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Chapter Two:Wealth and Poverty:
U.S. and Global Economic Inequalities
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Copyright © Allyn & Bacon 2010
Chapter Two Outline• Quality of Life Indicators• Life chances• Absolute Poverty
Global Perspective
•Social Stratification•Wealth vs. Income•Class divisions
U.S. Class Inequality
•Poverty Rate and Poverty Line•Who are the Poor?•Consequences of Poverty
Poverty in the U.S.
•Welfare state•Explanations of Poverty•Solutions to Poverty?
Social Welfare
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Land of OpportunityAmerica 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 PerspectiveThere 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
•Transforming from agrarian to industrial economy•National and per capita income is somewhat low•Ex: Colombia, Guatemala, Poland
Low-income nations
•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 DisparityGap 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 InequalityU.S. has significant social stratification:
Hierarchy of social groupsSome 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 ClassKarl 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 assetsPower: Achievement of goals despite oppositionPrestige: Respect and esteem from others
The interplay between these factorsdetermines one’s position
Wealth
Prestige
Power
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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 InequalityWealth Income
Value of all economic assets
Wealth more unevenly distributed than income
Poorest 20% of U.S. families have NO wealth
Minorities have accumulated less wealth than whites
Economic gain from salaries 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
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Copyright © Allyn & Bacon 2010
Class Divisions in U.S.Upper Class:
Wealthiest and most powerfulMade up of investors and heirs
Upper-middle class: Control production in societyMade 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 positionsRemain at edge of poverty
Chronically Poor:20% of U.S. populationNegative 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 year12.3% (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 inflationTakes into account family sizeSome 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 povertyAge:
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 povertyLimited access to health care
Inadequate nutrition which leads to medical problems
Difficulty finding affordable housing
Reduced educational opportunitiesFewer years of schoolingLess likely to graduate from high school or college
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Social WelfareWelfare state:
Started in 1930s under Roosevelt’s New DealAssistance 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 programs1996 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 lazinessLack of human capital (education and experience)Seen by most sociologists as blaming the victim
Cultural Explanations:Focus on cultural deficiencyCulture of poverty theory: develop attitudes and
behaviors which keep one trapped on povertyLack of cultural capital (social assets such as
language)
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Explanations of poverty cont.Structural Explanations:
Takes a macro approachChanges 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.