Assessing Class: Income
Income is a fundamental resource denominator of social class and stratification. Since the mid-twentieth century, the Census Bureau has tracked the inexorable trend of increasing income inequality that has resulted from changes in the labor market, the economy, and household composition in the United States. Those with the education and in-demand skills have benefited while those without have suffered; single-parent families and non-married households have not fared as well as two-income married households. Most sociologists have abandoned classic social class theories in the post-industrialized West and post-Marxist world. Some say that that they have been slow in analyzing these trends and need to create new models for understanding new economies.
Keywords Family; Gini Index; Household; Income; Poverty Line; Social Mobility; Social Stratification; Transfer Programs; Wealth
Assessing Class: Income
A 1988 article in The Futurist (which now appears naïve) predicts that there is, as the title states, "One Giant Middle Class" (Cetron, 1988), which will grow thorough the end of the twentieth century. Rising incomes were viewed as stretching farther because people were marrying late and having fewer children than ever before. Lawrence Lindsey, Assistant Professor of Economics at Harvard, was quoted in the article as defining a middle-class individual as "… someone who expects to be self-reliant, unlike the upper class with its unearned wealth or the lower class with its dependency on society. Far from declining, the middle class is bigger than ever, and its ethic is alive and well" (cited in Cetron, 1988, p. 10).
Years later, the promise of a homogeneous middle class may hold some validity, but its continued vitality is less ensured. Income and access to resources are traditional determinants of social class, and given dramatic social and technology shifts, social scientists are beginning to take serious stock of the historical income data from the latter half of the twentieth century and the early twenty-first century that show an inexorable gap in the aggregated incomes of the lowest and top earners.
Growing Income Inequality
This conspicuous inequality in earnings emerged on the research agenda of sociologists at the turn of the twenty-first century. Some sociologists, such as Kenworthy (2007) and Kim and Sakamoto (2008) in their research on income, were surprised that their fellow sociologists had not studied this phenomenon with more intensity. The complexity of these dramatic changes defies classic sociological theory, and sociologists were only beginning to make sense of them and start developing new models at that time. In his article, “Inequality and Sociology,” Kenworthy (2007) expresses a need to understand the rising disparity of earnings and income in the United States. The growth in inequality is an important development in the United States during the past generation and "sociologists have not been able to offer …a class-based explanation for rising inequality …. [and] to the extent they have, the evidence does not appear to fit very well …" (p. 587).
Kim and Sakamoto (2008) studied aggregate occupational data to find the underlying source of the differences in wage equality. They asked how occupational structure relates to wage inequality and offered a series of hypotheses, at the heart of which is that most of the increase in wage inequality is largely within occupations, and the rising level of wage inequality across this period is mostly unrelated to changes in the distribution of workers across occupations or to mean differences in wages across occupations: "Within-occupational inequality has increased more than between occupational inequality, and the reduction in the explanatory power of occupation is especially obvious after controlling for education" (p. 152).
In the early 1990s, sociologists began to embroil themselves in a debate about whether social classes can be identified as old indicators fell away. Clark and Lipset (1991) defined seven societal factors that were shaping dramatic changes in society:
- Politics with less class and more fragmentation;
- Economic growth that is undermining the hierarchy of class;
- Decline of large industries and the spawning of smaller entrepreneurial businesses;
- Advancement of technology and the knowledge base;
- Globalization of the markets;
- Decline of the traditional family; and
- Less of an impact of families on stratification than of women in the workforce along with greater rewards for education.
Gilbert (2008) labels the twenty-five years after WWII as "The Age of Shared Prosperity," but the thirty plus years following that are tagged "The Age of Growing Inequality." He found three significant shifts in job earnings during this time:
- Men's earnings have stagnated, on average;
- Women's earnings have risen steadily; and
- The distribution of earnings of both have become more unequal.
Wages at the top have risen substantially, while real wages of those in the lower half of the labor market have remained unchanged in the time period (p. 57).
