Today, quintile, or the top twenty percent of

Today, more people are living in poverty or struggling to pay their bills than ever before. Most of the middle class suppresses these struggles due to shame or fear. If you see the ease with which those in upper classes live in comparison to the struggle that those in lower classes have to endure compared to 15 years ago there is no denying that income inequality is beginning to take its toll on even the most resilient worker. This inequality is eating away at the American dream. The cause of this inequality is a characteristic unique to America; rather than having a holistic business method, companies focus on maximising shareholder wealth at the expense of their workers and customers, and the general public. This inequality is causing economic hardships for the working class and will only be solved if people in the United States change their business model to be more ethical and allow employees to be more productive and content. Income inequality is not a temporary issue. It is not just the rise and fall of the economy. It is not the normal gap between the rich and the poor. This time, the issue is different. According to the United States Census Bureau, from 1967 to 2015 the incomes of every quintile as a whole went down; except for the income of the fifth quintile, or the top twenty percent of earners, whose incomes went up by seven percent as a whole. Even the fourth quintile had a decrease in income. Prices continue to rise but for the vast majority of Americans paychecks are shrinking. For the last fifty years, the income gap has been on the rise. There is a direct connection between the very wealthy and the stock market. Although the United States has the highest rate of stock market participation in the world, it is the wealthiest ten percent of the populus that holds over seventy five percent of stocks. (Ireland) There are now very few people controlling the interests of such a grand majority of the stock market. It is becoming apparent “that shareholder primacy is in reality the primacy of a small privileged elite.” This is very beneficial to the very wealthy, but devastating to those who are not investors. When a company focuses on maximising the value of their stocks, they often go to great lengths to maximise profits. This has a very negative effect on the consumer and the employee, and the average citizen. To help their stock values rise, businesses take every opportunity to maximize profits. Many business people will say that maximizing profit is the purpose of business no matter what the cost. However, “such a limited moral examination does not challenge the foundations of corporate activity.”(Dobson) The two ways to increase profits are to increase income or decrease spending. Increasing prices is problematic in a capitalist society- if you increase prices, less people will buy your product. So, businesses find every way to decrease spending. The easiest way to decreases expenses is to lower the cost of employees. If the number of employees is at its minimum, their wages are kept low, and the expense of holding these employees is minimized, the business should be able to both maximise profits and maintain affordable prices for their goods or services. Some would argue that the practice of prioritising shareholder wealth is not immoral. John Dobson, of the Financial Analyst’s Journal, argues that “the language of business is, by definition, financial, and the market enables whatever moral values prevail.” In other words, he believes that the morals of the market follow the morals of the people. Once the priority of the market becomes high stocks, as it has become, the morals turn towards profits and turn their backs on the people making the profit possible. Companies like GE, who fire the bottom ten percent of producers each year, are a cut-throat example. To keep wages low, businesses outsource work to those who will work for a lower profit, to other countries, decreasing employment opportunities for citizens. They also fight increases in the minimum wage and reduce pay increases within the company. To decrease the cost of holding employees, they provide the minimum benefits, or like Walmart, schedule shifts so that their employees are not working enough hours to be granted benefits. These kinds of tactics lower the household income for employees, but corporations get the one thing they want- quicker, bigger profits.Some argue that this income inequity has not harmed the quality of middle class life. Scott Winship, author of There is No Evidence That Inequality Harms The Economy Or Democracy strongly believes that the middle class is in fact better off than in previous years. “If inequality between the poor and middle class is problematic,” he argues, “it has always been problematic…. It is not especially so today”. He claims that today’s middle class family has twice the purchasing power of a family fifty years ago, and that incomes of the middle class and the lower class are growing at a similar rate. However, his own statistics prove him wrong. He shows that the income of the middle class has grown 63% since 1969, while that of the lower class has grown only 46%; a 17 point difference. (Winship) If this is true, how are incomes as supposedly equitable as Winship claims? How does this inequity not affect millions of Americans?If as a society we attempted to grow incomes equitably, it would be better for us all. Not only would this provide a safer base for the working class, it would provide stability to our economy. It would allow for a fairer treatment of the workers and allow them to live a more fulfilling lifestyle. It would also lead to a more equal management of stocks: one that does not rely on the interests of the stockholders alone, but one that rests on the shoulders of employees and consumers. This ‘holistic’ approach to business has been tried before; and it has worked. Historically, raising salaries rather than lowering them has created success and growth for companies. When Ford began to make the Model T, he doubled his employees wages. He wanted to ensure a stable workforce and allow them to buy the product they were producing. At the time, there was ‘chronic absenteeism’ and a high rate of worker turnover. (Cwiek) His raising of wages, while not the most desirable for stockholder, allowed for higher productivity and more overall growth. As a more modern example, Costco has a similar business theory to Ford. Rather than paying their employees less and raising prices, they have raised their wages and lowered their prices. This leads to lower initial profits. However, it increases morale among employees, increases turnover, increases productivity, and leads to better prices for consumers. In all this fosters a better shopping environment and makes shoppers want to come back again and again, growing the business and satisfying stockholders. Rather than maximising shareholder value employers should focus on creating a more equitable pay structure. Maximising stock value at the expense of the employees creates a hardship for the working class. This uniquely American characteristic needs to be eliminated to bring about equity between the classes. Going back to a time when employees were seen as assets and not a cost to be minimised and where maximization of stockholder value was not the primary goal will reduce reduce pay inequalities and create a better working environment. By changing the corporate culture in a way where we no longer focus only on stock price, we will be able to help reduce poverty, create better, more productive work environments and help the middle and working classes.