The document discusses challenges facing young households in the US due to rising income inequality. It notes that the income gap between the highest and lowest earning young households has grown, with the lowest quintile seeing declining incomes. Potential causes discussed include differences in education levels, rising student loan debt levels, occupational differences, and financial behaviors. Solutions proposed include increasing eligibility for Pell grants and implementing reforms to teacher performance and education standards. A multi-step plan is outlined to gather feedback, propose legislation, lobby for passage, and track results of efforts to address the problem through education and student loan reforms.

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Income Inequality
Challenges Facing
Young Households in
the US
Chunzi Lin
Nick Pawloski
Benjamin Rustman
Wei Rong Tay
Zach Uminski

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Pew Research Center
 Founded in 1990 and based in
Washington D.C.
 Provides information on social
issues, public opinions, and
demographic trends
 Conducts public polling,
research, media content
analysis, etc.
 Mission is to enrich the public
dialogue and supports sound
decision-making

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Income Inequality

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Income Inequality

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Young Households
 Income gap among young households has become bigger
 Lowest quintile of earners have seen their share of income fall,
while highest-earning quintile grown their share of income
 Decreasing mean income for young adults
 As young generation grow older, it will widen the income
inequality gap
 Causing social and economic problems
 So what can be the root causes…?

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Causes
1)Education
 College graduates are more likely to earn twice the salary of
high school diplomas

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Causes
1)Education (conti.)
 The median wage growth of college graduates is higher than
non-college graduates
 This could be due to the supply and demand of labor market

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Causes
2)Student Loans
 69% of graduates had student loan debt
 Average student loan debt is more than $30,000
 Increased by 33% since 2005

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Causes
2)Student Loans (conti.)
 College tuition fees has increased dramatically over the last
few decades

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Causes
2)Student Loans (conti.)
 Average earnings of young college graduates has been
decreasing

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Causes
3) Occupation
 Young adults with higher degree tend to find higher-paid jobs
 Increasing starting salaries for high-skilled jobs
4) Consumption & Investment behavior
 Higher educated individuals have better financial knowledge and act
accordingly
 People with less financial literacy are more likely to be in debt

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Alternatives
Current system is not working
Changes must be made
Education
Student Loans
Source: Intrust

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Annual expenditures per FTE student for elementary and
secondary education in selected OECD countries, by gross
domestic product (GDP) per capita: 2010 Alternatives

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Annual expenditures per FTE student for postsecondary education
in selected OECD countries, by gross domestic product (GDP) per
capita: 2010 Alternatives

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Alternatives
1)Education
 Establish committee to grade teacher’s performance
 Repercussions for low performing teachers
 Eliminate/Reduce “Common Core”
 More local control

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1)Education

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Alternatives
2)Student Loans
 69% of graduating seniors
had student loan debt
 Pell Grants are major
source for low income
families
 Increase threshold from
$23,000 to $32,000

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Criteria
 Public Nature of Problem
 Problems:
 1) Public
 2)Governmental
 3)Economic
 Targeted Demographic
 Low Income (>$30,000)

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Methods
Social Acceptance
Political Backing
 Lobbyist
Economic Feasibility
Time sensitivity
Short and Long Term Goals

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Recommendations
 Student Debt
 Rising costs in
education
 Inability to pay
 Pell Grant Adjustment
 30% of College Costs
 Income Restriction Change
from $23,000 back to
$32,000
 Increase in Social benefits

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Recommendations (conti.)
Education Gap
 No Incentive for teachers to perform well.
 Different levels of teachers in each level creates
unstable learning environment
Performance-Based Pay
 Restructured Tenure
 Teacher Monitoring

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Implementation Plan
 Step 1: Find multiple possible solutions & select the
best option
 Pell Grant adjustments
 Education adjustments
 Estimated time: 10 weeks
 Step 2: Propose our income and education bill to the
community & collect feedback
 Specific interviews
 Estimated time: 6 months

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Implementation Plan (conti.)
 Step 3: Analyze community feedback
 Break data into different demographics
 *Age, educational background, race, wealth, etc.
 Estimated time: 8 weeks
 Step 4: Propose income and education bill to our local
representative
 Hire assistance to draft official bill
 Estimated time: 4 weeks

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Implementation Plan (conti.)
 Step 5: Income and education bill passes into law
 Hire lobbyist
 Attract media attention
 Estimated time: 10 weeks to a year
 Future Steps: Track performance
 Is it helping to solve the problem?
 Does it need updates or revisions?

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Potential Challenges
 Gathering community feedback
 Getting the bill passed

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Conclusion
 Income inequality among young households is a newly raised
issue in the United States
 Education, student loans, occupations, consumption behaviors
are root causes
 Our team propose Pell Grant adjustment as a solution
 Short-term and long-term goals
 Our team is confident

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Reference Lists
 DeNavas-Walt, C., Proctor, B. & Smith, J. (2013). Income, Poverty, and Health Insurance Coverage in the United States: 2012.
Retrieved April 5, 2015 from http://www.census.gov/prod/2013pubs/p60-245.pdf
 NCES. (2013). Digest of Education Statistics: 2012. Retrieved April 7, 2015 from http://nces.ed.gov/programs/digest/d12/
 NCES. (2014, January 1). Education Expenditures by Country. Retrieved April 7, 2015, from
https://nces.ed.gov/programs/coe/indicator_cmd.asp
 Rotherman, A. (2012, May 24). How To Fix Pell Grants | TIME.com. Retrieved April 6, 2015,from
http://ideas.time.com/2012/05/24/how-to-fix-pell-grants/
 Baum, S. & Steele, P. (2010). Who Borrows Most?Bachelor’s Degree Recipients with High Levels of Student Debt. Retrieved
April 1, 2015 from https://trends.collegeboard.org/sites/default/files/trends-2010-who-borrows-most-brief.pdf
 Strauss, V. (2013, December 15). How much teachers get paid — state by state. Retrieved April 7, 2015, from
http://www.washingtonpost.com/blogs/answer-sheet/wp/2013/12/15/how-much-teachers-get-paid-state-by-state/
 Student Body of America Assosiation. (n.d.). Possible Solutions to the $1 Trillion Student Debt Crisis. Retrieved April 6, 2015,
from http://www.studentbodyofamerica.org/possible-solutions-to-the-1-trillion-student-debt-crisis
 U.S. Census Bureau. The Statistical Abstract of the United States: 2012. Retrieved March 30, 2015 from
http://www.census.gov/compendia/statab/2012/tables/12s0232.pdf

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Question?