LET’S TALK ABOUT MONEY!WEALTH, INCOME, &

CONSTRUCTING SOCIAL CLASS

SOC 3300 – Social Inequality Dr. M. C. Sengstock

Professor of Sociology

http://users.wowway.com/~marycay910

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ISSUES FOR DISCUSSION:WHAT IS INCOME? … WEALTH?

HOW DO THEY DIFFER?• What Do We Mean By Income?– What Does Thomas Shapiro (#5) Mean by

Income?

• What Do We Mean By Wealth?– What Does Shapiro Mean By Wealth?

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INCOME• Earnings From Work:– Salaries or Wages

• Substitutions for Earnings:– Pensions, Social Security– Disability Payments, Unemployment Insurance,

Other Social Assistance

• Resources Obtained Over a Specific Period (Annually, Monthly, etc.)

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WEALTH

• Total Value of a Family’s Financial Resources – Minus All Debts

• Includes: Stocks, Money in Banks, Other Investments

• Business(es)• Property Owned: Home(s), Cars, Planes • Debts Are Subtracted from Above • Remainder Are the Family’s “ASSETS”

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COMPARING INCOME & WEALTH • How Much INCOME Do YOU (Personally) Have?

– Regular, Full-time Job?– Part-time Job?– Salary? Or Wages? What’s the Difference?

• Salary: Known Amount Per Month/Week• Wages: Amount Per Hour – Changes With Number of Hours

– Regular Income from Social Security or Pension?– Irregular Income from Day Jobs? – No Regular Income?

• How Much WEALTH Do YOU Personally Have? Your FAMILY?– Own a Home or Condominium? A Business? Or Several?– Own a Vacation Home? Own Any Other Real Estate (Rentals)?– Have a Bank Account? How Much Is In It?– Own Stocks, Bonds, Other Investments?

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IMPORTANCE OF WEALTH

What Does Wealth Do? … Allow People to Do?• Tide You Over for a “Rainy Day”• Save for the Future – Plan for Retirement • Save for the Future: Children, Grandchildren• Build Up FAMILY Resources For Posterity• Ethnic Community Goals: “He Has PROPERTY!”

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The Hidden Cost of Being African American: How Wealth Perpetuates Inequality

(Thomas Shapiro, 2004 – #5)

• Interviewed Nearly 200 Families• Asked About Their “Wealth” – Their “Assets” • How They Plan to & Actually Acquire Wealth• How They Use Their Assets

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WHAT PEOPLE SAID ABOUT “WEALTH”

“Wealth”: Treated Differently from “Income”• People SPEND Income – They PRESERVE Assets • Wealth There for Emergencies: Personal Safety Net,

Cushion Against Unexpected Job Loss, Health Crisis • Quotes:

“Income Supplies Life Support; Assets Provide Opportunities.”• “Income is Limited. Assets You Hold Onto For the Future.”• “Wealth is Definitely Long Term. We Act As If It’s Not Even

There.”

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CORRELATING WEALTH & INCOME• Wealth in America (Lisa Keister, 2000)

• Finds Little Correlation Between Wealth & Income• What Does This Mean?– People Who Have Wealth Primarily Have It From the PAST– It Was INHERITED– They Keep It In Reserve for Unexpected Expenses– It Helps Them Get a Good Education, Perhaps Good Jobs– But They Don’t Necessarily Make the Largest Salaries– They Live a Life Style Which Those With ONLY Income: • Cannot Afford – Cannot Understand!• They Always Have a “Back-Up”

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People Confuse Wealth & Income

• True of General Public• Also True of Many Social Scientists & Research

Studies– Research Almost Always Focuses on INCOME!– Rarely Uses Wealth As a Variable!– We Compare High – Middle – Low Income People– We Do Not Look At How Much Wealth People Have –

Or How “Wealthy” Differ From Those Without Wealth

• Perpetuated By the American Media

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EXAMPLES OF WHAT WEALTH CAN DO

• Assets to: – Send Kids to Private Schools “Good Contacts” – Support Children in College No School Loans– “Legacy” Admission to College (vs. Affirmative Action)– Provide Down Payments for Children’s Homes

Larger Homes, Better Neighborhoods, Better Schools– Provide Jobs/resources in Family Businesses

• EX: Republican Nat’l Committeewoman: “Get a Job!”• Ann Romney: “Had To Get Use Daddy’s Stocks & Loans To

Get Through College!

