Poverty and Wealth

Income and Wealth

- Wealth refers to the total economic assets owned by a person or family; it consists of property and income. Property comes in many forms, such as buildings, land, animals, machinery, cars, stocks, bonds, businesses, and bank accounts. Income is money received as wages, rents, interest, royalties, or the proceeds from a business.

- Large differences of income and wealth have existed as long as these data have been collected. Wealth is highly concentrated. The majority of wealth, 68 percent, is owned by only 10 percent of the nation's families. The super-rich, the richest 1 percent of U.S. families, are worth more than the entire bottom 90 percent of Americans. This unequal distribution of income and wealth has been remarkably stable; the changes that do occur indicate growing inequality.

- Also, there have been persistent differences in income and wealth between men and women, the young and old, and white and non-white Americans.

- The income inequality of a population is commonly measured using the Gini index. The Gini index ranges from 0, indicating perfect equality to 1, indicating perfect inequality. The increase in the Gini index for household income between 1970 and 2009 indicates a significant increase in income inequality.

Global Stratification

The Rich and the Poor

The Rich

The Poor

Who are the poor?

  1. Age - The age category at the greatest risk of poverty today is children, who make up 37.5% of the U.S. poor. In 1999, 12.1 million young people (16.9% of people under the age of eighteen) were living in poor households.
  2. Race - Despite popular culture in the U.S., the poor is comprised of more white people than black people as well as more non-Hispanic people than Hispanic people. However, in terms of specific populations, African Americans and Hispanics are overrepresented among the poor (at 24% and 23% of the population, respectively, compared to 8% of non-Hispanic whites).
  3. Gender - Women are at the greatest risk of poverty; sixty-two percent of poor U.S. adults are women. The feminization of poverty refers to the trend by which women represent an increasing share of the poor.
  4. Family Patterns - Single mothers are at higher risk of poverty than single fathers (36% and 16%, respectively). Divorce raises the risk of poverty for all families-and especially the children. Within a year, one in eight children of divorcing parents slips below the poverty line.
  5. Region - The official poverty rate varies from state to state (the highest rate of poverty is New Mexico at 20.5% and the lowest is 7.2% in Maryland). By region, the South (13.1%) and the West (12.5%) have the highest rates of poverty, followed by the Northeast (10.9%) and the Midwest (9.8%). Also, urban areas have higher average household incomes and lower poverty rates than rural areas (11.2% and 14.3%, respectively).

