Lesson 5: Social Class and
Inequality
Social Problems
Robert Wonser
1

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
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
 Criticisms?
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?
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
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 wellrepresented 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
2010 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?
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
20
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
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
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
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
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
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
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
30
Financial (Non Home) Wealth
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, 1990-2005 (all figures adjusted for
inflation)