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IMPACT ON AFRICAN-AMERICANS

• “Wealth Dearth” Main Impact: African-Americans• Not Been In a Position to Accumulate Wealth• Wealth Is Accumulated Over GENERATIONS• Wealth Is Not the Work of 1 Individual• Getting A Good Education & Good Job:– Provides a Good INCOME– It Does Not Produce WEALTH

• That Requires Several Generations!

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APPLICATION TO WHITE ETHNICS

• Similar Impact on Other American Ethnic Groups– Jews Have Done Fairly Well in Getting Ahead – How Jews Came to Be Seen as “White” (Karen Bodkin)

– Irish, Italian, Greek, Jewish Became Doctors, Judges, etc. (Mary Waters #2)

– May Be Over-Stated Re Wealth– Many Italian & Polish & Some Irish Still Have Little

Wealth

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WHY MAJOR IMPACT ON BLACKS?• Impact of Government Policies • Other Institutional Policies• AFTER Civil War & Reconstruction• Blacks Ineligible for Government Programs:– 1935: Roosevelt – Social Security Act: Passed By

Deals With Southern States: STATE Administration– Post WW II Benefits: FHA, VA, GI: Blacks Ineligible– Restrictive Covenants in Housing – Home Ownership: MAJOR Mechanism Wealth

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Home Ownership As Major Component of Wealth

• For Most People – “The Home” Is the Main (Only ?) Component of Wealth

• Minorities – esp. African-Americans – Missed Out on Many Early Aids to Home Ownership

• Recent Drop in Real Estate Values Left Many Families’ Home Investment in Shambles

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CONSEQUENTLY:

• White English: Start Accumulating Wealth With a Major Asset – Began Pre-1900

• Other White Ethnic Groups: Began Around 1920 or Later – Had WW II Advantage

• African-Americans: Only Begin With the Civil Rights Movement of the 1960s

• Consequently: Still Far Behind in Wealth

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GOVERNMENT IMPACT ON OPINION:ASSET POVERTY LINE (APL)

Tool To Examine Resource Condition (“Wealth”) of American Families

• Ability to Survive for 3 Months Without Income (Conservative Assumption – Most Need More)

• 1999: Monthly Poverty Line (Family of 4) = $1,392• 3 x $1,392 = $4,175 – How Many Families Have It?• “Asset Poor” Families Have < $4,175 – Cannot

Survive for 3 Months Without Help• What If We Used a 6 or 9 Month Assumption?– Gap Would Be Even Greater

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EXAMPLES OF ASSET POVERTY• Typical African-American: <$3,000 Assets• “Asset-Poor” Families:– 25% of African-American & Hispanic Families– 13% of White Families

• 2001 Recession Particularly Hard on Middle Class – Had Been Accumulating Some Assets

• Comparisons: – Whites (BASE): $1.00 Assets – Hispanics: $0.11 Assets– African-Americans: $0.07 Assets

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IMPACT OF ASSET POVERTYInability to Survive Through Minor Emergency:• Unemployment, No Unemployment Benefits • What Happens If They Lose a Job? • … If Someone Gets Sick? • If There Is a Recession (EX: 2001)• Conservative Answer: “They Should Have

Planned Better!”

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IS EDUCATION THE ANSWER?

• Impact of Education on Assets – Prior to 2001 Recession – Middle Class Families

• Middle Class Defined By Education:• If White Middle Class Owns $1 of Wealth– …Black Middle Class Owns $0.25 – …Up From $0.10 Earlier

• Wealth Is NOT Accumulated By Individuals …• But By Families – OVER TIME

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SIGNIFICANCE OF WEALTH ISSUE• Illustrates the Interaction of Social Class & Its

Dimensions With Race & Ethnic Characteristics• Social Class Is Determined By Income, Wealth• Racial Characteristics Determine Social Class

Membership To a Considerable Extent • Ethnic Characteristics Determine Social Class

To a Lesser Extent• Social Institutions Influence These Patterns In

Major Ways21

NEXT TOPIC:INFLUENCE OF THE MEDIA

• The Media: Creating the Middle Class• Defining the Middle Class• Defining Who Belongs To the Middle Class• Defining the “Others”

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THE MEDIA ROLE IN SOCIAL CLASS DEFINITION

