social problems - oakton community college

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Social Problems Lecture 1 - Problems produced by social inequality

Introduction

Inequality is rooted in systems of stratification, a ranking of individuals and groups in a hierarchy thatreflects their access to and possession of scarce resources.

Can you see the geologic strata in this image from Badlands National Park in South Dakota? This refers to layersof rock and sediment in the earth that hold internally consistent characteristics thus distinguishing them from otherlayers. This same concept is used when understanding social stratificationsocial stratification in society. Societies can be stratifiedby class, race, gender, and other categories. This refers to different "layers" in a hierarchical system.

In the United States, one way to study this system of stratification and social inequality is to look at thesocial class structure. Most Americans would probably say that our society contains an upper class, amiddle class, and a lower class -- and they would probably locate themselves within the middle class. Inrecent years, as inequalities in our society have grown, a new category has emerged within sociologicaldiscourse, the underclass. This category includes the poorest of the poor, those individuals who are, atbest, marginally integrated into (or attached) to broader social institutions; they experience long-termand extreme poverty with little probability of ever escaping it.

In this lecture we will examine the evidence of social inequality, especially as it pertains to those at thetop and bottom of society. We will also look at the consequences this has for individuals and for oursociety.

Objectives

In this lecture you will learn to:

1. quantify the dimensions of inequality in American society.2. articulate how wealth and income are concentrated at the top of society.3. identify whether or not the "American Dream" is alive in terms of social mobility.

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Lecture 1 -- The American Class System

What social class are you? What are the markers of social class? What role does it play in our lives?Often, in the U.S., we are uncomfortable talking about social class because in an open society thatembraces the value of equal opportunity, class (especially the relative privilege or advantage thataccrues to members of a social class) seems "anti-American," anti-equal opportunity. Click here(http://www.youtube.com/watch?v=nU5MtVM_zFs) to watch the first 9 minutes of the PBSdocumentary People Like Us: Social Class in America. After watching the video, think about social classand how it shapes one's opportunities, aspirations, and view of the world?

While there are variations in how sociologists draw the social class system, most would agree that thereare four broad classes today -- upper, middle, working, and lower -- and some would add a fifth, theunderclass. Please note that social class is not simply measured in terms of income or wealth. It alsoreflects occupational prestige, educational attainment, and broadly speaking, relative access to power andresources in society. This is known as socio-economic-status (SES).

Because income and wealth are components of class-based stratification, and because our culture tendsto place high value on them, we will spend additional time on these in the following section.

The Concentration of Income and Wealth

Income

https://www.youtube.com/watch?v=nU5MtVM_zFs

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Income is measured in terms of the wages and salaries we earn from our paid employment, along withunearned money from our investments, child support, alimony, and other sources. According to the U.S.Census, in 2017 the median household income in the U.S. was $61,372. The median familyincome in 2017 was $75,938. (NOTE: "Family" is defined by the Census Bureau as two or more peoplesharing dwelling who are related by birth, marriage, or adoption. Family data excludes about 1/3 of allU.S. households.)

In Illinois the median household income in 2017 was $62,992. The median family incomewas approximately $77,000.

These measures, of course, do not tell us anything about how income is distributed in this country. Oneway to capture the inequalities in income is to look at the distribution of income across income groups.

The US Census regularly publishes data on this, with households divided into five evenly-sized groups, orquintiles; each quintile includes 20 percent of the total number of households in the U.S. To understandthis, think about all income that is earned in a given year as a pie, with each of these groups receiving aslice of the "income pie." While the income is not evenly distributed within quintiles, looking at how it isdistributed among quintiles tells us something about inequality. If there was no inequality, the slice thateach group receives would be the same size. The extent to which the sizes vary is a reflection of inequality.

The table below provides information on how income was divided among these five segments in 1970 and2017.

Quintile Percent of All Income Going toEach Quintile in 1970

Percent of all Income Goingto Each Quintile in 2017

Top 20 percent* 43.3 51.5*Second 20 percent 24.5 23.0Third 20 percent 17.4 14.3Fourth 20 percent 10.8 8.2Bottom 20 percent 4.1 3.1

Source for 1970 data: US Census Bureau, Historical Income Tables Source for 2017 data: Current Population Reports, Income, Poverty, and Health Insurance Coverage inthe United States, 2017, Table 2.

*NOTE: The Top 5% of earners take home 22.3% of all income in the U.S.

What do you notice about the distribution of income between quintiles? In both time periods, there issignificant inequality, with the largest share of income going to the top 20 percent of households. What

https://www.census.gov/library/publications/2018/demo/p60-263.html

https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html

https://www.census.gov/content/dam/Census/library/publications/2018/demo/p60-263.pdf

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about when you compare the distribution across time? Here it becomes evident that not only isincome becoming more skewed, but also that the share going to the top 20 percent ofhouseholds has been at the expense of all the other income groups. How can this increasingconcentration be explained?

