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Chapter 2Wealth and PovertyU.S. and Global Economic InequitiesWealth and Poverty in GlobalPerspectiveHigh-income nationsHighly industrialized economy High national and per capita incomeEx: U.S., Canada, JapanMiddle-income nationsTransforming from agrarian to industrial economy 2013 Pearson Education, Inc. All rights reserved.Wealth and Poverty in GlobalPerspective (2 of 2)National & per capita income is somewhat lowEx: Colombia, Guatemala, PolandLow-income nationsPrimarily agrarian economyVery low levels of national and per capita incomeEx: Sub-Saharan Africa 2013 Pearson Education, Inc. All rights reserved.Global DisparityGap between richest and poorest nations is increasingQuality of Life indicators (life expectancy, health, sanitation) show that there is: Disparity in life chances of individuals around the world 2013 Pearson Education, Inc. All rights reserved.4Global Disparity (2 of 2)Life chances: having access to important resources Food, shelter, health care, clothingUnequal access to resources leads to 1.3 billion people who live in absolute poverty:Inability to secure most basic necessities of life 2013 Pearson Education, Inc. All rights reserved.U.S. Class InequalityU.S. has significant social stratification:Hierarchy of social groupsSome groups control more resourcesU.S. stratification system has changed over time:Gap: haves & have nots increasingLife chances for poor in America decreasing 2013 Pearson Education, Inc. All rights reserved.6Measuring Social ClassKarl Marx (1818-1883) unidimensional approachClass position determined by relationship to means of production in capitalist societyBourgeoisie: own means of production Proletariat: work for those who own means of production

2013 Pearson Education, Inc. All rights reserved.7Measuring Social Class (2 of 3)Max Weber (18641920) takes a multidimensional approachWealth: Value of economic assetsPower: Achievement of goals despite oppositionPrestige: Respect and esteem from others 2013 Pearson Education, Inc. All rights reserved.8Measuring Social Class (3 of 3)Erik O. Wright (1997)Recent theory of class criteria for placement with corresponding class distinctions:Ownership of means of productionPurchase of labor of othersControl of labor of othersSale of ones own labor 2013 Pearson Education, Inc. All rights reserved.9Wealth vs. Income InequalityWealthValue of all economic assetsWealth more unevenly distributed than incomePoorest 20% of U.S. families have NO wealthMinorities have accumulated less wealth than whites 2013 Pearson Education, Inc. All rights reserved.Wealth vs. Income Inequality 2 of 2)IncomeEconomic gain from salaries and wagesBig gap between highest and lowest income earners in the U.S.Median income for Blacks and Hispanics remains lower than that of Whites 2013 Pearson Education, Inc. All rights reserved.11Class Divisions in U.S.Upper Class: Wealthiest and most powerfulMade up of investors and heirsUpper-middle class: Control production in societyMade up of professionals (doctors, attorneys, stockbrokers) 2013 Pearson Education, Inc. All rights reserved.12Class Divisions in U.S. (2 of 3)Middle class:White collar workers, middle managementWorking Class:Semiskilled workers in industry and nonmanual positionsMade up of daycare workers, cashiersWorking Poor: 2013 Pearson Education, Inc. All rights reserved.13Class Divisions in U.S. (3 of 3)Work full time Made up of unskilled and lowest paid service positionsRemain at edge of povertyChronically Poor:20% of U.S. populationNegative net worth (owe more than they own) 2013 Pearson Education, Inc. All rights reserved.Poverty in the U.S.Poverty Rate: % of population below governmentally defined poverty line; fluctuates from year to year14.3% (43.6 million people) in 2009Poverty Line:Established in 1965 by Social Security Administration 2013 Pearson Education, Inc. All rights reserved.15Poverty 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 inflationTakes into account family sizeSome believe it is out of date as formula is based on 1960s standards. 2013 Pearson Education, Inc. All rights reserved.16Who are the Poor?Characteristics associated with greater poverty risk:Gender: 2/3 of adults in poverty are womenHouseholds headed by women are fastest growing segment of poorFeminization of poverty 2013 Pearson Education, Inc. All rights reserved.17Who 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 2013 Pearson Education, Inc. All rights reserved.Consequences of PovertyLimited access to health careInadequate nutrition which leads to medical problemsDifficulty finding affordable housingReduced educational opportunitiesFewer years of schoolingLess likely to graduate (high school/college) 2013 Pearson Education, Inc. All rights reserved.19Social WelfareWelfare state:Assistance programs for housing, health, education, incomeSeveral changes made to program over time:Economic Opportunity Act of 19641996 Welfare Reform 2013 Pearson Education, Inc. All rights reserved.20Explanations of PovertyIndividual Explanations:Laziness; human capital; blaming the victimCultural Explanations:Cultural deficiency; culture of poverty theory; cultural capitalStructural Explanations:The economy puts people in poverty 2013 Pearson Education, Inc. All rights reserved.21Solutions to PovertyFunctionalist Solutions:Strengthen social institutions Conflict Solutions:Reduce gender, racial, and class inequalitySymbolic Interactionist Solutions:Reduce stigma associated with being poor by changing how we view those in poverty. 2013 Pearson Education, Inc. All rights reserved.22