collect higher percentage from people who make more money. Hence, the“Congress shall have power to lay and collect taxes on income.. .without appointment among the several States,” to create a balanced income tax system (Amendment IXV). Such change can help fund government programs and create a better balance between the rich and poor, and can provide federal government with a massive __ **//new source of income.//** __

**Basic Procedures** The incomes of the people should be divided into different sector/decile, and divide it into anywhere from five to ten deciles. The first decile will have the highest percentage of tax and the tenth decile will be taxed with the minimum amount. Specific percentages and decile can be decided once the statistics regarding the income of the people are gathered.

**Lower the Tariff** On top of this system, it is better to lower the tariff, not necessarily to give advantage to the poor, but to make sure the lower class members can have more purchasing power. If the tariff were to be lowered, then the price of products will be reduced, thereby decreasing the pressure of purchasing. Not everyone has the same purchasing power, and making products more easily available can ensure common purchasing

**Problem with Lowering the Tariff** This will definitely lead to a decreased profit from tariff, but “new source of income” from the new graduated income tax should compensate for the reduction. This, in effect, will also open up US markets to foreign competition to break the power of US trust and reduce the number of increasing big businesses. This should allow more opportunities for small businesses to take a chance and pull down the “big guys.”

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 BBC. // Poverty //. N.d. BBC. // http://www.telegraph.co.uk/news/uknews/8127481/Gap-opens-up-between-rich-and-poor-in-Britain.html //. Web. 3 Feb. 2012. =====

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Scott Hatch and Lisa Zimmer Hatch. (n.d.). Moving through the Progressive Era. In // SAT II U.S. History: Moving through the Progressive Era //. Retrieved February 5, 2012 =====

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"Wages and Working Conditions, by Stanley Lebergott: The Concise Encyclopedia of Economics | Library of Economics and Liberty." //Library of Economics and Liberty//. N.p., n.d. Web. 5 Feb. 2012. . =====