Wealth and Poverty:
U.S. and Global Economic Inequalities
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Copyright © Allyn & Bacon 2010
Global
Perspective
U.S. Class
Inequality
• Quality of Life Indicators
• Life chances
• Absolute Poverty
• Social Stratification
• Wealth vs. Income
• Class divisions
Poverty in the
U.S.
• Poverty Rate and Poverty Line
• Who are the Poor?
• Consequences of Poverty
Social Welfare
• Welfare state
• Explanations of Poverty
• Solutions to Poverty?
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Land of Opportunity
 America has been called the “Land of Opportunity”
due to:
 Possibility of achieving “The American Dream”

Each generation can potentially have a higher standard of
living than those that came before.
 Possibility of social mobility:

Upward or downward movement in a class system
 A class system is a system of social inequality based on
ownership and control of resources
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Global Perspective
 There is economic disparity both between nations and
within nations of our world.
 Nations can be ranked into 3 categories:
High-income nations
• Highly industrialized
economy
• High national and per
capita income
• Ex: U.S., Canada, Japan
Middle-income nations
Low-income nations
• Transforming from
agrarian to industrial
economy
• National and per capita
income is somewhat low
• Ex: Colombia,
Guatemala, Poland
• Primarily agrarian
economy
• Very low levels of national
and per capita income
• Ex: Sub-Saharan Africa
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Copyright © Allyn & Bacon 2010
Global Disparity
 Gap between richest and poorest nations is increasing.
 Quality of Life indicators (life expectancy, health,
sanitation) show that there is disparity in life chances
of individuals around the world.
 Life chances: having access to important resources
(food, shelter, health care, clothing).
 Unequal access to resources leads to 1.3 billion people
who live in absolute poverty:
 Inability to secure most basic necessities of life.
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U.S. Class Inequality
 U.S. has significant social stratification:
 Hierarchy of social groups
 Some groups control more resources than others
 U.S. stratification system has changed over time:
 Gap between “haves” and “have nots” is increasing.
 Life chances for poor in America are decreasing.
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Measuring Social Class
Karl Marx (1818-1883) takes a unidimensional approach.
 Class position determined by relationship to means of
production in capitalist society:
 Bourgeoisie: own means of production
 Proletariat: work for those who own means of production
 Bourgeoisie exploit workers leading to inequality and
poverty in society.
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Measuring Social Class cont.
 Max Weber (1864–1920) takes a multidimensional
approach
 Wealth: Value of economic assets
 Power: Achievement of goals
despite opposition
 Prestige: Respect and esteem
from others
The interplay between these factors
determines one’s position
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Wealth
Prestige
Power
Measuring
Social
Class
cont.
 Erik O. Wright (1997)
 Recent theory of class has 4 criteria for placement with
corresponding class distinctions:
Criteria for placement:
Class:
Ownership of means of production
Capitalist class
Purchase of labor of others
Managerial class
Control of labor of others
Small business class
Sale of one’s own labor
Working class
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Wealth vs. Income Inequality
Income
Wealth
 Value of all economic assets
 Economic gain from salaries
 Wealth more unevenly
and wages
 Big gap between highest and
lowest income earners in the
U.S.
 Median income for Blacks
and Hispanics remains lower
than that of Whites
distributed than income
 Poorest 20% of U.S. families
have NO wealth
 Minorities have accumulated
less wealth than whites
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Copyright © Allyn & Bacon 2010
Class
Divisions
in
U.S.
 Upper Class:
 Wealthiest and most powerful
 Made up of investors and heirs
 Upper-middle class:
 Control production in society
 Made up of professionals (doctors, attorneys, stockbrokers)
 Middle class:
 White collar workers, middle management
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Class
Divisions
in
U.S.
cont:
 Working Class:
 Semiskilled workers in industry and nonmanual positions
 Made up of daycare workers, cashiers
 Working Poor:
 Work full time
 Made up of unskilled and lowest paid service positions
 Remain at edge of poverty
 Chronically Poor:
 20% of U.S. population
 Negative net worth (owe more than they own)
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Poverty in the U.S.
 Poverty Rate:
 % of population below governmentally defined poverty line.
 Fluctuates from year to year
 12.3% (36.4 million people) in 2006
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Copyright © Allyn & Bacon 2010
Poverty in the U.S. cont:
 Poverty Line:
 Established in 1965 by Social Security Administration
 Formula takes market basket (low cost, nutritional food
budget) and multiplies by 3 (for non food costs).
 Adjusted each year for inflation
 Takes into account family size
 Some believe it is out of date as formula is based on
1960’s standards.
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Who are the poor?
 Characteristics associated with greater poverty risk:
 Gender:



2/3 of adults in poverty are women
Households headed by women are fastest growing segment of
poor
Feminization of poverty: trend where women are
disproportionately represented by those in poverty
 Age:
 Children under 18 make up 40% of those in poverty (but only
25% of overall population)
 1 in 6 kids lives in poverty, if under age 6 then 1 in 4 kids live in
poverty. (2006)
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Who are the poor? cont:
 Race:
 Minorities are very overrepresented in poverty
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Consequences of poverty
 Limited access to health care
 Inadequate nutrition which leads to medical problems
 Difficulty finding affordable housing
 Reduced educational opportunities
 Fewer years of schooling
 Less likely to graduate from high school or college
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Social
Welfare
 Welfare state:
 Started in 1930s under Roosevelt’s New Deal
 Assistance programs for housing, health, education, income
 Several changes made to program over time:
 Economic Opportunity Act of 1964


Started “war on poverty” with Head Start, Job Corps, Manpower
Development
Poverty rate dropped following new programs
 1996 Welfare Reform
 Limited amount of time recipients can receive assistance
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Explanations of poverty
 Individual Explanations:
 Focus on lack of motivation and laziness
 Lack of human capital (education and experience)
 Seen by most sociologists as blaming the victim
 Cultural Explanations:
 Focus on cultural deficiency
 Culture of poverty theory: develop attitudes and behaviors
which keep one trapped on poverty
 Lack of cultural capital (social assets such as language)
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Explanations of poverty cont.
 Structural Explanations:
 Takes a macro approach
 Changes in economy put people in poverty through no
fault of their own

Downsizing, layoffs, increase in technology
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Solutions
to poverty:
No consensus on causes of poverty results in no
consensus on solutions to poverty.
 Functionalist Solutions:
 Strengthen social institutions (education, family) so
they can help meet the needs of poor individuals
 Conflict Solutions:
 We must reduce gender, racial, and class inequality
before we can eliminate poverty.
 Symbolic Interactionist Solutions:
 Reduce stigma associated with being poor by changing
how we view those in poverty.
Copyright © Allyn & Bacon 2010