INEQUALITY: POVERTY AND WEALTH

CHAPTER 2

Defining Economic Inequality

Social Stratification- rank individuals based on objective criteria, often wealth, power and/or prestige.

Human beings have a tendency to categorize or rank things.

Naturally creates inequality, haves and have-nots.

Inequality causes many social conflicts, which lead to greater social problems.

Each society has its own way to rank or stratify, the population…but the level of stratification can vary greatly.

In certain societies, political power may be used to separate people.

Example: Cuba, members of the Communist party often have preferential housing and access to better schools, while people with different political affiliations often live in poverty.

Within the United States, wealth and income are used to stratify people into social classes; the wealthier you are, the more important others may consider you.

Other societies, use birth status and family original as a way to divide people.

In these societies, privileged positions may be available to families regarded as “nobility”.

As previously stated, the U.S continues to stratify individuals based on income and wealth.

Income refers tot he money received for work or through investments. Paycheck or dividends.

Wealth, on the other hand, refers to all of your material possessions including income.

Example: You could probably raise a considerable sum that would be more than your monthly paychecks if you were to take everything you owned-your car, your electronics, your clothes-and place these items on Ebay to sell at a fair market value.

Income Distribution

One way that sociologists and economists look at income distribution in the United States is by dividing the population into quintiles.

Quintiles: five equal segments that each account for 20 percent of the population.

Ranking households based on income alone shows that most Americans exist somewhere between extreme wealth and extreme poverty and gives a clearer understanding of how vague terms like “middle class” and “lower class” can be quantified.

In 2009, the richest 20% of Americans controlled just over 50% of total income.

The poorest quintile had only 3.4% of total income.

The second lowest quintile accounted for 8.6%, the middle quintile 14.6% and the second-highest for 23.2% of all income.

The richest of the top quintile-the top 5% of all earners- made $180,000 or more per year and accounted for 21.7% of the nation’s combined income.

Median (mid-point) of all household incomes in 2009 was $49,777, one in five households made do on less than $20,453 (bottom quintile).

Second quintile’s incomes ranged from $20,454 t0 $38,550; the third ’s, from $38,551 to $61,801; the fourth, from $61,802 to $100,000.

One-fifth of U.S households earned more than $100,000.

Wealth

Wealth includes income and assets.

Can consist of stocks, bonds, real estate, cash and a host of other items.

The top 1% of wealth holders in the U.S has more total wealth than the entire bottom 90% of the population.

Power

Income and wealth often bring with them power or access to power.

Power: the ability to get people to do what you want without having to make them do so.

Force: a type of power that occurs when you make someone do something against his or her will.

Example: Dictators often use force or the threat of force to make people follow orders.

Persuasive Power: you use direct or indirect methods to get what you want.

It is much easier to get people to follow along if they believe it is in their best interests.

Example: Oprah’s book club

Prestige

Prestige refers to the level of esteem associated with our status and social standing.

It is often assumed, the less a job pays, the less prestige it carries.

Not only do low-wage workers have to struggle financially, they must struggle to earn respect in society as well.

Occupational prestige varies according to the job and reflects which work a society respects the most.

Few parents look at their children and dream of them becoming burger flippers rather than engineers, because an engineer attains more occupational prestige in our society.

A combination of wealth, power and prestige form the stratification and class systems used to characterize the population of the United States.

How Does Inequality Affect The Lives of People?

Class in America: When it comes to social class, where do you stand?

When asked to identify themselves in the social class scheme, most people claim to be part of the middle class.

Karl Marx suggested that there are two social classes: the proletariat and the bourgeoisie.

Regardless of the number of social classes, the lower you are on the ladder, the more experience you have with social problems.

Upper or Elite Class

Very small in number and holds significant wealth.

3 million of the 300 million people in the U.S are considered Upper Class.

Many are considered “old money”; their class standing comes from wealth, power and prestige.

Others are entertainers or professional athletes who have generally earned, not inherited, their wealth.

According to research studies by Sociologist G. William Domhoof. prerequisites for membership in the upper class may include attendance at an exclusive prep school, belonging to exclusive social clubs and being born into a wealthy or powerful family.

Upper Middle Class

Consists of high-income members of society who are well educated but do not belong to the elite membership of the super wealthy.

They tend to occupy professional positions with high prestige and hold places of authority in the workplace.

Their income exceeds $100,000 a year- enough for them to live comfortably-and they own property or other outside investments.

15% of the U.S population.

Middle Class

People have moderate incomes.

They vary from low-paid white collar workers (teachers, policemen) to well-paid blue collar workers (restaurant managers, factory foremen).

Middle-class workers may be skilled laborers (plumbers) but they are generally not manual laborers.

Members of the middle class have at least a high school diploma, and many have trade school or college experience.

