Workers and the Economy - Essay Example

Workers and the Economy Workers and the Economy of inequality Inequality can be described as the situation where a part of the population has access to more rights or opportunities compared to other people in a society. Inequality, therefore, captures an unfair situation where a certain group in the population has more money, rights, power, and opportunities for other benefits than others (Davidson, 2009). Inequality can also be described in terms of the difference in standards of living, income, living conditions, among other economic and social conditions of the people in a certain area or place. These is evidenced by different houses and amenities in different parts of a city or town depicting inequality and also the different levels of wealth with some people living in abject poverty while others having millions or billions describing inequality. Inequality can also be described in terms of the social amenities present in a certain location in terms of the financial, judicial, housing, transportation, among other social amenities whose difference describe inequality among classes. The effect is the presence of hierarchy where there is the lowest classes having to deal with low income, poor standards of living, and abject poverty most represented by the jobless and a part of the working class. The second class on the hierarchy is the working class who have slightly improved income, a higher standard of living, and access to social amenities but at the top are the rich and super rich consisting of capitalists. The capitalists have the best social amenities, highest standards of living, and the most income consisting mainly of non-home income. The existence of these disparities results in the alienation of the lower classes in the access of many social, political, and economic opportunities and benefits. Measuring inequality Measuring inequality involves the finding of the level of distribution of income, consumption, and other attributes ion a region, nation, population, or continent. There are certain measures used to measure inequality including the most common measure that is the Gini-coefficient of inequality (Davidson, 2009). The coefficient of the Gini-coefficient of inequality varies between zero and one with 0 representing complete equality and 1 representing complete inequality (Davidson, 2009). However, this measure has a disadvantage of lack of addictiveness across groups where the sum of coefficients in subgroups does not equate to the total Gini of a society. The other measure of inequality is the Theil-index that is preferred for its addictiveness across groups though not commonly used as the Gini-inequality coefficient. However, the disadvantage of the Theil-index is that it lacks straightforward appeal. The Decile dispersion ratio is the other measure of inequality calculated by dividing the sum of income of the richest 10% of the population under consideration to the total income of the poorest 10% of the population (Zweig, 2000). The fourth measure of inequality is share of income also known as consumption of the poorest percentage depicts the amount of income held by a percentage of the poorest people in the population. These different measures of inequality have certain advantages and disadvantages and the choice of the method to use depends on the purpose of the measurement of inequality and often a combination of the measures are used for effectiveness and credibility. Causal relationship between class and inequality Zweig (2000) defines the class as the “power some people have over the lives of others and the powerlessness most people experience, as a result” (Zweig, 2000). The author goes further to define classes as the “groups of people connected to one another, and made different from one another by the ways they interact when producing goods and services” (Zweig, 2000). This definition brings into the fore the fact that class is about economics and not lifestyle since it captures the “different degrees of income, status, and power” (Zweig, 2000). From the above definition, classes in society include capitalist class consisting of owners and operators of major corporations. The working class includes the people sharing a common situation in the social structures, however lacking much power. The lack of power makes the working class be relatively vulnerable in different fronts including on the job, in politics, culture, and in the market. Class division in the United States is the main representation of economic equality. This is evidenced by the massive disparity between the income of capitalists and those of working households. This is as high to the tune of 12 times the amount of income earned by an unskilled worker to level the amount earned by a capitalist (Zweig, 2000). There is a causal relationship between class and inequality as defined by the different power levels contained in different classes. This is evidenced by the capitalist class who own all produced in their factories and have power to control the work lives of employees in their factories who form the working class. The effect is that the capitalist class has the power over the working class depicting the inequality between the capitalist and working class. Capitalist class sets production terms, own businesses, have money and social status providing them power to influence the political and cultural life of a country (Zweig, 2000). The capitalist influence defines opportunities for everyone and limits these opportunities in accordance with their will for augmenting and deepening their power depicting the causal relationship between class and inequality. The other evidence of the causal relationship between class and inequality is in the working class where they have no power at the job place on how the pace and content of their work. They are directed by a supervisor on how to do the job and these occurs regardless of the job being skilled or unskilled, white or blue collar, and the varied occupations. The division of labour into the management and the