Social stratification and wealth inequality. US population - Term Paper Example

Inequality: An Introduction to social Stratification Social Stratification and Wealth Inequality Social stratificationforms the heart of the society and is characteristic of linking the various aspects of the society together. The works of Karl Marx have been significant in making social stratification a major subject of scholarly study and research in the industrialized era. There are various factors that determine the position of the person in the stratified structure of society. These include the nature of the work they perform, the level of education, their sex and ethnicity as well as their mother language, personal wellbeing, child-raising traditions and contentment. The position of the person in society is the most important judge of the attitudes and behavior of the person. Over the passage of time, the inequalities that have emerged in power, wealth and income have been the hotbed of debate for both Marxist and non-Marxist thinkers. Although there is no consensus on the reasons due to which these inequalities surface, the role of socialization in aggravating these inequalities has been starting to be researched and acknowledged by sociologists. The sociological focus of this essay is on the wealth inequality that exists between four different classes of the society. Karl Marx was of the view that class was a product of economic forces. Max Weber contended with a multidimensional perspective of the development of a class system in the society encompassing economic, social and political aspects. There are several theories explaining the creation of inequality between classes. Wealth inequality is the procreation of ideology. Functionalism asserts that it is social inequality which provides the impetus for people to occupy various positions in the society for the survival of the entire class. People would be motivated to achieve what is famously known as the American Dream and to strive for the acquisition of wealth and fortune; this would create two types of groups i.e. people who have been successful in collecting wealth and those who have not. Contrary to that, conflict theory considers social stratification as a consequence of class conflict and blocked opportunity. The conflict theory opposes functionalism by supporting the notion that those at the lower most levels of society are unable to reap large rewards because they are dominated by the higher classes. The Marxist view regards inequality to be a product of capitalism. According to Marx, the industrial society can be classified into two main types based on the ownership of the means of production. Capitalists are in command of the resources of production i.e. land, factories and machinery. Workers do not possess any resources of production and are required to work for the capitalists for a living (Kornblum 246). Wealth inequality is considered to be more serious and acute than income inequality. Wealth inequality refers to either less income in the past years or the lack of any bequeathed wealth from one’s ancestors. Over the passage of time, the division of social classes has come to encompass much greater range and depth. Often sociologists divide society into seven main social classes: 1. Upper-upper class: Old money 2. Lower-upper class: New money 3. Upper-middle class 4. Middle class 5. Working class 6. Working poor 7. Poverty level For the purpose of this essay, four of the classes will be analyzed, compared and contrasted in the context of the wealth inequity that exists between them. Wealth inequality is compared by using measures of social inequality. These include an analysis of the social worth of households, the total assets of the classes, the inequality between the rich and the poor and proportions of wealth (Kornblum 265). Identifying and explaining the characteristics of a typical member of a social class is easier than to demarcate and differentiate the boundaries of the class. Moreover transfer of people from one class to another is not a fluid process, and people do not frequently change their classes of origin. The following part of the paper will describe the characteristics of families from four different classes. Middle Class The middle class forms the immediate most family that would be analyzed. I have chosen my own family to be a representative of this group. I have collected the required data from different documents of the net assets that we own and other financial statements. The middle class typically constitutes of people who make their living by working. I belong to the middle class and my parents have been working in professional jobs for a very long time now. They are educated and they have acquired college education. An estimated 30% of the Americans are in the middle class. The middle class is different from the working class on the basis that both classes require skills but the middle class has a higher educational status. A typical family from the middle class is different from families from other classes in such a way that the members are stuck in the middle of the social class system, enjoying comforts but a limited number of luxuries and even lesser assurances. Working class I have chosen to use the working class for comparison since one of my friends, Antony Halls, is from the working class. The working class constitutes about 30% of the US population. This class is representative of the fastest and the most challenging changes in the US today. Like the middle class, people who consider themselves part of this class come from diverse backgrounds (Kornblum 280). My friend, Antony, has attended college but he has acquired vocational training of a construction worker. He has two more brothers besides him; both have carried on with his father’s carpentry workshop. Antony and his brothers are employed in manual jobs requiring skilled, semiskilled or unskilled