Lesson 5: Social Class and Inequality Social Problems Robert Wonser

Social Class Groups stratified by their access to resources Resources may include wealth, income, education, employment, land

Understanding Inequality Inequality is the unequal access to scarce goods or resources. It is the result of abundance. It is found in most, if not all, societies. It is a question of how unequal a society is. How unequal is the United States?

How does the US compare to other nations? Percentage of wealth held in 2000 by the Top 10% of the adult population in various Western countries

International Comparison of Poverty Rates among Wealthy Countries

Defining Poverty Absolute measure Based on a threshold, usually annual income Criticisms? Relative measure Compares person or group to the rest of the community or society

Poverty Threshold Takes age, family size, and number of dependent children into account when determining amount of people living below the poverty line Example: In 2012, poverty threshold was $23,283 for a four person household with two children under 18 $18,498 for a three person household two children. Can you get by on poverty wages?

Extreme Poverty Neighborhoods Areas with poverty rates of 40+ percent These areas often have higher crime, poor health outcomes, and fewer education and job opportunities

Karl Marx’s (1818-1883) Views on Class Class based on ownership of the means of production Capitalists own factories and other mechanisms to produce goods Working class sells their labor to capitalists in exchange for wage

Social Classes in the United States The upper class (capitalist class): Wealthiest people in a class system Make up about 1% of the U.S. population Possess most of the wealth of the country

The United States is a Rich Society? Only when you include those at the top. Exclude the top quintile and the picture is different.

Who are the 1%? With 376,076 members, the largest single group in the 1 percent are those who listed their occupation as a manager. Lawyers who work on Wall Street are twice as likely as those in general practice to make the top 1 percent. Physicians who work primarily in doctor's offices are somewhat more likely to make the cutoff, though all doctors are well- represented in the group.

In 2010, the top hedge fund manager earned as much in one HOUR as the average (median) family earned in 47 YEARS. The top 25 hedge fund managers in 2010 earned as much as 658,000 entry level teachers. In 1970 the top 100 CEOs made $40 for every dollar earned by the average worker. By 2006, the CEOs received $1,723 for every worker dollar. http://www.huffingtonpost.com/les-leopold/inequality-is-much-worse-_b_2633191.html?utm_hp_ref=tw

How are stocks distributed? Dow closed today (3/11/2013) over 14,400. A new record…. Whose wealth is this measuring? http://money.cnn.com/data/markets/ and http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/06/this-viral-video-is-right-we-need-to-worry-about-wealth-inequality/

What’s the Dow at Recently? The Dow closed on August 26, 2014

Ratio CEO pay to Workers’ Wages

Social Classes in the United States The upper-middle class: Professionals and managers Make up about 14% of the U.S. population Benefited the most from college The middle class consists primarily of “White collar” workers Have a broad range of incomes Make up about 30% of the U.S. population

Social Classes in the United States The working (lower-middle) class: “Blue-collar” or service industry workers Less likely to have college degrees Make up about 30% of the U.S. population

Social Classes in the United States The lower class (the working poor): Many poor people who typically have lower levels of education than other classes Make up about 20% of the U.S. population

Max Weber (1881-1961) Three aspects of stratification Class Position in economic sector Status Social position based on honor, education, prestige, religion, and other characteristics Power Political connections and affiliations

Income vs. Wealth Income Money from sources such as earnings, unemployment compensation, social security, interest and dividends, and rental income Wealth Family or household’s net worth, the difference between the value of these assets and the amount of debt

Other Dimensions of Inequality Race/Ethnicity Gender Access to healthcare and health insurance Many negative health conditions associated with poverty Likelihood of being imprisoned Education Access to housing

Functionalism and Poverty Davis and Moore “Some Principles of Stratification” (1945) Some positions in a society are more specialized and valuable Only a few have the talent for more important positions Learning those skills require sacrifices, must receive more resources and rewards to compensate Different positions in the social hierarchy have different levels of prestige and esteem Social inequality inevitable and functional

Functionalism and Poverty Herbert Gans (1971) Poverty can have positive functions Get “dirty work” done cheaply Encourage purchase of lower quality products Give higher status to others (someone must be at the bottom) But functions of poverty can be both economically and morally costly

Poverty and Symbolic Interactionism Oscar Lewis’s Culture of Poverty Thesis (1969) The poor hold a unique set of values and beliefs that makes it difficult for them to escape poverty Sense of powerlessness Feelings of inferiority Lack of work ethic

Poverty and Conflict Theory Groups have different interests that come into conflict with one another Poverty is systematic Karl Marx Workers alienated from their labor because they have little say in what they do in the production process.

Income, Net Worth and Financial Worth

Distribution of Net Worth Total assets are defined as the sum of: (1) the gross value of owner-occupied housing; (2) other real estate owned by the household; (3) cash and demand deposits; (4) time and savings deposits, certificates of deposit, and money market accounts; (5) government bonds, corporate bonds, foreign bonds, and other financial securities; (6) the cash surrender value of life insurance plans; (7) the cash surrender value of pension plans, including IRAs, Keogh, and 401(k) plans; (8) corporate stock and mutual funds; (9) net equity in unincorporated businesses; and (10) equity in trust funds. Total liabilities are the sum of: (1) mortgage debt; (2) consumer debt, including auto loans; and (3) other debt. From Wolff (2004, 2007, 2010, & 2012). Source: http://www2.ucsc.edu/whorulesamerica/power/wealth.html

Financial (Non Home) Wealth Total assets are defined as the sum of: (1) the gross value of owner-occupied housing; (2) other real estate owned by the household; (3) cash and demand deposits; (4) time and savings deposits, certificates of deposit, and money market accounts; (5) government bonds, corporate bonds, foreign bonds, and other financial securities; (6) the cash surrender value of life insurance plans; (7) the cash surrender value of pension plans, including IRAs, Keogh, and 401(k) plans; (8) corporate stock and mutual funds; (9) net equity in unincorporated businesses; and (10) equity in trust funds. Total liabilities are the sum of: (1) mortgage debt; (2) consumer debt, including auto loans; and (3) other debt. From Wolff (2004, 2007, 2010, & 2012).

Net worth and financial wealth distribution in the U.S. in 2010

Wealth distribution by type of asset, 2010

Share of wealth held by the Bottom 99% and Top 1% in the United States, 1922-2010.

Distribution of income in the United States, 1982-2006 http://www2.ucsc.edu/whorulesamerica/power/wealth.html

Top income shares in the U.S. and Sweden, 1950-2009

CEOs' pay as a multiple of the average worker's pay, 1960-2007

CEOs' average pay, production workers' average pay, the S&P 500 Index, corporate profits, and the federal minimum wage, 1990-2005 (all figures adjusted for inflation)