Sociology Ch 8

Changes between 1980 and 2002

INCOME 1980 Average income for top 0.1 percent $1.2 million 2002 Average income for top 0.1 percent $3 million Their income rose by nearly 250%, faster than any other group INCOME SHARE Top 0.1 percent - share of U.S. income more than doubled to 7.4 percent Rest of top 10 percent rose far less Bottom 90% share actually fell NET WORTH 338,400 households with net worth over $10 million in 2001 Grew more than 400% since 980 (after adjusting for inflation) Total number of households grew only 27%

Functional theory argues

Inequality is nearly universal in all societies, and it exists because it has positive functions for society. Inequality... assures that the most important positions in society are filled by the most competent people. assures that people perform important positions competently. persuades people to undergo the years of training and hard work required to perform important jobs.

Who are the Underclass?

They are primarily residents of inner city areas high in unemployment, out-of-wedlock births, female-headed families, welfare dependence, homelessness, and serious crime. They are also disproportionately Black and Hispanic.

Semi-peripheral countries

are the countries between the core countries and peripheral countries, having intermediate levels of industrialization, some development in their secondary and tertiary sectors, and greater autonomy than peripheral countries. E.g., countries like Brazil, Greece, and Spain.

Max Weber argued there are three important dimensions to stratification:

class, status, and power

Intragenerational mobility

refers to changes in social standing for one person over the course of their lifetime.

Clan system

the basis for stratification is birthright a person's family ties are the primary determinant of their social standing people can marry outside their own clan (exogamy) and this is often employed as a means to forge alliances among clans. E.g., Somalia and Iraq

capitalists

who own large businesses employing many workers, such as the DuPont family, the Rockefellers, and the Kennedys.

petty bourgeoisie

who own small businesses, such as someone who owns a car repair shop, a small software company, a consulting business, or a small medical practice.

workers

who sell their labor, such as someone who works on an assembly line, at a fastfood restaurant, or in an all-night gas station.

managers

who sell their own labor but exercise authority over other employees, such as a dean in a college or a vice-president in a corporation

Traditional stratification systems (caste, clan, and estate systems) are based on

ascribed social statuses

SES, socioeconomic status

, a composite index based on occupational prestige, income, and educational attainment. This measure assumes there is status consistency, the tendency for people having high status in one area of their lives to also have high status in other areas. For example, rich people tend to be more highly educated and to occupy high status occupations. However, there is not always consistency between different measures of status. For example, the very prestigious political positions of President of the United States and Supreme Court Justice are both paid considerably less than many corporate directors or physicians.

Lower-Middle Class

About 30 percent of the population falls into this class. Their average incomes are around $40-$50,000 per year. They typically have at least a high school education, perhaps some college or post-high school training. These people occupy the semiprofessional and technical positions in corporations, such as craftspeople and foremen. They make a good living and enjoy a comfortable lifestyle, but feel threatened by inflation and taxes.

CEO Salaries

CEO salaries have risen far faster than other salaries in the United States and far faster than those in other countries. 1960 average CEO salary 12X average worker Mid 70s 40X average worker Early 1990s 70X average worker - Graef, 1991; Kelly, 1995 In Europe 6X to 8X average worker

Inequalities in income becomes much more real if we consider specific examples.

For example, in 1995, the median household income of all households in the United States was $34,076 (Statistical Abstract of the United States 1997, Table 718). In two days in 1992, major-league baseball teams signed contracts with 23 players for a total of $197.75 million. Greg Maddux signed for $28.0 million for 5 years; Andre Dawson signed for $9.3 million for 2 years; Todd Worrell signed for $9.5 million for 3 years; and Randy Myers signed for $11.0 million for 3 years. (Associated Press, December 10, 1992). In 1991, the salaries of heads of top health insurance companies in the United States ranged between $648,000 and $2,396,000 per year; while those for heads of top drug companies ranged from $1,979,000 to $12,788,000 per years (New York Times, March 31, 1993).

