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Chapter 2:
Inequality: Poverty and Wealth
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Defining Economic Inequality

Social Stratification
• To rank individuals based on objective criteria,
often wealth, power, and/or prestige
• Naturally creates inequality

Income
• Refers to the money received for work or
through investments

Wealth
• Refers to all material possessions including
income
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Continued

Income Distribution
• About 60 percent of Americans receives less
than 27 percent of the nation’s income
• The wealthiest fifth of the population receive
nearly 50 percent of the money
• If country’s income was divided equally, each
group would receive 20 percent
• Median
 Distribution is the midpoint of all the
numbers ranked from lowest to highest
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Copyright © 2011 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.
Copyright © 2011 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.
Copyright © 2011 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.
Continued

Wealth
• Includes income and assets

Power
• The ability to get people to do what you want without
having to make them do so
• Persuasive power
 Means that you use direct or indirect methods to get
what you want

Prestige
• Refers to the level of esteem associated with our status
and social standing
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Copyright © 2011 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.
Copyright © 2011 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.
How Does Inequality Affect the Lives of People?

Upper or Elite Class
• Very small in number and holds significant wealth

Upper Middle Class
• Consists of high-income members of society who are
well educated but do not belong to elite membership of
the super wealthy

Middle Class
• Have moderate incomes
• Vary from low-paid white-collar workers to well-paid
blue-collar workers
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Continued

Working Class
• Makes up about 30 percent of population and comprises
people who completed high school and lower levels of
education

Lower Class
• The ones who truly feel the effects of poverty
• Often live paycheck to paycheck, if they are employed at
all
• More than two-thirds of African Americans and 60
percent of Hispanics in nation live near or below the
poverty line
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Continued

The Urban Underclass
• The homeless and the chronically unemployed
• Often live in substandard housing in
neighborhoods with poor schools, high crime,
and heavy drug use
• Rarely have health care coverage and often
lack a high school education
• Sociologist William J. Wilson
 Both their lack of vision and lack of role
models are what make it difficult for many
to imagine any other way of life
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The Effects of Social Class

Neighborhoods
• Sociologists observed how people’s behavior is
influenced by quality of the neighborhoods they live in
• Over time, poor people tend to settle in areas already
populated by their own class
• Growing up in a wealthy neighborhood
 Children from these areas do better in school, have
lower risk of teen pregnancies, and have higher
standardized test scores
• Disadvantaged communities
 Lower birth weights, poorer health, and lower levels
of education
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Continued

Health
• Poor women with children, who frequently have
insufficient diets, suffer higher rates of mental
depression and worse physical health than 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 greater SES tend to enjoy better health,
whereas those with a lower SES tend to have poorer
health
• An individual’s health influences his social stratification
across a lifetime
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Continued

Family
• Variety of factors differentiate families, but particularly
important is social class
• U.S. Census Bureau found correlations between family
form and poverty rates
 Female-headed households have poverty rates nearly
three times higher than national rate for all families
 Female poverty rates also higher than rates for
households headed by single men
• Family composition appears to be a main factor that
affects whether or not children live in poverty
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Continued

Education
• In US, free 12-year education is available to every child
regardless of family or class
• Not all educational opportunities are the same
• Jonathan Kozol
 Schools in urban communities frequently lack basic
educational supplies
 Suburban schools often have a surplus of supplies
and staff
 Dramatic differences lay in structure of system
• Places with higher property taxes receive more
educational funding
• Poor urban areas need more help but actually get less
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Continued

Social Mobility
• Term that describes ability to change social classes
• Horizontal Mobility
 Refers to moving within same status category
• Intragenerational Mobility
 Occurs when individual changes social standing,
especially in the workforce
• Intergenerational Mobility
 Refers to change family members make from one
social class to next through generations
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Continued
• Structural Mobility
 Occurs when social changes cause many
people to change social status
simultaneously
• Exchange Mobility
 Suggests that within the United States, each
social class contains a relatively fixed
number of people
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Copyright © 2011 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.
History of Poverty


