Chapter 2
Poverty and Wealth
Economic Inequality in the
United States
• Social Stratification – system of ranking people in
a hierarchy
• Social Classes – categories of people who have
similar resources and opportunities
• Income (salary or earned wages)
– Highest-earning 20 percent of U.S. families received
48% of all income. Lowest-paid 20% received just 4%
of all income. (U.S. Census 2006)
• Wealth (economic assets owned)
– Wealthiest 20% own about 84% of all wealth. Top 5%
own 60% of all wealth in the United States, the top 1%
owning nearly 40% of all private economic assets
Taxation
• Progressive taxation – policy that raises tax
rates as income increases
– $1 million or more – nearly 30% to federal
taxes
– $40k-80k – about 10% to federal taxes
– $10-20k – about 3% to federal taxes
The Rich and the Poor
• The rich – top 10-20% of the population (families
which have an average income around $200,000)
• The poor – families with low-paying work or no
job at all, usually with no wealth (12.6% poverty
rate)
– Poverty line – standard set by the U.S government for
the purpose of counting the poor (family of four at
$19,971 annually) – U.S. census Bureau 2006
– Poverty gap – difference between actual income of a
poor household and the official poverty line
The Poor
• Age – children are at greatest risk, make up about 35% of
the poor.
• Race – racial minorities have a higher percentage of poor
than whites, but numerically minorities do not make up the
most of the poor population.
• Gender – women are at greater risk of poverty. 61% of all
U.S. adults who are poor are women. Gender gap as a
result of feminization of poverty.
• Family Patterns – poverty rate lower for the married.
Single female-headed-households at great risk of poverty.
• Region – inner city, urban areas have greatest poverty.
Poverty lowest in areas that offer more jobs and
educational opportunity
The Poor
• Working Families are working harder and longer.
• The Working poor
– Barbara Ehrenreich - Nickel and Dimed
• The Nonworking poor – many poor families do
not have a steady income. High percentage of
poor not working at all or doing part-time work.
Many reasons include: health problems, lack of
skills, lack of jobs, etc.
• The underclass – poor people who live in areas
with high concentrations of poverty and limited
opportunities for schooling or work.
“Hypersegregation”
Problems linked to Poverty
1.
2.
3.
4.
5.
6.
Poor health
Substandard Housing
Homelessness
Limited Schooling
Crime and Punishment
Political Alienation
Social Welfare
•
Social Welfare Programs – organized efforts by
government, private organizations, and
individuals to assist needy people
1. Social welfare programs benefit those defined as
worthy
2. Social welfare programs benefit most people
3. Social welfare programs change income
inequality only a little
Applying Theory to Poverty
• Structural-Functional Analysis – culture of
poverty, meritocracy, social disorganization,
inequality is inevitable and useful
• Symbolic-Interaction Analysis (defining the
problem) – society or the individual (blaming the
victim)
• Social-Conflict Analysis – poverty and capitalism,
cultural capital, feminist theory, multicultural
theory, intersection theory
Solutions?
• Personal Responsibility (conservative) vs.
Societal Responsibility (liberal)