The Functions of Poverty (Gans, 1971)

Gans (1971) argues that poverty persists in our society because it serves several important social functions. Poverty... assures that society's "dirty work" (dangerous, dead-end jobs) will be done. subsidizes economic activities that benefit the affluent by the poor serving as underpaid domestics, freeing affluent women for other activities. creates jobs for people in professions that serve the poor such as social workers or protect society from them such as prison guards, police, and parole officers. Prolongs the life of goods others no longer want, such as day-old bread, secondhand clothes, and used cars provides people (the poor) who can be punished as real or alleged deviants to uphold the legitimacy of conventional norms. offers upward social mobility to those just above the poor who can exploit them with slum housing, narcotics, gambling, and other goods and services sold at inflated prices to the poor who don't have the means to shop elsewhere.

Trends in inequality

In contrast, the period from the late 1960s until today has been a time of slower economic growth, uneven progress, and even increased inequality in our stratification system.

Occupational Prestige

In industrial and post-industrial societies, a person's occupation is their most important social position. National surveys asking respondents to rank various occupations find that certain occupations are accorded far more social prestige or status than others. Occupational prestige rankings tend to be stable over long periods of time and even across different countries. Blue-collar jobs tend to be given far less social prestige than white-collar jobs. Lower prestige occupations are also more likely to be held by women and minorities.

Karl Marx: Class Conflict

Karl Marx argued the proletariat (workers who sell their productive labor for wages) were exploited by the capitalists (owners of the means of production). Workers tend to accept the dominant ideology of the functional view of stratification as a form of false consciousness. However, he predicted workers would eventually realize the exploitation and overthrow the capitalists in a worker's revolt, creating a socialist society. This socialist society would be a transitional one leading eventually to a classless society (one with little or no inequality), communism. Marx argued a single economic dimension is the basis of social stratification. He has been criticized as an economic determinist, arguing that economics lies at the root of all the important processes in a society.

Subjective Self-Reports of Social Class

One method sometimes used to measure social class is the subjective self-report method, in which people are asked to identify their own social class. However, this method is often not very accurate. There is a long history of people being unable to correctly classify themselves within the U.S. stratification system. During the Depression, 8 out of 10 Americans claimed to be in the middle class (DeMott, 1990). Self-reports are also affected by the categories used. When respondents are asked to place themselves in the upper, middle, or lower class, 75% or more place themselves in the middle class. However, when a fourth category, "working class," is available, about 40-45% place themselves in that category and the "middle class" category drops to about 40-45% (DeMott, 1990).

Tumin (1953) raised several important criticisms of the functional view.

Rewards are often inconsistent with importance. Many people earn money and prestige beyond their apparent importance to society. Examples include rock singers, film stars, and professional athletes. Why do those people make many times the income of the President of the United States? This view is inconsistent with inheritance. Social class is sometimes ascribed (determined before someone is born by forces beyond their control), and often relatively stable across generations. If selection for occupations was based solely on competence one might expect greater variation from generation to generation. There are many unfair barriers to competition. The poor, minorities, the aged, and women are often denied access to jobs for which they might be more highly qualified.

Eric Wright's Revision of Marx

Sociologist Erik Wright (1985) argued that changing conditions made it necessary to modify Marx's analysis to include four classes:

Poverty Line

The U.S. government assumes that poor families spend one-third of their income on food, so it estimates the cost of food then multiplies that amount by three to compute the poverty line. Since food costs vary by family size, time and location, this number varies. In 1995, for an urban family of four, the poverty line was $15,569. Obviously, this is a rather arbitrary designation that does not take into account changes in food consumption much less changes in costs of basic goods and services like housing (Katz, 1989). Despite its obvious shortcomings, this definition of poverty is the basis for deciding who receives government help and it is also the basis for most official statistics on poverty in the United States.

Recent Trends in Inequality in the U.S.

The dominant trend in the United States throughout most of the 20th Century has been a modest reduction in inequality. This is consistent with the "Kuznets Curve." A far more noticeable trend has been the increasing economic prosperity of all—what Olsen (1990) calls the 'prosperity escalator.' This trend was most noticeable in the Post-War period from 1947 to 1967. This was a period of unprecedented prosperity and economic growth. During this period, there developed the widespread belief among Americans that the quality of their lives would be better than that of their parents and the quality of their children's lives would exceed that of their own.