Makes up approximately 34% of the U.S population and incomes of members in this group range from $40,000 to $80,000 per year.

Working Class

Makes up about 30% of the population and comprises people who have completed high school and lower levels of education.

Most of its members hold jobs that require manual labor or clerical skills such as construction workers and bank tellers.

Working-class citizens earn an hourly wage instead of a salary.

Very limited opportunities for job improvement because they work by the hour and lack a formal education.

Lower Class

The ones who truly feel the effects of poverty.

In the U.S, close to 37 million people are in this category.

Members often live paycheck to paycheck, if they are employed at all.

More than 2/3’s of African Americans and 60% of Hispanics in the nation live near or below the poverty line.

Almost half of the children in the U.S live in or near poverty, along with 10% of senior citizens.

Urban Underclass

The homeless and the chronically unemployed.

Truly impoverished, they often live in substandard housing in neighborhoods with poor schools, high crime and heavy drug use.

Some are lucky enough to receive financial assistance from the government.

Members of this class rarely have health care coverage and often lack a high school education.

The jobs they find are typically minimum wage with very little room for social upward mobility.

According to Sociology William J. Wilson, the lack of vision and lack of role models are what make it difficult for many to imagine any other way of life.

They are disadvantaged, experiencing broken homes, poor schools and substandard housing, but what makes them truly disadvantaged is that they know of almost nothing else.

The young have very few positive role models that can show them how to escape poverty.

The Effects of Social Class

Neighborhoods: research studies show that people in the U.S are increasingly segregating themselves by income.

The segregation of affluence is responsible for creating this pattern.

Those with money move away from the poor, society become increasingly separated based on social class.

Within wealthy neighborhoods, studies show that children from these areas do better in school, have a lower risk of teen pregnancies and have higher standardized test scores.

Children who grew up in disadvantaged communities have lower birth weights, poorer health and lower levels of education.

Health

Studies find that poor women with children, who frequently have insufficient diets, suffer from higher rates of mental depression and worse physical health than their wealthier counterparts.

Poverty influences access to food, and food influences both physical and mental health.

Health and socioeconomic status (SES) have been found to be linked; those with a greater SES tend to enjoy better health, whereas those with lower SES tend to have poorer health.

Sick children grow into adults who have less education and earn less than their healthy counterparts.

Family

The U.S Census Bureau has found correlations between family form and poverty rates.

Female-headed households have poverty rates that are nearly three times higher than the national rate for all families.

Female poverty rates are also higher than the rates for households headed by single men.

In 2007, children represented almost 36% of all the people in poverty, even though only 25% of the total population were children.

Education

In the U.S, a free 12-year education is available to every child regardless of family or class.

Not all educational opportunities are the same.

In a two-year study of public schools, Jonathan Kozol found that schools visited in urban communities frequently lacked basic educational supplies.

In some cases, chemistry labs didn't gave beakers or test tubes and students were forced to share textbooks.

Suburban schools had a surplus of supplies and staff.

What accounts for such dramatic differences?

Local taxes fund schools, places with higher property taxes receive more educational funding.

Children living in poor urban areas need more help but get less.

Social Mobility

Describes the ability to change social classes.

Horizontal mobility: refers to moving with the same status category.

Example: Moving from one company to another but earning the same amount of $ and holding the same position.

Vertical mobility: moving from one social status to another.

Example: Adopting a new position, that allows for a higher status.

Intragenerational mobility: when an individual change social status, especially in the workforce.

Example: An employee who works his/her way up from the mail room to senior executive.

Intergenerational mobility: refers to change that family members make from one social class to the next through generations.

Example: Immigrants who were members of the lower class but their children receive an education and move up the social class ladder.

Structural mobility: when social changes cause many people to change social status simultaneously.

Example: Low skilled factory workers who lose their jobs due to jobs being sent overseas. Must accept jobs that pay less and have fewer benefits.

Exchange mobility: within the U.S, each social class contains a relatively fixed number of people.

As some families move into a higher status, others must move down.

How Does The U.S Define Poverty?

What does it mean to be poor?

Transitional poverty: a temporary state that occurs when someone goes without a job for a short period of time.

Marginal poverty: when a person lacks stable employment.

Example: A handyman bouncing between jobs.

Residual poverty: chronic and multigenerational. A family living in residual poverty will pass the poverty on to their children, who will pass it to their children and on and on.

Absolute poverty: so poor that they do not have the resources to survive.

Relative poverty: a state that occurs when we compare our financial standing and material possessions to those around us.

The U.S government has different standards for defining poverty.

Using a benchmark known as the poverty line, the government can determine what services are needed by whom.

U.S Department of Health and Human Services Poverty Guidelines for 2011

Number of Persons in

Family

Poverty Guideline

1 $10,8902 14,710

3 18,5304 22,3505 26,170

6 29,9907 33,8108 37,630