U.S. Most Stratified Industrial Society The Poor Are “Invisible,” Demeaned

Concerns of “Wealthy Class” EmphasizedWealthy Not Viewed as a “Class”

“Middle Class” Defined As Major Focus Middle Class Is NOT a “Working Class”

(Gregory Mantsios #6)

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U.S. Most Stratified Industrial Society • Socio-Economic Class Influences Everything:– Jobs & Income – Quality of Education– Health & Safety– Social Contacts

• YET – Maintain an Illusion of “Egalitarianism”– “Horatio Alger” Myth

• Mass Media Influential in Defining Class• Decreasing Number of Media Outlets

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Media: Poor – Invisible, Demeaned

• 40 M Poor in U.S. (ME, NH, VT, RI, CN, NY, NJ) – Poor Are Increasing – 2x as Fast as Genl. Pop.

• Poor Are Ignored in Media – Do Not Exist• “Faceless” – Just a Number– Undeserving, At Fault: Cheats, Addicts, Lazy– Eyesore, an “Irritation” as Opposed to Maltreated– Occasional Attention – Affluent Christmas Gifts• HHs < $10K – Give 5.5% to Charity• HHs >$100K – Give 2.9% to Charity

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Poverty: Individual or Systemic?2 Views of Poverty:• Individual: The Media’s View– If You’re Poor, It’s Your Fault

• Systemic: The Reality:– Direct Result of Economic & Political Policies• Favor the Rich with Tax Cuts, Corp. Aid; • Deprive Poor of Jobs, Adequate Wages, Right to

Unionize• Produce a Society in Which General Wages Decrease

– “Blaming the Victim” (Wm. Ryan)

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Focus on Issues of “Wealthy Class”

• Great Attention to Stock Market – Though Few People Own Stock

• Attention to Taxes & Need to Decrease Them– Though Most Tax Decreases Favor Very Rich– Even the Poor Convinced Taxes Are Bad!

• Media Concern With “Extreme” Union Power • Little Attention to Corporate Political Influence

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Wealthy Not Defined as a Class

• Wealthy Behavior as a “Class” Ignored• Wealthy Influence in Society Ignored – Supreme Court: Corporate Right to Fund Lobbyists

• Most Political Power in Hands of Millionaires!• Wealthy Use Their Influence • Wealthy Image as “Benevolent” – Usually Donate to Arts, Wealthy Causes– Generally Do Not Give to Agencies Helping Poor

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Middle Class As Major Focus

• If the Poor Are Demeaned …• & Rich Are Not Defined As Rich …• What’s Left? • Emphasis on “Middle Class” – Everyone Not

“Poor” Defined as “Middle Class”• Leaves Viewers, Readers Believing: – “We” (Rich & Working People) Are All the Same …– Except for Those Lazy, Good-for-Nothing Poor!

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Evidence for Huge “Middle Class”

• Surveys: Most People (75%-90%) Identify Themselves as “Middle Class”

• Upper & Lower Class ID Is Rare (5%-10% Each)• Give Option of “Working Class”: – Divide “Middle Class” in Half– Even Objectively Poor Often ID As Middle Class– Impact of the Media’s Image of “the Poor”?

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Middle Class NOT a Working Class• How Did “Middle Class” Become “Middle”? • Most Started “Poor” – Worked Hard • Assisted By Government Programs:– Home Ownership Assistance– Educational Programs – Social Security, Unemployment, etc.

• Assistance from Labor Unions! (Our Parents?) • Today: Middle Class People Dissociate

Themselves from Working Class! – Business Students Believe in Trusting Employers 31

Reality of the Upper Class• Very Wealthy Control U.S. Society– Disproportionate Share of “Wealth” (vs. “Income”)– Have a Distinct Life Style– Interact Primarily Among Wealthy (Schools, Clubs)– Are a “Governing” Class – Run for Office, Get Elected, Get into Power– Ensure That Political & Economic Policies Favor

Their Own Interests (Taxes, Environment, Trade)– Avoid Societal Problems Through Private Programs

• Private Police, Schools, Clubs, etc.32

Summary• U.S. Has Highly Structured Class System• Mass Media Influence Public Opinion re Economy &

Social Class System• Wealthy Control Society’s Economy, Politics– But Not Viewed as “Wealthy” by Society

• Most People ID as “Middle Class”• Middle Class Dissociate Themselves from “Working

Class”• Poor Are Demeaned & Blamed for Their Victimization

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