The Richest Get Richer

The uppermost 0.01 percent of the population in the U.S. is about 14,000 households, each with $5.5 million or more in income in 2004. How much did the income of the top 0.01 percent increase in two time periods compared to the bottom 90 percent? 1950-1970 162 X 1990-2002 18,000 X

Capitalists

These are the super-rich top 1 percent of the population who own more than the entire bottom 90% (Federal Reserve and Internal Revenue Service, 1989). People in the capitalist class typically have incomes in excess of $1 million per year. They are usually educated at prestige universities, and their ownership of radio stations, newspapers, and television stations, along with their political connections, gives them the power to influence public opinion. This class, small though it may be, is often divided into "old money" and "new money." The longer a family has money, the less tainted they are by the sometimes unscrupulous manner in which they obtained their riches. "New money" families are often looked down upon by "old money" families and not trusted, though their children and grandchildren can enter the "old money" class by attending the right schools and marrying old money.

Social class

Weber saw this as a continuum instead of a dichotomy between proletariat and bourgeoisie. For Weber, social class could be measured by a combination of wealth—the property or economic resources owned by someone, such as buildings, factories, cars, stocks, bank accounts—and income—the money they receive a rents, royalties, wages, or profits.

What is the origin of the underclass and why does it persist?

Wilson argues it grew from major economic changes. Jobs once held by inner-city residents have largely moved out of inner cities to the suburbs, the "Sun Belt" states in the South or Southwest, or overseas. Many inner-city residents are unqualified for the few jobs now available in their area; they lack the means to travel to jobs in the suburbs, and the stability of neighborhood social institutions like schools and churches becomes undermined as their economic base crumbles

Women & Single heads-of-households

Women are more likely to be poor than men. Sixty two percent of poor people over the age of 18 are women. Many of the same factors that lead children to be poor also lead women to be poor. Large numbers of poor adult women are the struggling single parents heading the poor households with children. Since an increasing percentage of impoverished families are single-parent families, and those families are increasingly headed by women, the result has been what many sociologists call the feminization of poverty—a tendency for women adults to be poor much more frequently than men adults. Thirty years ago, most poor families still had both parents in the household and women were the single-parent heads of only 25% of all poor families. By 1995, this percentage had doubled to 54%.

expanding universalism

a greater tendency for occupational status to be attained by achievement rather than inheritance. Inheritance plays less of a role in occupational mobility today in industrialized societies than it did in earlier preindustrial societies.

The land of opportunity

a place where the values of freedom, equality, and opportunity rule, and where everyone can hope for and most can achieve

Core Countries

are the dominant countries in world-system theory, having high levels of industrialization, strong secondary and tertiary sectors of the economy, high levels of political autonomy to pursue their own interests, and heavy investments in other countries. E.g., the United States, Germany, and Japan.

Peripheral countries

are the most dependent countries, having low levels of industrialization, weak secondary and tertiary sectors of their economy with most of their production in the primary sector, high levels of investment from other countries, and unable to ward off interference in their internal politics by other countries. E.g., third world countries such as Bangladesh, Zimbabwe, and Sri Lanka.

A key characteristic of any stratification :

how much inequality there is. The United States actually has much more inequality than most people realize. Just how much inequality is there? We also argued above that inequality can be measured in many different ways. Here we will focus on Income Wealth Occupational Prestige Recent Trends in Inequality in the United States

Stratification

is a characteristic of the entire society, not just single individuals. Hence, whether any one individual is wealthy or poor, powerful or powerless, honored or reviled, is very much affected by the society itself and its system of stratification, not just by the characteristics of that individual.

Absolute poverty

is a condition of deprivation in which people have too little money or other resources to obtain all they need for basic survival.

Horizontal social mobility

is mobility in which sons are no better off than their fathers in terms of social prestige, wealth, or power.

Status or social prestige

prestige is the respect and admiration accorded a social position or occupation and people in those positions by others. Status can result from respected acts (such as acts of bravery or compassion).