workers shows different classes because of the different roles carried by these classes. The management take on less tasks and less hours at more pay while the workers have more jobs and more hours at a lesser pay. The capitalist class may not even work at all but derive the most benefits from the work of the management and the workers. Formation of unions has been a measure to reduce capitalist power over the workers but the impact has not been without struggle owing to the contracts and stalling negotiations and the fact that despite the power of unions the boss remains the capitalists and the workers have to obey contracts signed by them. The other way the power relation in terms of class showing inequality has been reduced is the formation of cooperatives though they are small and have low market power. Being a member of the cooperative does not present the worker with social and political capital evidenced by middle and capitalist classes depicting the other causal relation between class and inequality. Ownership of stock in the company is the other manner of improving working class power in a company, but the fact remain they are employees and cannot make other decisions at the company reserved for the owners. The effect is an inequality caused by the difference in class between the capitalist and middle class having more economic, social, and economic power compared to the working class (Davidson, 2009). According to Wolf and Zacharias (January, 2007), within class inequality is highest among capitalist and self-employed households with the explanation being the difference between the very rich and the extremely rich in the capitalists (Wolf & Zacharias, January, 2007). For the self-employed households, the inequality ranges from the prosperous business owners to loss-making ones. Blue collar workers depict the lowest within class inequality owing to augmented unionization but the managerial class showed high inequality use of the differences in the occupational places with managers for example a CEO of a large corporation receives more salary than a manager of a small business. The inequality arising from class differences can also be explained by the differences in the income from non-home wealth. The non-home wealth for the capitalist class consists of 85% of its total wealth, which is so high compared to the 24% or lower for all the other groups. The major income source for all the other classes is earnings. According to the Gini coefficient, the reasons for increased inequality are the augmented increase in the non-home wealth that grows at a disproportionate rate favouring the capitalist class. There is also an increase in inter class inequality that favours the capitalist class as evidenced by their minimal percentage of households of less than 5% while controlling over 20% of total income (Wolf & Zacharias, January, 2007). The effect is that class differences among the population causes both inter class and intra-class inequality because of the different characteristics of the varied classes. This is the other depiction of the causal relationship between class and inequality in the society. Inequality in terms of income can be explained by differences in skills, existence of middle classes, unionization, and discrimination in terms of race and gender. The other factor that can also depict the causal relationship between class and inequality is the limited access of public goods including education, banking services, adequate housing, transportation services, and justice services. There is a relation between class and privileges and prestige with the access increasing with the increased in class from low, middle to upper class/ capitalists. Different classes have varied access to financial, housing, transportation, education, and judicial services owing to the disparity in wealth and income levels (Wolf and Zacharias, January 2007). Capitalists have access to the best amenities due to their ability and willingness to purchase compared to middle and lower class levels with the lower class having to do with the social amenities provided by the government that may not be adequate for them all. Differences in the access to social amenities by the different classes create inequality between the classes depicting the causal relationship between class and inequality. There are certain drawbacks of labour including the lack of equality among the different classes, the non-relationship between amount of work and hours to the payment, and the benefits derived that may not be enough to sustain the workers to have better lives compared to the capitalist class (Zweig, 2000). Labour has a direct relationship with the standard of living that favours the capitalist class over the other classes. Labour results in lack of autonomy where the worker has to follow directions in terms of the content and pace of his/her work from a supervisor/management affecting creativity and innovation at the workplace. The above analysis and evidence depict the causal relationship between class and inequality. The reasons for the assertion include the control of power and access to other economic and social resources by the capitalists compared to the other classes in the community. Other reasons include disparity in income levels, high non-home income, control of social and cultural power, control of means of production and the inability of the working class to determine the pace and content of their work. Other reasons are the high differences in within class equality caused by the presence of very rich and extremely healthy individuals within the capitalist class. All these reasons point to the presence of inequality caused by class differences. References Zweig, M. (2000). The working class majority: America’s best kept secret (pp. 9-37; 181-183). Ithaca, NY: Cornell University Press. Davidson, R. (2009). Reliable inference for the Gini index. Journal of Econometrics, 150, 1, 30.40. Wolf, E. & Zacharias, A. (January, 2007). Class Structure and Economic Inequality. New York: The Levby Economics Institute. Read More