Throughout human history, there have always
been people who are poor
Elizabethan “Poor Law” of 1601
• First real law dealing with “welfare and poverty” in
Britain
• Attempted to accomplish four things:
 Separate church from delivery of social services
 Eliminate begging and crime in streets
 Bring social assistance under government control
 Set standards to determine those eligible to receive
help and amount of help they should receive
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Continued



Welfare in US largely left to local areas
Because of large numbers of injured soldiers and
increases in immigration, need to help poor
became greater than many localities could handle
Two welfare ideas arose
• Settlement house movement
• Charity Organization Society

Key historical event in the United States in a
discussion of poverty is the Great Depression of
1929
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How Does the United States Define Poverty?

Transitional Poverty
• Temporary state that occurs when someone goes
without a job for a short period of time

Marginal Poverty
• Occurs when person lacks stable employment

Residual Poverty
• This type is chronic and multigenerational

Relative Poverty
• State that occurs when we compare our financial
standing and material possessions to those around us
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Copyright © 2011 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.
Functionalism

Functionalists Kingsley Davis and Wilbert
Moore
• Every system tends toward equilibrium, so
inequality in the US is inevitable – even
essential – for society to function smoothly

Society has various positions that need to
be filled
• The more important the position is, the rarer
the skill or the longer the training period
required for it
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Continued



Occupations that are greatly rewarded in
our society are the ones that require the
most skills
Idea suggests that US is a meritocracy
Meritocracy Argument
• States that those who get ahead in society do
so based on their own merit
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Conflict Theory

Conflict theorists generally follow the ideas
of Karl Marx
• Stratification occurs because the proletariat
(workers) are exploited by the bourgeoisie
(owners)

Sociologist Melvin Tumin
• Few things affect a person as much as social
class
• Suggests that we reward certain occupations
because we’re forced to
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Symbolic Interactionism


Interactionists often look at the meaning
behind social problems
William Ryan
• Suggests that when people look at inequality,
they tend to view those at the bottom as
creators or co-creators of their problem
 Blaming The Victim
• Involves blaming those who suffer from a social
problem for that problem
• Believes that such a process ignores structural
problems of the society
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Continued

Sociologist William J. Wilson (2009)
• Suggests that mentality of blaming the victim
prevents us from actually seeing social
structural problems that lead to inequality
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The Welfare System



There is a harsh social stigma associated
with those who receive welfare
Until 1996, U.S. welfare system run as an
entitlement program
1996, President Bill Clinton signed
Personal Responsibility and Work
Opportunity Reconciliation Act
• Created Temporary Assistance to Needy
Families (TANF) program, which changed
welfare system drastically
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Continued

Through TANF program
• Person only allowed to receive government
assistance for total of five years and only up to
two years at a time
 Person’s children will not receive aid
throughout their childhood
• Recent data show that two-thirds of those who
were on Aid to Families with Dependent
Children (program in effect before TANF) were
never on the program longer than two years
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Continued

One of the driving forces behind TANF was
emphasis on job training for the poor
• Because TANF assistance only lasts for two
years at a time, long-term training options,
such as obtaining college degree, are
impossible
• Data show that transition from welfare to work
usually results in jobs that don’t pay a living
wage
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Continued

Two separate philosophies that guide the
U.S. welfare system
• Residual Welfare
 System of relief intended for people with
jobs whose earnings are not enough to
support them
• Institutional Welfare
 Part of first line of defense against poverty
 Assistance offered on preventive basis, and
no time limit is imposed
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Taxation

United States makes use of two separate
forms of taxation:
• Progressive Taxation
 A system in which people who earn more
pay higher taxes
• Regressive Taxation
 A system that taxes everyone the same
percentage of money, but results in poor
paying a higher percentage than rich
Copyright © 2011 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.
Copyright © 2011 Pearson Education, Inc., Upper Saddle River, NJ 07458. All rights reserved.

SOCIAL PROBLEMS SOCIAL TOPICS