labor- a typical characteristic of members of the working class (Kornblum 280). The working class is different from the working poor based on the fact that the incomes of this group is able to sustain the basic needs of the families without outside aid; this means that the working poor require outside aid for meeting their needs since their incomes are not sufficient. Since Antony is my friend, interviews with him have been my method of data collection for this research essay. New money New money occupies the higher rungs in the social ladder. It constitutes about 15% of the US population. This group encompasses those individuals whose wealth has been around for a couple of generations, as compared to those of old money who have had inherited wealth for generations till now. I will be researching and comparing Jeff Harris’s family from the New Money or nouveau riche class. Jeff Harris belongs to the family of one of my maternal cousins. Harris started out as an average student in college but was unable to perform well and dropped out. He started to work as a clerk in a grocery store and in a junkyard. He had to support his wife and kids and was at times so short of money that they had to wash their clothes in the bathtub because they could not afford a Laundromat. Today, Harris has grown to be an investment advisor and multimillionaire in South Carolina. He did not have wealth bequeathed to him from previous generations. New Money generally encompasses the families who formally belonged to a lower social rank but have risen to a higher one by acquiring wealth. This wealth has led to the acquisition of goods and services that the members of this group were not able to afford earlier. The acquisition of wealth is dependant more on talent than on inheritance and this is a distinguishing quality of this social class from Old Money. In the case of Harris, one can clearly see that it was his own entrepreneurship and talent for business and investment that made him so successful at it. The methods of data collection include the Internet and interviews with my cousin and distant relatives regarding the financial status of the millionaire. Also, total net assets etc have been analyzed to provide a detailed comparison. Poverty level Our governess, Julia Stephens, belongs to the poor class. The poverty level class, also known as the underclass, do not have the means and resources to fulfill their basic requirements i.e. food, clothing and shelter. These people are poor and the class is marked by low rates of employment. They are subject to the deprivation that arises from basic levels of education, soaring figures of unemployment and low incomes. Our governess has only passed her middle school i.e. studied till the 8th grade after which she dropped out to support her mother in a small stitching workshop. Given the lowly profile of the job, our governess was paid a small income. Although countries like the US, where the average standard of living is quite high, poverty is still deeply entrenched in a significant portion of the lower class. The governess and her family lived a poor quality of life and often did not have a timely access to health care. The poverty line is defined as the amount of money required to sustain a household; people below this line are regarded as poor. In the underclass, some people may not be able to work because of some disabling condition or old age, as in this essay is the case with Julia’s parents. Less than five percent of the Americans are on a living wage and the probability that their children are able to ascend into higher echelons of society is only half. Kerbo argues that the people who are able to come out of poverty rarely ascend high, with a tendency to fall back in the same class later in their lives (255). The underclass is different from the working poor by the absence of regular, permanent jobs. Comparing Wealth Inequality Between the Four Families The class system that most sociologists agree with apparently seems to be a relatively stable and constant system. The variance between the social classes is widening. Notably, the gap that exists between the capitalists owners, representing the New Money class, and all other classes is enlarging- a notion buttressed by Marxism. It is seen that there is a widening class chasm between the three uppermost classes, who have been able to gain authority and clout due to their skills and backgrounds, and the three lowermost classes, who are subject to attrition in their power in the market. The working class and the working poor are an important means of labor in the contemporary world. All these factors, directly or indirectly, cause inequality between classes to aggravate. When comparing my family i.e. the middle class with other classes, one can appreciate that there are a number of differences embedded in our lives. Because of these differences existing between the classes, the families have developed differing value systems, consumption patterns and opinions. When analyzing my family, I realized that our treatment of wealth is different from that of Jeff Harris’s family. For us, wealth is something that is to be saved up and used during times of emergency. We regard wealth as a cushion, something we can fall back on when times are hard. My parents have been working in professional jobs for the past couple of decades and they have always emphasized the importance of working hard, acquiring education and aspiring to achievement. We live in a house that my parents bought a few years ago from the money that they saved up from their daily expenses. Moreover my parents have always worked on the principle of long term planning- planning for the house, a car, my education etc. Our focus is on the income that we earn and our family is engaged in large amounts of consumption. Therefore most of the income that my parents earn is spent away for the satisfaction of our