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Economic issues in the United States

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Economic issues in the United States

A country's economic issues reflect the distribution of intellectual and material resources and workload in its society. The United States is one of the most affluent countries in the world, with a leading system of higher education, but – with the exception of a few much smaller Asian city states – it is also the world's industralized country with the most uneven distribution of wealth.

Educational system

The U.S. educational system is compulsory for the first 9 to 12 years of education, depending on the state. While most students graduate between 17 and 18 years of age, many states allow for the student to voluntarily remove themselves from enrollment, or "drop out" without earning a diploma.

Although some funding comes from the federal government, public education is almost entirely funded and controlled individually by state and local governments and school districts. Within a state, primary control of the system rests with the state, which delegates authority to local authorities.[1] Although the Department of Education wields some authority, most powers concerning schooling remain with the states.

The funding and condition of the school system in each municipality is largely determined by the school district or local government. In affluent communities, especially those with many school-age children, the educational system tends to be more heavily funded on a per-student basis and tends to be more effective. Communities that are less affluent or have a lower proportion of families with children generally spend less money per child.[1] Statistical information generated by the No Child Left Behind Act, and similar acts at a state level, demonstrate the general correlation between money spent per child and academic success.

State governments since the 1970s have grappled with these issues of educational equity. Despite these attempts, in 1992, the U.S. General Accounting Office stated, "Although most states pursued strategies to supplement the local funding of poor school districts, wealthier districts in 37 states had more total (state and local combined) funding than poor districts in the 1991-92 school year. This disparity existed even after adjusting for differences in geographic and student need-related education costs." [2] In some states, most prominently New Jersey, courts have ordered dramatically increased funding in lower income areas. In other states, legislatures have acted on their own initiative to somewhat equalize the funding available.[3]

Access to health insurance

The United States does not have universal health care or a system of socialized medicine. Health insurance may be provided as an employee benefit, while unemployed, part-time, and self-employed workers must often pay for their own insurance. In 2001, 41.2 million people in the United States (14.6% of the US population) had no health insurance coverage, though a significant portion of those are in the U.S. without proper documentation. By 2004, this had risen to 45 million (15.6%). The U.S. Census Bureau attributed the drop primarily to the loss of employer-provided plans due to the economic downturn and a continuation of rising costs.

A recent Harvard University study found that medical bills are a leading cause of bankruptcy in the United States. The study found that many declaring bankruptcy were part of the middle class and were employed before they became ill, but had lost their health insurance by the time they declared bankruptcy. In the U.S., people leaving a job can continue with their former employer's health insurance plan under the COBRA at a rate that is usually double the rate the employee paid while employed. When an employer-insured person loses a job due to illness and does not have sufficient resources to continue to pay for COBRA health insurance, they also lose their coverage.

Efforts to provide universal health care in the 1960s and early 1990s floundered against widespread opposition by politicians who objected to government control of medicine and business groups which opposed further regulation of the healthcare and insurance industries. Despite a general consensus, codified in the federal Emergency Medical Treatment and Active Labor Act, that emergency care must be provided even to the indigent, it is not widely accepted in the United States that the availability of broader health care should be considered a right and paid for by public funds.

Cost of living

Some states have a cost of living wage that requires a business to add an additional wage to the minimum wage .

The minimum wage is an extremely minor part of inflation or cost of living increases. In fact, the minimum wage has not kept up with inflation over the past 30 years . Inflation has much more to do with monetary policy and credit .

Rising land values

A rise in land values was the true bubble of the so-called housing bubble.[4][5] Even after the crash in home prices, land values are high near the Atlantic and Pacific coasts, and low elsewhere in the U.S.[4] High land values result in high cost of living, causing cities and states in expensive areas to have high taxes. The high cost areas are at a competitive disadvantage to the rest of the country, and was a factor in the population shift to the South in the last several decades.

The economic effects of land prices was most notably discussed by Henry George. This economic school of thought is known as Georgism.

Use of credit and savings rate

The United States has the lowest savings rate of any developed nation. This low savings rate is offset by the high use of credit.

Further reading

  • Douglas S. Massey, Categorically Unequal: The American Stratification System, Russell Sage Foundation Publications 2007, ISBN 0-87154-585-3

References

  1. ^ a b "Equity and Adequacy in Education Finance: Issues and Perspectives". Books.nap.edu. Retrieved 2012-03-12. 
  2. ^ "Equity and Adequacy in Education Finance: Issues and Perspectives". Books.nap.edu. Retrieved 2012-03-12. 
  3. ^ "Equity and Adequacy in Education Finance: Issues and Perspectives". Books.nap.edu. Retrieved 2012-03-12. 
  4. ^ a b Wisconsin School of Business & The Lincoln Institute of Land Policy (Updated Quarterly). "Land Prices for 46 Metro Areas". 
  5. ^ Glaeser, Edward L. (2004). "Housing Supply , The National Bureau of Economic Research, NBER Reporter: Research Summary Spring 2004". 


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