Classical sociological models of Marx, Weber and others are simple and do not fit today's complex societies. As Scott and Leonhardt (2005) remark, "As some sociologists and marketing consultants see it, the commonly accepted big three — the upper, middle, and working classes — have broken down into dozens of microclasses, defined by occupations or lifestyles" (p. 1).
Gilbert, however, has not abandoned class models altogether. Although he admits that structuring the classes is an art, not necessarily a science, he stands by the model with six classes that he and his mentor, Joseph Kahl, created many years ago, based on typical income and occupation:
Capitalist — 1%, Income $2 million +
Upper-middle Class — 14%, $150,000
Middle Class — 30%, $70,000
Working Class — 13%, $40,000
Working Poor — 13%, $25,000
Underclass — 12%, $15,000 (2008, p. 27).
Gilbert qualifies his model by saying that the middle class and working class "… traditionally portrayed by division between office and factory — was long regarded as the critical dividing line in the class structure. But today many office jobs are simplified and routinized like jobs in the factory" (p. 14). Gilbert argues that the line dividing the capitalist and upper-middle classes from the classes below them has become most significant mainly because the economic returns on capitalist property and on the advanced education typical of the upper-middle class have grown rapidly, while rewards for those without educations and skills are diminished.
Kenworthy (2007) conducted comparative analysis with data from other Western countries in order to understand the evolution of the class situation in the United States. He studied earning and income on three levels of inequality:
- Earnings among employed individuals;
- Among households; and
- Among households when government taxes and transfers are included.
Kenworthy contends that the growing gap of inequality of income among the unemployed may be attributed to technology and globalization, but his analysis shows that other industrialized countries have not realized nearly the same discrepancy in income. He concludes that wage-setting institutions, such as unions, have also helped to account for the change with downward pressure exerted on the wages of the least skilled and upward pressure on the wages of the best. Households vary depending on number of earners, length of employment through the year, and pairing of earners; i.e., high earners tend to pair with high earners, and these factors also have had a tremendous impact on the disparities.
Kenworthy also says that,
… within-industry shifts in labor demand away from less-educated workers are perhaps a more important explanation of eroding wages than the shift out of manufacturing … Also, global competition and immigration … [decline of unions] … decline in the real value of the minimum wage, the increasing need for computer skills, and the increasing use of temporary workers.
Kenworthy argues that the issue of inequality is one of the most important societal phenomena in recent history and must be taken seriously by sociologists. He also implies that tracking it is critical to setting public policy for setting wages and adjusting transfer programs.
Neckerman and Torche (2007) reviewed research on economic Inequality, including earnings, wealth, and opportunity. They state that as economic inequality was recognized as more than a transitory phenomenon, sociologists and other social scientists began to study its implications. They point to research that separates the transitory from permanent shifts in income. Neckerman and Torche refer to an article by M. Gangl (2005) that shows that the United States "still has the highest income inequality among industrialized countries after accounting for short-term variation" (cited in Neckerman & Torche, 2007, p. 338). Consensus concerning this inequality includes evidence that the stagnant minimum wage has impacted the lower strata, as has a decline in union membership. Male incomes have been hardest hit and returns for higher education have had a significant impact.
A survey of the research also indicated to Neckerman and Torche that the most challenged rationale for the inequality is the issue of technology. Some researchers have found that disparities were emerging before digital technology became entrenched in the 1990s. They point to others who have studied the institutional shifts in business and labor, including a "… shift from manufacturing to services, deregulation … transformations in corporate governance, a decline in union representation, and a rise in the use of contingent labor …" (2007, p. 338). Inflated salaries for those at the top have also contributed to what they call "upper-tail" inequality.
"The American public has always cared more about equal opportunity than about equal results," says Sawhill (1999, p. 4). This is central to the American belief system. "Socialism has never taken root in American soil," but how much inequality is too much? Sawhill considers three hypothetical societies:
- A meritocracy in which society members are regarded for hard work and talent regardless of who they are;
- One in which citizens are rewarded by pure "luck," — a lottery; and
- One based purely on the family of birth with no possibility of mobility.
According to Sawhill, most...
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