Wealth Distribution – An Unemployment Centric Perspective (Private)

Published on July 31st, 2012 | by

Wealth distribution discussions are frequently focused on the amount of pay that people deserve, but I have a different perspective to share with you.

Low Income Housing

For example: The liberals argue that the middle class is struggling, but the wealthy are earning from a few times more, to hundreds of times more money than hard working middle class employees, and that isn’t fair.

The conservatives argue that the wealthy CEOs built their businesses from the ground up, and that they deserve all the money they get because the business belongs to them, or that their jobs are stressful.

I’ll get to the point: I view the wealth distribution issue from a more employment-centric perspective.

The fact that the rich are making so much more money than the middle and lower class is one reason why unemployment is as severe as it is.

The Reason

Money has to come from somewhere. There is literally a finite amount of money in circulation in a given economy, and it is distributed to organizations and people through the purchase and sale of goods and services, as well as by paying employees, which then use that money to buy products, supporting their economy (assuming the products they buy are made locally).

Keep in mind that it is not just the income of ultra-wealthy people such as Bill Gates that is the problem, but also those making less than $20 million per year, and even those making $200,000 to $900,000 per year. There are many more people in this category.

Remember when I said that money has to come from somewhere?

The wealthy are able to collect such enormous amounts of money from the businesses they run that the businesses’ ability to hire people is actually limited by that. I am not saying that is the only reason why they don’t hire people, but it is a contributing factor to the unemployment situation, due to the following reason:

The income of only one person that earns $1,000,000 USD annually is enough to hire and pay 33 people $30,000 per year or hire 83 people and pay them $12,000 per year. According to the IRS, more than 350,000 people in the United States alone make more than $1 million per year.

Out of America’s population of more than 300 million people, that is 0.001% of it.

So, assuming that the 0.001% I mentioned is making exactly a million per year, for the sake of convenience, which is actually far less than some of them make, their combined income would be $350 billion USD which is enough to hire 11.6 million people and pay them $30,000 per year.

Assuming a national unemployment rate of 8.4%, and a population of 300,000,000, there are 25.2 million unemployed people.

Alternatively, this is enough to hire 29.1 million people if they were to be paid $12,000 per year, this is a relatively low income, but I made that calculation to show you that there is enough money for virtually no unemployment, and more, including a very low crime rate.

Poverty is caused primarily by unemployment and there is a strong correlation between poverty and the crime rate as well. A weak economy usually entails a high crime rate.

0.001% of America’s population is taking home enough money to hire the entire unemployed population.

Conclusion: When I see a wealthy person driving around in something expensive such as Lamborghini, I’m not concerned about whether or not they deserve the vehicle, but the first thought that comes to mind is how many people could have been hired with the money that they are taking home, and how much better the economy could be.

More employment strengthens businesses.

Photo Credit: Pascal \\o/ on Flickr


About the Author

writes on CleanTechnica, Gas2, Kleef&Co, and Green Building Elements. He has a keen interest in physics-intensive topics such as electricity generation, refrigeration and air conditioning technology, energy storage, and geography. His website is: Kompulsa.com.