needs and some small luxuries. In contrast to that, Harris’s family is better off than us in wealth and they have differing values. We possess objects and things that we have collected in the past; for Harris and his family, wealth is a means of collecting unique and rare objects, legacies and pedigrees. Where we believed in managing money effectively, Harris either saves up money or invests it in some profitable venture. We had little savings but Harris has a lot of savings. When comparing Antony Hall’s family, belonging to the working class, there are differences in the savings and views of the class compared to other classes. For Antony, money is something that is to be used and spent. The family has very meager savings as compared to our middle class family. The difference is more drastic for people living below the poverty line. Julia, our governess narrates that despite working at our place and doing a part-time job in a restaurant, she is barely able to make enough money to support herself and her old parents. She says that she has no savings and there is no concept of collecting money to buy assets as is present in the middle and new money class. When comparing Antony with our family, one can conclude that the working class families do not only have lesser incomes than middle class families, but they are also characteristic of lesser financial security, notably attributed to the increasing number of layoffs and plant closings in some areas of the US; this has caused Antony to change three jobs in construction companies because the changing economic conditions made the companies layoff some of the employees. One of Antony’s brothers also started a job in a construction company by after a year when the global financial crisis was at its peak, the company laid off a quarter of its workforce, of which Antony’s brother was a part of. When I asked Antony about his education, he said that he is the only one who studied beyond high school. His brothers and most of his family members only have a simple high school diploma. This decreases the opportunities that his family had for work in today’s competitive, high-tech society. Many of the people from the working class are found to be working in low-pay jobs in the tertiary sector of the economy, especially in fast-food restaurants. As a result, scores of workers from the working class are considered to be members of the working poor Statistics show that the top 5%, i.e. the upper class (constituting both the old and the new money), owns more than half of the wealth. Kornblum is of the view that the upper class is in possession of an approximate 40% of the total personal wealth in the US (276). Harris is representative of this class and has an income of over 3 million US dollars. According to Statistical Abstract, the hyper-rich have seen a dramatic increase in their wealth income over the past couple of decades. The average income of these people is now about $3 million a year, a 2.5 times increase in the income they earned in the early 1980s. Plotting the statistics on a graph, it can be seen that between 1983 and 2001, the positions of the hyper-rich was increased by 400% whereas the total number of households in this group grew only by 27% (Kornblum 276). Antony stated that on average, he and his brothers earned an income less than $35000 annually. In fact, the population at the very bottom of the social class system (about 20% of the total population) was found to have a negative net worth. The past two decades has seen a significant rise in wealth inequality. In the 1990s, the uppermost class was attributed to about 60% of increases in national wealth; the richest 20% were characteristic of almost 100% increase in national wealth. Over the years, US have become the country with the maximum wealth inequality between the social classes. Harris and his family are typically in the top 20% owns 80% of the entire wealth. In contrast to that, the 20% of the Americans forming the lowermost class, i.e. those living below the poverty level and the working poor, including Julia and Antony, do not own any wealth. This is because they are either not in possession of any assets or the debts they owe surpass the value of their assets. Estimating the total wealth that our family has, I realize that we possess wealth of about $63,000; although this figure is not less but when compared with the wealth possessed by the top 1% of the population averaging about $12.5 million, one can appreciate the difference that exists between the middle and the upper class. This means that there is a large degree of total wealth concentration in the higher classes of the society. I asked Harris’s relatives, Antony and Julia about the total worth of their assets. When taking out the worth of the house, the figures showed that most of the wealth was concentrated in the topmost levels. A house is not regarded as a liquid asset and when I collected statistics on the distribution of other assets such as checking and savings account, the Harris and his family was the collective owner of half of the non-home wealth after summing up the wealth of all the four families. For our middle class family, these assets constitute the wealth stored in accounts, market deposits and pension savings. When calculating the wealth of our family, these assets constituted 85% of the total wealth. On the other hand, it has been documented that the richest 10% of the families are the owners of about 85% the total shares of a company which the public owns and 85% of the negotiable financial instruments. Comparing the net worth of our households, it was seen that the household of Harris and his family had a net financial worth of $240,000; on the other hand, my household and subsequently that of Antony and Julia have a net worth of $45000. Another way of comparing the wealth differences in the social class is by studying the percentage composition