Among the reasons that have been suggested for this trend are:

the tremendous increases in the salaries of chief executive officers of corporations (see chart below)and executives at hedge fund firmsgovernment tax policies that provide tax loopholes for the wealthy, or differential tax rates for"income" and "capital gains"; capital gains has a lower tax rate than income (see Schwab for 2017rates)a flat minimum wagestagnant "real income" for most workers (see chart below on income by educational attainment for menand women)falling rates of unionization (e.g., In 1954 28.3% of all U.S. workers were in unions; today (as ofJanuary, 2019, that rate is 10.5% (BLS, 2019). Today, public sector workers have a unionmembership rate of 33.9%; private sector's rate is 6.4%).the loss of good-paying manufacturing jobs combined with the growth of low-paying service jobstechnological innovation: computers and numerically controlled machine tools replace humans;these workers are pushed into local service sector jobs; with a glut of excess workers in that sector,wages remain lowglobalization: today we compete with workers from all over the world who would gladly work for afraction of what we would expect; this drives wages down in the U.S.

NOTE: "Real income" is simply income adjusted for inflation. For an overview of how workers' buyingpower has remained all but flat over the past few decades (and actually declined for most male earners),see chart below.

https://www.schwab.com/public/schwab/investing/retirement_and_planning/taxes/current-rates-rules/dividends-capital-gains-tax-brackets

https://www.bls.gov/news.release/union2.nr0.htm

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Wealth

Wealth refers to all assets individuals own.

Net worth refers to the value of all assets owned minus debt.

Obviously income and wealth are related. Some forms of wealth (stocks, bonds, real estate investments)generate income and excess income is often invested to create wealth. As with income, in this countrywealth is highly concentrated.

The Urban Institute (2017) recently produced a series of charts demonstrating wealth inequality in theU.S. for family households. The chart below captures this inequality. To animate the chart and show howfamily wealth inequality changed over the past 50 years, click to the link and then "animate."

http://apps.urban.org/features/wealth-inequality-charts/

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To animate chart, click here and then on "animate".

According to the Urban Institute, these changes have increased wealth inequality significantly. In 1963,families near the top had six times the wealth (or, $6 for every $1) of families in the middle. By 2016, theyhad 12 times the wealth of families in the middle.

For most Americans, the value and equity of the home they own represents the vast majority of theirwealth. The following bar graph from the Pew Institute, based on Census data, illustrates the dramaticwealth differences between whites and blacks or Latinos in the U.S. Again, the vast majority of thisdifference lies in home ownership and values.

http://apps.urban.org/features/wealth-inequality-charts/

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For an interesting discussion in Forbes magazine about how to eliminate the racial wealth gap, see thislink:http://www.forbes.com/sites/laurashin/2015/03/27/10-proposals-for-eliminating-the-racial-wealth-gap/#9af8ff67390a

Sociologist William Domhoff notes that numerous studies show that the wealth distribution has beenextremely concentrated throughout American history. In his studies he found that the distribution ofwealth was very stable over the course of the 20th century with the vast majority concentrated at the verytop of the ladder; by the last decade of the 20th century it was almost as concentrated as it had been in1929, when the top 1% had 44.2% of all wealth. That trend continues today.

Clearly, both income and wealth are very unequally distributed, with those individuals and families at thetop of society having possession or control of more than the rest of society. Additionally, the level ofconcentration seems to be worsening. Let's now look at some of the consequences of this trend for oursociety.

Consequences

http://www.forbes.com/sites/laurashin/2015/03/27/10-proposals-for-eliminating-the-racial-wealth-gap/#9af8ff67390a

http://sociology.ucsc.edu/whorulesamerica/index.html

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Obviously, one of the most significant consequences of these patterns is that those at the top of societygenerally pass their advantage on to their sons and daughters, thereby perpetuating inequalities insociety. If you explored the list of the richest people in the United States published by Forbes, youdiscovered that some of them are "self-made men (and women)," but most came from privilegedbackgrounds and hand that privilege on to the next generation.

In particular, this raises questions about the extent to which inter-generational mobility, that is, themovement that occurs from one generation to the next, occurs. We know that whites have a greaterprobability of upward social mobility from one generation to the next than do members of minorities,given the broader patterns of inequality and discrimination.

For an excellent study on social mobility, see the Pew Charitable Trusts report, "Pursuing the AmericanDream: Economic Mobility Across Generations" (2012). According to this report:

43% of kids born in the bottom quintile stay there.Just 4% of those born in the bottom, make it to the top.Of those born into the top quintile, 40% stay there, and just 8% end up on the bottom. For both ofthese groups, this is 2 times as high as would be expected by chance.The report calls this "stickiness at the ends", meaning there is less relative social mobility for thoseborn into the top and bottom of society.People in the middle have a roughly equal chance of moving up or down, unless they are African-American, a group who is about twice as likely to move down relative to their white counterparts.

So, is the American dream alive? The answer is yes, but is more alive for some than others dependingupon what you were born into.

The report also found that college graduates are more upwardly mobile from the bottom and less likely tofall from the top and middle. See the chart below illustrating the data on this.

https://www.pewtrusts.org/en/about/news-room/press-releases-and-statements/0001/01/01/pew-finds-most-americans-have-greater-income-than-their-parents-but-little-movement-up-and-down-the-economic-ladder

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Please watch this brief video that illustrates income inequality and social mobility in the U.S.

https://www.youtube.com/watch?v=t2XFh_tD2RA

This raises many questions about our system of stratification based class and race, and their relationshipto education; we will explore race in particular in more detail in later chapters. For our purposes here,there is a problem when opportunities for social mobility are essentially blocked for children who areborn into low-status families.

https://www.youtube.com/watch?v=t2XFh_tD2RA

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social problems - oakton community college

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