Life Styles

refer to the activities, behaviors, possessions, and other, often visible, characteristics of how an individual spends their time and money. These often reflect social class and may be used as ways for an individual to advertise his or her social class to others.

intragenerational social mobility

that Abraham Lincoln was referring to when he said "There is no permanent class of hired laborers amongst us. Twenty-five years ago, I was a hired laborer the hired laborer of yesterday labors on his own account today, and will hire the labor of others tomorrow." Lincoln was referring to the common tendency for individuals over the course of their lives to experience upward mobility as the low-paying jobs they have as inexperienced young people are replaced by dramatically better paying jobs as they gain experience, training, and education.

dependency theories

theories that argue rich industrialized countries keep poor countries underdeveloped and dependent on them to serve their own needs (Wallerstein, 1976, 1979, 1980).

Estate system

there are three main estates: the nobility, the church, and peasants. Since only eldest sons inherited all the wealth, other sons of noblemen had to enter the clergy or make a living in some other way. Estate systems permit more social mobility than a caste system. E.g., feudal Europe and some Asian nations

false consciousness

they would be unaware of how severe were class differences between themselves and the bourgeoisie.

Children

A generation ago, the elderly were more likely to be poor than other adults or children. But today, children are far more likely to be poor than adults, and the elderly are actually slightly less poor than the population as a whole. Infants and children are the age group most likely to be poor today. They constitute 40% of the poor in the United States. Twenty percent, one of every five, children under 18 are poor.

Upper Middle Class

About 14 percent of the population belong to this class. It, more than any other social class, is shaped by education, since its members hold managerial or professional jobs that are made possible only by their professional or graduate education. Their annual income is typically $100,000 or more. This social class is within reasonable reach of the middle class, so becoming upper-middle class is often a goal of their socialization.

The Working Poor

About 22 percent of the population belongs to this class. Most have less than a high school education, many are functionally illiterate, and they typically hold seasonal, part-time, temporary, jobs such as house cleaning, day laborer, or migrant farm worker. They have little or no job security, live from paycheck to paycheck, are constantly in debt and must rely on social service programs such as food stamps. Their average income is less than $20,000 per year. Their sole retirement income is likely to be Social Security since they cannot save money with their low wages and they typically have no retirement benefits.

The Underclass

About 3 percent of the population fall in the underclass (Myrdal, 1962; Wilson, 1987). This class includes people typically having less than a high school education. They are often unemployed, or occasionally employed with part-time or seasonal work at best. Many of them survive only through social services such as welfare, Their average annual income is less than $13,000 often far less.

The Working Class

About 30 percent of the population belongs to this class. They have an average annual income of about $30,000. These people are the blue-collar workers and white-collar workers having routine, closely supervised jobs. They have little occupational prestige and often have no more than a high school education. They feel more threatened by layoffs, cheap labor in other countries, and recessions. With no more than a high school education, they have little hope of achieving a higher social class.

Racial or Ethnic Minorities

Both Blacks and Latinos are about three times as likely to be poor as are whites. Yet, because of the much larger number of whites in the U.S., about 2/3 of the poor are whites. In 1995, the poverty rates for Blacks was 29.3%, for Latinos the rate was 30.3%, for Asian and Pacific Islanders it was 14.6%, and for (non-Hispanic) whites the rate was 11.2% (Statistical Abstract of the United States 1997, Table 736).

Welfare vs Wealthfare

However, benefits to different groups in our society do not always come in the form of expenditures. Wealthy people and corporations benefit considerably more than do the poor from federal government. Most benefits to these people come not as direct expenditures by the federal government but as revenue reductions based on tax breaks. For example, the expenditures for housing in the previous slide, large though they are, pale in comparison to the revenue reductions produced because the federal government does not tax interest on home mortgages. Price supports for agricultural products, tariffs on goods manufactured in other countries, tax deductions and other forms of "wealthfare"—government policies and programs which primarily benefit the wealthy and large corporations—provide billions of dollars in financial benefits to the wealthy and large corporations while remaining largely invisible in the government accounting procedures.