of wealth by income. When comparing the perspectives of Harris and my family with others, I realized that as I moved from Julia and Antony’s family to mine and Harris’s, there was an increase in wealth and income and this caused the higher families to give less importance to life cycle assets as compared to the lower families; although this trend was more obvious for Harris and his family. With the exception of Harris and his family and other uppermost families, the fraction of total household wealth as represented by net equity in owner-occupied housing, consumer durables and household inventories, demand deposits and currency, and life insurance and pension cash surrender value diminished as a result of income and wealth. Compared to this, the fraction of total household wealth that constitutes time and savings deposits; bonds, securities, stock and trust equity; and equity in business and investment real estate showed increased as one moved from the lower families to that of Harris, representing an increase in household income and wealth (Osberg 125). For the two lowermost wealth classes, including Julia and her family, life cycle wealth was more than 80% of the total wealth held by them. In contrast to that, the upper three wealth classes, compromising of Harris and his family, capital wealth formed a total of 83% of the household disposable wealth. This shows that the life cycle model is an appropriate model for describing the reasons due to which the middle class engage in the gathering of wealth including housing, durable and liquid assets (Osberg 125). Harris and other upper class members have different reasons and sources for accumulating wealth whereas the lower class members, including Antony and Julia, do not have adequate income to collect assets. The wealth inequality has exacerbated so much over the years that the net wealth of the richest people is equal to the total wealth of the lower classes. The growing disparity between the classes also impacts the lifestyles of the people. Harris, with considerable amount of wealth, is able to improve his lifestyle, seek health care, afford luxuries and enjoy comforts. The perceptions regarding the wealth divide between the families also differ. Our family is more likely to speak of the divide between the rich and the poor as compared to Harris’s. We believe that the rich economies are providing unbalanced returns to the rich, causing the lower classes to feel more stressed out. In the US, inequality is peaking as depicted by a Gini coefficient of .47 in 2009. Conclusion The US is representative of higher levels of wealth inequality. In the context of the distribution of wealth, one can see that it is heavily skewed towards the rich. This shows that the US cannot be considered a middle class society. Due to the unequal distribution of wealth and income, families at the higher levels in the social class system are better off than those at the lower levels. Statistics report that when comparing the wealth disparities of the upper class or New Money and the working class and the underclass, one can conclude that most of the wealth is condensed in the top class. Economic resources are not distributed across in the society in a symmetrical fashion. The gap between the rich and the poor is getting bigger with each passing year with the rich incrementing their wealth rapidly. The New Money class and the upper class in general are distinguished from other social classes by the amount of wealth that they have collected and the sources of the accumulation of wealth. Measuring wealth by indicators such as the total assets of the families and financial value of the households etc, one can come to the conclusion that the distribution of wealth is concentrated in the higher classes of society. Official demarcations do not exist between the classes; consequently, it is possible for social mobility to take place. It is observed that a certain degree of social mobility is present within the classes; however there are many determinants of social mobility, excluding any fixed criterion for moving up the social hierarchy. Social mobility can vary from culture to culture. However one can identify education to be an important determinant of social mobility. One can observe that a number of people in the higher classes have accumulated net assets by doing professional jobs and having a higher level of education. In the case of Harris, it was self-confidence that got him all the way to the top. He aimed high to become a part of the higher class and had his aim set at what he wanted to do. He always knew that he can build his way to the top classes and he got to the top by hard work and commitment. He got motivated when he came across a stockbroker at some party. After that he started to build up his knowledge about investment by perusing books when he got free from his hours at the grocery store. He started to save up some money and started to teach at a local college. His profession as an investment advisor began at the college, where his students were his first clients. Harris reflects that there were a lot of challenges but what got him through was his will and belief. Thus for Julia and Antony to ascend to higher classes, they need to build some knowledge and gain hands-on experience of the profession and to be committed to what they aim for. They need to believe in themselves and let of the fear that may hinder them. Thus, there is social mobility possible across classes and can be achieved by hard work and commitment. Works Cited Kerbo, Harold R. Social stratification and inequality: Class Conflict in Historical, Comparative, and Gobal Perspective. 7th ed. McGraw-Hill Companies, 2008. Print. Kornblum, William. Sociology in a Changing World. California: Cengage Learning, 2007. Print. Osberg, Lars. Economic inequality and poverty: international perspectives. New York: M.E. Sharpe, 1991. Print. Read More