Final answer:
Rising incomes that favor high-income workers increase inequality, while a larger decline in high-income earners' wages may decrease it, but may not necessarily affect the poverty rate. The U.S. has generally seen an increase in income inequality without major policy changes to address it. Changes in these income patterns are important indicators for policymakers.
Step-by-step explanation:
Effects on Poverty and Inequality
When incomes rise for both low-income and high-income workers, but the increase is greater for the latter, the inequality gap widens. This is because high-income earners are pulling further away from low-income workers in terms of overall income. Conversely, when incomes fall for everyone, but the decrease is steeper for high-income earners, the gap between the high-income and low-income workers decreases, thus reducing inequality. However, the latter scenario could potentially push more people closer to the poverty line, if the low-income workers' incomes fall below a certain threshold. It is important to note that while these changes alter inequality, they may not directly affect the poverty rate unless the incomes fall below the poverty threshold.
Long-term effects of these trends show that the United States has not significantly changed the way it manages inequality; rather, income inequality has generally increased. A major shift in policy or economic structure would be required to manage and potentially reduce these disparities. Policymakers use changes in these indicators to understand when populations are being affected by economic changes, but no changes might indicate that programs intended to reduce poverty are not effective.
Ultimately, it is possible for income inequality to change without affecting the poverty rate. For instance, if people with high incomes increase their earnings by a larger margin, while those below the poverty line see no change in their incomes, inequality increases but the poverty rate remains the same.