Inner-city residents or residents of poor rural counties

Poverty is most common in central cities (20.6%) and rural areas (15.6%). Suburbs have poverty rates roughly half those of central cities (9.1%). Counties with higher levels of poverty are most likely to be in the South and least likely to be in the Midwest. In 1995, the lowest poverty rate occurred in the Midwest (11.0%), the highest in the South (15.7%), second-highest in the West (14.9%), and second lowest in the Northeast (12.5%)

Tax Cuts Benefit the Most Wealthy

President Bush said during the 2004 election that most of the tax cuts went to low- and middle-income Americans. In fact, most - 53 percent - will go to people with incomes in the top 10 percent over the first 15 years of the cuts, which began in 2001 and would have to be reauthorized in 2010. And more than 15 percent will go just to the top 0.1 percent, those 145,000 taxpayers.

Permanence of Poverty: Patricia Ruggles (1989)

Roughly half of the poor are "short-term poor," who stay poor, moving out of poverty in a period ranging from a few months to less than eight years. The other half are "long-term poor" who remain poor for eight years or more, some even for most of their lives. Even among the long-term poor most eventually overcome their poverty. Passing poverty on from one generation to the next is actually quite uncommon. Only about twenty percent of people who were poor as children remain poor as adults Poverty, for the great majority of poor people, is not a permanent state they will experience all of their lives, but a temporary condition they must endure for a period of time while they try to martial the resources required to break out of their poverty.

Claiming Class: "Putting on Airs"

Some of the inaccuracy of self-reported social class may be due to efforts by people to claim a higher status than they actually have. People use status symbols such as expensive jewelry, clothes, or cars to communicate our status to others. Blatant efforts to display status through the possession or consumption of status symbols is called conspicuous consumption (Veblen, 1899). Where do you think Veblen was when he developed this concept? Beverly Hills?....No, he was in Columbia, Missouri. The Hyper-Rich (NY Times)

culture of poverty

a subculture associated with people in lower social classes thought to encourage them to become resigned to their fate and to discourage personal achievement. This perspective assumes that the cultural values and norms of behavior for the poor are significantly different from those of others, and their culture creates a self-perpetuating cycle of poverty in which the poor lose hope of getting out of poverty, quit trying, and thus remain poor. Even worse, say thesthis culture is passed on to the next generation, leading many of their children to remain poor throughout their lives as well.

Modern industrialized societies most commonly have a class system based on

achieved social statuses.

Imperialism

argued that powerful countries used the resources of less powerful countries to favor their own interests and without fair compensation for those resources. Divides countries into peripheral countries core countries semi-peripheral countries

Lenski and Lenski (1982)

argued that social stratification systems vary depending on the stage of development of a society. The Nobel prize-winning economist, Simon Kuznets (1955, 1966) found in his "Kuznets curve" that inequality first increases and then later declines with increasing technology. Why do you think inequality would increase and then decline?

Blaming the Victim: William Ryan (1976)

argues that it is social structural conditions within society as a whole, such as the availability of jobs and access to education which lead to poverty. To support his argument he points out that other countries such as Sweden and Japan, which display less overall inequality, also have less poverty. The culture of poverty, he argues, is a reasonable response to the difficulties of being poor. It is a consequence of poverty, not its cause. To argue otherwise, said Ryan (1976), is "blaming the victims" for their own suffering

Wealth

consists of the property or economic resources owned by someone and not required for immediate consumption, such as buildings, factories, cars, stocks, bank accounts.

Sociologists Dennis Gilbert and Joseph Kahl (1993

describe the contemporary class structure in the United States based on six categories. These categories are defined by a combination of class, status, and power, and hence, may be viewed as an updated description consistent with Max Weber's view. Those six categories and their relative percentage of the population are displayed here. (See chapter 8 ppt)

Permanent Underclass: Sociologist William J. Wilson (1987)

further extends this debate by describing what he sees as a permanent underclass. The underclass is the most impoverished segment of American society for whom poverty is relatively permanent (Wilson, 1987). His argument is similar to that of Oscar Lewis and Michael Harrington in that he believes there is a relatively permanent class of people unlikely to escape poverty. However, he differs fundamentally from them by arguing that it is structural conditions in society which perpetuate the underclass, not the values and behaviors of members of that class.

