Social Inequality Chapter 2 – Economic Inequality Dr. Roderick Graham Fordham University

This is a graph of the three areas of the SAT score by Family Income…What’s going on here?* *

General Points 1. Economic inequality is not the only dimension of inequality….but arguably the most important 2. The concept of “class” is central to discussion on inequality…but scholars do not agree on how to define it 3. Scholars make a distinction between income inequality and wealth inequality (wealth inequality being greater) 4. Inequality in the US is increasing, with people at the top getting more and people at the bottom getting less

Two Views of Class Structure Class Structure as Continuum  Class is defined using three measures (income, education, occupation)  Because non-economic measures are used, we often call this measure “socioeconomic status”, or SES.  There are no clear cut boundaries separating classes…class differences are a matter of quantity  Most models that use SES have 5 to 7 classes

The Social Prestige Scale (SEI Index)* Physician 82 College professor 78 Judge 76 Attorney 76 Astronomer 74 Dentist 74 Bank officer 72 Engineer 71 Architect 71 Clergy 70 Chemist 69 Nurse 62 School teacher 60 Author 60 Accountant 57 Actor 55 Computer programmer 51 Athlete 51 Bank Teller 50 Electrician 49 Police officer 48 Secretary 46 Mail carrier 42 Plumber 41 Farm owner 41 Dancer 38 Mechanic 37 Bus Driver 32 Cashier 31 Gas Station Attendant 22 Taxi Driver 22 Garbage Collector 17 Janitor 16 Maid 14 Shoeshine 9 *National Opinion Research Center

Two Views of Class Structure Class Structure as Antagonistic Categories  Marxian approach…people are in classes based upon their common relationship to the means of production  Classes are generally in conflict  Classes are not in a continuum…there are clear breaks between people with respect to attitudes, lifestyle, and life chances  A distinction is made between a class “in itself” and a social class “for itself”

Comparing Views of Class by Percentage Capitalist Class (1%)Upper Middle Class (14%)Middle Class (30%)Working Class (30%)Working Poor (13%)Underclass (12%) Owners of means of production (15%) Employees in Contradictory Locations (45%) – managers, professionals Workers (40%) – nonowners, nonexpert, nonmanagerial Socioeconomic Status (class as continuum)Class as Antagonistic Groups

Income Inequality  Income = money from salaries, wages, social security, welfare  % of people making more than 100,000 has increased over the last 30 years  If we compare ethnic groups, we see that blacks and Hispanic have lower incomes than whites  If we compare households, we see that female headed households have lower incomes than two-parent or male headed families (why?)  The middle class (middle income groups) is shrinking!!  The upper class is growing INEQUALITY WITHIN THE UNITED STATES IS GROWING!

A Quick Detour (Mean, Median, Quintiles, and more)  Let’s have a quick discussion on how sociologists make numerical comparisons…. 1. What is the difference between saying: “the mean income of Americans….and the median income of Americans…”? 2. What do we mean by quintiles? 3. Sociologists often make claims like “the richest 20% owns 80% of all wealth to support inequality. How do they calculate this?”

A Quick Detour (Mean, Median, Quintiles, and more) Incomes 1,000, ,000 80,000 70,000 55,000 33,000 12,000 10,000 5,000 If we calculate the mean (or average), we get $229,000 If we calculate the median (or midpoint) we get $55,000. The median is the point at which half the values are above, and half the values are below. Sometimes the median is considered the “typical” value. Quintiles simply mean breaking the values up into fifths. Sometimes sociologists will say, “the richest 20%..” This is the top 1/5 (quintile) of the population. If we get the total amount of income for the top quintile (1,970,000) and divide this by the total overall amount of income (2,290,000), then we get 86%. Thus, “the richest 20% own 86% of total income”.

Income Inequality Understanding Poverty  Poverty is usually defined by income  About 37 million people live in poverty  Blacks and Hispanics have disproportionately higher poverty rates than Whites  What do we mean by disproportionate?

Income Inequality Causes of Income Inequality  Decline in earnings growth  Rise in single parent households  Changes in the age structure of the labor population (older workforce)  Declining unions  Globalization

Wealth Inequality  Wealth = value of homes, land, investments, savings – debts  Wealth inequality is greater than income inequality  The richest 5 th of the US population owns 85% of the wealth…this is a VERY large percentage!! (fig. 2.4)  The richest 5 th (20%) own an average of 2 million dollars worth of wealth…while the bottom 40% own an average of $2000.  Over the past 30 years, the rich have gotten richer and the middle classes have seen their wealth decline

Who are the wealthy?  Table 2.3  Blacks and Hispanics own considerably less wealth than Non-Hispanic whites  Aside from owning their own homes, blacks and Hispanics, on average, have almost NO wealth  In poor economic times, the gap between whites and minorities tend to grow  Married couples have more wealth than female headed households

Economic Inequality in a Global Context US vs. Low Income Countries  Low income countries (southeast Asia, Africa) have higher rates of poverty and inequality US vs. High Income/Industrialized Countries  The US has more poverty and inequality

Economic Inequality in a Global Context Effect of Globalization  One view says that globalization is a tide that rises all boats  Countries have to compete with other countries and invest wisely  Countries work to find profitable niches, resulting in more economic prosperity  One view argues that globalization allows rich countries to exploit poor ones  Transnational corporations can move to other countries, weakening labor unions and reducing wages  Trade is not truly free, as rich nations subsidize their businesses

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