1. Lesson 5: Social Class and Inequality
Social Problems
Robert Wonser

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

3. 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?

4. 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

5. International Comparison of Poverty Rates among Wealthy Countries

6. 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

7. 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?

8. 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

9. 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

10. 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

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

12. 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.

13. 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 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.

14. How are stocks distributed?
Dow closed today (3/11/2013) over 14,400.
A new record….
Whose wealth is this measuring?
and

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

16. Ratio CEO pay to Workers’ Wages

17. 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

18. 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

19. 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

21. 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

22. 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

23. 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

24. 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

25. 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

26. 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

27. 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.

28. Income, Net Worth and Financial Worth

29. 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:

30. 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).

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

32. Wealth distribution by type of asset, 2010

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

34. Distribution of income in the United States, 1982-2006

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

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

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