Chapter 2

Wealth and Poverty

U.S. and Global
Economic Inequities

Wealth and Poverty in Global

Perspective
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

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Wealth and Poverty in Global

Perspective (2 of 2)
National & 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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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

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Global Disparity (2 of 2)
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

U.S. stratification system has changed

over time:
Gap: haves & have nots increasing
Life chances for poor in America decreasing

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Measuring Social Class

Karl Marx (1818-1883) 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

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Measuring Social Class (2 of 3)

Max Weber (18641920) takes a
multidimensional approach
Wealth: Value of economic assets
Power: Achievement of goals despite
opposition
Prestige: Respect and esteem from others

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Measuring Social Class (3 of 3)

Erik O. Wright (1997)
Recent theory of class criteria for placement
with corresponding class distinctions:

Ownership of means of production

Purchase of labor of others
Control of labor of others
Sale of ones own labor

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Wealth vs. Income Inequality

Wealth
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

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Wealth vs. Income Inequality 2 of 2)

Income
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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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)

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Class Divisions in U.S. (2 of 3)

Middle class:
White collar workers, middle management

Working Class:
Semiskilled workers in industry and
nonmanual positions
Made up of daycare workers, cashiers

Working Poor:

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Class Divisions in U.S. (3 of 3)

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
14.3% (43.6 million people) in 2009

Poverty Line:
Established in 1965 by Social Security
Administration

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Poverty in the U.S. (2 of 2)

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 1960s 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

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Who are the Poor? (2 of 2)

Age:
Children under 18 make up 35% of those in
poverty (but only 24.3% of overall population)
1 in 5 kids lives in poverty, if under age 6 then 1 in
4 kids live in poverty (2009)

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 (high school/college)

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Social Welfare
Welfare state:
Assistance programs for housing, health,
education, income

Several changes made to program over

time:
Economic Opportunity Act of 1964
1996 Welfare Reform

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Explanations of Poverty
Individual Explanations:
Laziness; human capital; blaming the victim

Cultural Explanations:
Cultural deficiency; culture of poverty theory;
cultural capital

Structural Explanations:
The economy puts people in poverty

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Solutions to Poverty
Functionalist Solutions:
Strengthen social institutions

Conflict Solutions:
Reduce gender, racial, and class inequality

Symbolic Interactionist Solutions:

Reduce stigma associated with being poor by
changing how we view those in poverty.

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