Sociology 125
October 13, 2012

Class concept
Individual attributes
Key Idea
One person’s class position does not affect anyone else’s
Opportunity-hoarding The advantages of being in a privileged class position causally depend on the disadvantages of others (“exclusion”)
Domination & exploitation
The advantages of being in a privileged class position causally depend on two things: exclusion and controlling the activities of others.

1. An extremely rich capitalist/corporate managerial class
2. Historically a large and stable middle class anchored in possession of educational credentials, with an uncertain future.
3. A working class that was once supported by a strong labor movement with living standards overlapping the middle class, but now quite vulnerable.
4. A poor segment of the working class, with low wages, unconstrained competition, high vulnerability.
5. A marginalized population living in desperate poverty.

Household income
57%
17%
26%
Household net Financial Assets
19%
42%
39%
Richest 1% of households
Next richest 9% of households
Bottom 90% of households
Distribution of Household Income and Wealth, 2004

The Top Decile Income Share, 1917–1998

Annual rate of growth of family income by income group
1947-79 compared to 1979-2005
1947-1979
4,0%
3,5%
3,0%
2,5%
2,0%
1,5%
1,0%
0,5%
0,0%
20th 40th 50th 80th 95th
1979-2005
4,0%
3,5%
3,0%
2,5%
2,0%
1,5%
1,0%
0,5%
0,0%
20th 40th 50th 80th 95th

Where in the distribution has inequality increased the most?
1979
1989
2000
Ratio of average household income of the richest 1% to the median household
Ratio of average household income of the next richest 4% to the median household
Ratio of household income of the median household to the bottom 20%

600%
500%
400%
300%
200%
100%
0%
Earnings Growth at the Very Top of the Income Distribution
1972-2001 top 10% top 1% top .1% top .01%

Ratio of Average CEO to Average Worker pay, 1965-2007
350
300
250
200
150
100
50
0
1965 1972 1978 1989 1997 2000 2005
From Mishel, et. al. The State of working America, 2008-09, Figure 3AE

Ratio of executive pay to Average worker pay
1940s-2000s
Executives = 3 highest paid officers in companies that were among the 50 largest in 1940, 1960, or 1990
Bottom 10% of executives
1940
Median executive
Top 10% of executives
700 times the pay of average workers
600
500
400
300
200
100
1950 1960 1970 1980 1990 2000
Source: New York Times 4/8/2006

Class Origins of People in the “Forbes 400” list of wealthiest people in the U.S.
45%
40%
35%
30%
25%
20%
15%
10%
5%
0% wealth sufficient to already be in
"Forbes 400" inherited substantial wealth
(over $50 million or large business) inherited
$1 million or medium business wealthy background nonwealthy background

United States
Australia
Canada
Germany
OECD Total
United Kingdom
Luxembourg
Netherlands
Finland
France
Norway
Sweden
Relative Poverty Rates
(% with income < .5 national median)
5.3
7.3
7.1
6.8
7.7
8.3
8.1
11.0
10.6
12.4
12.0
17.1

Changes in Child Poverty Rate and National Income, 1959-2007
50%
$40 000
45%
40%
35%
GDP per capita
$35 000
$30 000
Children under 6
Children under 18
$25 000
30%
25%
20%
15%
$20 000
$15 000
$10 000
10%
5%
$5 000
0%
1959 1969 1979 1993 2007
$0

Growth of intense poverty:
% of poor living below half of the poverty line

9
United States
8
7
6
France
Canada
Spain
Italy
5
Australia
3
4 Denmark
Sweden
2
0 5 10 15 20
Children Living Below National Povery Lines (%)
25

Simple reasoning:
1. Some people who are born poor become rich, others do not, sometimes even within a family.
2. There must be something different between those who stay poor and those who do not which explains the different outcomes.
3. Therefore the explanation of poverty must be this individual difference: there must be a personal deficit of some sort.

Basic idea: Circumstances vary much more between the poor and the nonpoor do than personalities, motivations or values.

SOCIAL STRUCTURAL EXPLANATIONS OF
INEQUALITY AND POVERTY
1. Marginalization: Exclusion from labor markets
2. Inequality processes within labor markets
3. Processes which generate inequality in wealth

Social Structural causes of inequality and poverty:
#1 Marginalization
Definition : the process of being excluded from stable participation in the labor force.
Three issues: a) Simple observation: lack of adequate employment for people with low skills or with outmoded skills. b) This is NOT just a problem of inadequate skill formation. It is equally a problem of inadequate job creation .
c) The consequences of marginalization are intensified because of lack of real safety-net.

30%
25%
20%
15%
10%
5%
0%
Sweden US
Pre-transfer poverty rate
Post-transfer poverty rate

Social Structural causes of inequality:
#2. Inequalities within labor markets a) Two possible ways of organizing the process of connecting wages to jobs:
1. Individualized competition
2. Labor market governed by rules which dampen competition b) Why does intensification of competitiveness (deregulation) lead to increasing inequality?
c) Explanation for intensification of competition in the U.S.A.:
• Decline of unions
•
Decline of government regulation
•
Increased global competition d) Technological change

Social Structural causes of inequality:
#3 Wealth inequality
1. Difficult for average person to accumulate much wealth through savings.
2. Stagnation of household income since the early 1970s means that discretionary income for most people has not grown much.
3. Fantastic rise in employment earnings at high end of market has allowed professionals and managers to turn surplus earnings into capitalist wealth (stocks, bonds, etc.)