Net financial assets

household wealth after equity in homes and vehicles has been deducted) provides a more realistic estimate of the liquid assets of people (liquid assets are financial assets which can easily and quickly be converted to cash). Net financial assets are considerably lower than net worth. The overall household median net worth is $32,609 while median net financial assets are only $2,599. Net financial assets are distributed much more unevenly than income. The top 20% earn over 43% of all income while the same 20% holds over 67% of net worth and nearly 90% of net financial assets. Stocks, bonds, and trust holdings are especially concentrated among wealthy families. The richest 1/2 of 1% of American families own 40% of the nation's corporate stock (Federal Reserve and Internal Revenue Service Survey. 1989).

Most common method of measuring wealth: Net-worth:

household wealth based on the difference between assets and liabilities. Inequality is more pronounced in wealth than in income, with wealth much more concentrated in the upper extremes of the population. In 1989 the wealthiest 1% of the population owned 37% of the total wealth in the U.S., the richest 20% of the population owned 78.7% of the wealth in the U.S., while the poorest 20% were in debt by .4% (Federal Reserve and Internal Revenue Service Survey, 1989.). The wealthiest 1/10th of 1% (NY TImes)

Social mobility

is changing one's social status and thereby changing one's social ranking in the stratification system. Social mobility is an important measure of a stratification system. Despite the huge differences in wealth, income, prestige, and power in the United States documented above, those differences are viewed as entirely acceptable and even a good thing by many people because this country is perceived to be "the land of opportunity," in which each person can work hard and go from "rags to riches" and achieve the "American dream." Inequality, even dramatic inequality, is acceptable so long as each of us has "equal opportunity" to end up on the top of the heap.

Relative poverty

is deprivation experienced by some people in contrast to others who have more. Absolute and relative poverty do not always coexist. For example, the poorest students in an affluent school district may experience relative poverty when compared to the other students, but may have far more than is required for survival.

Power

is the capacity to influence or control behavior of others. Power is the hardest of the three dimensions to measure and there is some controversy over how power is distributed in the U.S.

Intergenerational social mobility

is the change in social standing of children in relation to their parents.

Social stratification

is the structure of social inequality in a society, i.e., the distribution of wealth, status, and power among people occupying different social statuses Social stratification is a universal characteristic of all societies. Every society has inequality, but societies differ widely in the form inequality takes.

structural mobility

mobility resulting from changes in a society's occupational structure or stratification system rather than from individual achievement—that has been made possible by the industrialization of the economy and the expansion of new white collar jobs. This expansion of well-paying jobs at the top along with low birth rates among the upper classes have made upward mobility possible. The threat is that this upward mobility may be reduced when the economy experiences a downturn or as the economy evolves into a post-industrial economy with rapid increases in low-paying service jobs and the potential for a disappearing middle class.

Vertical social mobility

occurs when there is a significant increase ("upward mobility) or decrease ("downward mobility) in social standing as measured by social status, class, or power

The American Dream

of a life of material comfort and personal happiness. This myth takes shape in our beliefs about social mobility in the United States in a number of ways. We tend to believe the United States has greater upward social mobility than other countries, with extreme upward social mobility a real possibility for us all, accessible through innate ability, hard work, and a little luck. How true is this belief? Before we can answer that we must first clarify what we mean by social mobility.

Caste system

one's social status is determined completely by birthright and it is irrevocable. Social mobility from one caste to another is quite unlikely. E.g., India's traditional system.

Life chances

refer to the likelihood of realizing a certain quality of life, or the probability of experiencing certain positive or negative outcomes in life such as material goods and favorable life experiences. People born into higher social classes are more likely to go to college, get a good job, and be healthy than someone born into a poor family. They even live longer. In later chapters we will also show that social class is related to factors as diverse as religion, political behavior, victimization, crime rates, and family composition.