NAME: ____________________________ PERIOD: ___ DATE: ____________ MRS. BRANFORD GLOBAL HISTORY 10

~ “ISSUE OVERVIEW: INCOME INEQUALITY” ~READING COMPREHENSION QUESTIONS

Directions: Read the article “Issue Overview: Income Inequality.” For each statement or question, fill in the number on the line provided of the word or expression that, of those given, best completes the statement or answers the question.

_____ 1. Which of the following are two main ideas from the article? A. Many experts agree that income inequality is getting worse in the United States. B. The United States is the 43rd most unequal country in the world when it comes to family income. C. Wealthy people pay less income tax than they used to, which is causing greater income inequality. D. People disagree about how to fix the gap between the rich and poor and how big of a problem it is.(1) Both A and B(2) Both A and D(3) Both B and C(4) Both C and D

_____ 2. Which evidence best supports the claim that income inequality is a problem?(1) Income inequality causes people to work harder and become more creative.(2) During a recession, like from 2007-2009, there was more equality between the rich and poor.(3) Wealthy people pay a smaller proportion of their income in taxes than they used to.(4) Countries with larger income inequality also have higher rates of unemployment, which leads to

social unrest.

_____ 3. Which conclusion can best be drawn from the graph “Uneven Progress Among U.S. Families”?(1) The top 5 percent of U.S. households lost the most money during the 2007-2009 recession.(2) The top 5 percent of U.S. households has consistent gains from 1966 to 2014.(3) The highest fifth of U.S. households has gained the most income since 1966.(4) The lowest fifth of U.S. households gained the most income since 1966.

_____ 4. Use the graph “Uneven Progress Among U.S. Families” and information from the article to select the statement which is true.(1) Increasing the minimum wage for the lowest fifth can help close the income gap.(2) The gap in income between the richest and the poorest is growing.(3) Workers who cannot go to college in the middle fifth have lower incomes.(4) The people in the top 5 percent have to pay more tax on their income than the lowest fifth.

_____ 5. An economist would find this document most useful for(1) providing background information about income inequality.(2) arguing for increasing the minimum wage to lower income inequality.(3) understanding the role international trade plays in lowering income inequality.(4) proving that prosperous countries have more income inequality than less prosperous countries.

Issue Overview: Income InequalityBy Bloomberg, adapted by Newsela staff on 09.29.16

New Series 2001 One Dollar Bill Notes. Photo by Alex Wong.

DEFINITIONS

capital – wealth in the form of money or property

income – the money a person makes, usually for the work they do

recession – an amount of time during which businesses lose money and many people do not have jobs

People all over the world are worried about the gap between the rich and poor. This gap is called income inequality and it is getting worse. The pope is the head of the Catholic Church. He disapproves of it. Janet Yellen is a top government official and is in charge of the U.S. Federal Reserve, the country's banking system. She said she’s “greatly concerned” about income inequality. The World Economic Forum is a group of world business leaders. It says income inequality is a threat to the entire world. Inequality has become a big issue in the U.S. presidential election. Experts argue over how inequality affects people and the world. They agree it has been getting worse in many countries for more than 20 years.

The Situation

From the late 1930s to the 1970s, there was a smaller gap between the rich and poor. Since then, though, the gap has grown bigger. The rich are getting richer and the poor are getting poorer. From 1979 to 2011, income tripled for the richest 1 percent. This 1 percent is the richest family out of every 100 families. Experts agree that the income gap is getting worse, but they argue about how much.

The CIA World Fact Book ranks countries by how unequal families' incomes are. The United States is 43rd out of 144 countries. Slovenia in Europe is the most equal and Lesotho in Africa is the least equal.

Equality and prosperity can also be different. Prosperity means that people are earning a lot of money and the country is doing well. In the United States, the gap between rich and poor is growing. At the same time, there are fewer poor people. China’s income gap has grown wider than America’s, even as hundreds of millions of Chinese are no longer as poor as they once were.

Courtesy of the Paris School of Economics, The World Top Incomes Database.

The Background

There are many reasons for income inequality. First, companies have closed factories in the United States, which has caused many workers to lose their jobs. The companies began making their products in countries where labor is cheaper. Second, the tech industries have grown much stronger. A tech job can pay very well. Third, college has become much more important for finding a job. It also has become very expensive. Fourth, wealthy people pay a lower proportion of their incomes in taxes than they used to. This means they keep more of their money and grow richer. Thomas Piketty wrote the best-selling book, “Capital in the 21st Century.” Piketty said that inequality got worse in the 1900s.

U.S. Census Bureau.

The Argument

Many people think there should be a smaller gap between the rich and poor. They point to studies that show that it creates big problems. Countries with a bigger gap have more people out of work. One study found that families in areas with more inequality had more money problems. They also had longer drives to work and were less able to pay their bills. More equality is linked to more social mobility. This is how easy it is for people to become richer.

Others argue inequality makes people work harder and make more money. It also makes people more creative and makes them take more risks. They point out that inequality isn't a win-or-lose game, in which some people get everything and others get nothing. From 2007 to 2009, the U.S. economy got worse and many people could not find jobs. During this recession, rich Americans lost money. For a short time, there was more equality, but the poor did not get richer.

One suggestion to lower inequality is increasing the minimum wage. It is the least amount of money by law that people can earn per hour. Other ideas include higher taxes on the rich. Piketty suggested a global tax on capital, or wealth. He said it would help deal with social unrest and protests that go along with inequality.