Economic Changes

Social Problems Linked to Poverty

  1. Poor Health
    • Many poor people can not afford adequate nutrition; about 15% of poor families are undernourished.
    • Poor families receive little medical care; at least one-third lack health insurance-more than twice the national average. Further, the poor have higher rates of infant mortality, the risk of death within the first year of life.
    • The poor experience more stress and are more likely to suffer from alcoholism, drug abuse, and violence.
    • The poor, who are more likely to die from infectious diseases and violence at any age, have a lower life expectancy than other groups. Thus, life expectancy for whites is about 77.5 years, while that of African Americans (who typically earn 65% as much income) is 72.2 years.
  2. Substandard Housing
    • Poor people must contend with crowding, dangerous lead-based paint, lack of heat, broken windows and locks, and collapsing walls and ceilings.
    • The National Coalition for the Homeless reports that at least 600,000 people are homeless in the U.S. on any given night, and as many as 2 million people are homeless at some point during a year. The number of homeless grow higher each year; the U.S. Conference of Mayors reports a steady increase in requests for emergency shelters throughout the 1990s, with a 15% increase from 1999 to 2000. The average length of time a person remains homeless is five months.
    • Conservatives point to personal problems in some homeless people, noting that they may suffer from mental disorders and many abuse alcohol and other drugs. In contrast, liberals point out that low wages and lack of low-income housing are the prime causes of homelessness.
  3. Limited Schooling
    • Poor children are less likely than rich children to complete high school, enter college, and complete advanced degrees.
    • A key part of educational inequality involves tracking, the practice of placing some students in college-bound ("academic") tracks and others in job-oriented ("vocational") tracks.
    • Although the stated goal of tracking is to educate children according to their academic aptitude, research suggests that school personnel typically label poor children as less able; as a result, they are taught by the worst teachers, in the most crowded classrooms, and learn by rote rather than by creative problem solving.
  4. Uncertain Work and the Working Poor
    • Some poor people (e.g., children, the elderly, and the disabled) can not work. But for those who can, jobs are hard to find. According to government statistics, 40% of the heads of poor families did not work at all during 1999. The most common reason offered by poor, healthy men is that there were no jobs to be found within reasonable commuting distance. Most women without jobs are single parents who can not afford childcare even if they could find a job.
    • Many heads of poor households (about 21% of the heads of poor families) make up the working poor, those who worked full-time at least fifty weeks during the year but remain poor because of low wages. Even full-time, year-round work at the minimum wage yields $15,350, almost $2,000 below the poverty threshold for a family of four. Another 39% of the heads of poor families worked only part-time, making their poverty even more serious.
  5. Crime and Punishment
    • Poor people are more likely to be involved in street crimes (e.g., assault, robbery, burglary, auto theft) than affluent people, both as offenders and victims.
    • However, the public pays little attention to the kinds of crime committed by wealthy people-including tax evasion, stock fraud, false advertising, bribery, and environmental pollution-even though such offenses may well cause greater damage to society as a whole.
    • The poor are more likely than the rich to face arrest, trial, conviction, and prison. Further, the poor enter the criminal justice system having to rely on public defenders who are generally underpaid and overworked. In contrast, the wealthy can enlist the help of private counsel and employ psychiatrists and other specialists, which greatly lowers the odds of conviction.

Responding to Poverty: The Welfare System

Blaming the Poor: Two Deficiency Theories

  1. Innate Inferiority - the British philosopher and sociologist Herbert Spencer put forward a position referred to as Social Darwinism, where he argued that the poor were poor because they are unfit. Poverty was nature's way of getting rid of those members who are unhealthy, slow, faithless, imbeciles in order to make room for the "fit," who were entitled to the rewards of wealth. In this view, the poor should not be given any type of state or private charity, because such acts would interfere with nature's way of disposing of the weak.
  2. Cultural Inferiority - One prominent explanation of poverty, called the culture-of-poverty hypothesis, contends that the poor are qualitatively different in values and lifestyles from the rest of society and that these cultural differences explain poverty. This position argues that the poor, in adapting to their deprived conditions, are more permissive in raising their children, less verbal, more fatalistic, less likely to defer gratification, and less likely to be interested in formal education than the well-to-do. These cultural patterns are held to be transmitted from generation to generation. The assumption is that poverty is created by the life-ways of the poor.

Structural Theory of Poverty

Sociological Approaches to Poverty

  1. Functionalism - contemporary functionalists assert that inequality is a cultural universal because it is beneficial to the operation of society.
    • Kingsley Davis and Wilbert Moore argue that some jobs are more important than others. In order to motivate people to fill positions that require more training and talent, it is important to offer greater rewards (including higher income, greater prestige, and more power) to these positions. Davis and Moore argue that an egalitarian society would be inefficient because it would not encourage people to excel.
    • Davis and Moore see society as a meritocracy, a system of social inequality in which social standing corresponds to personal ability and effort.
    • Criticisms of the Davis-Moore Thesis:
      1. How do you measure the importance of a position?
      2. Is the relationship between the importance of a position and its rewards as straightforward as the theory suggests?
      3. Why isn't society a meritocracy? That is, why are many positions not awarded on the basis of merit?
      4. Is inequality actually functional for society?
    • Herbert Gans argues that inequality exists because people benefit from it; inequality performs a number of functions:
      1. The poor are willing to perform unpleasant tasks
      2. They are willing to purchase things that no one else wants
      3. They remind others that it is important to work hard
      4. They serve as scapegoats for many of our social problems
      5. They create work for the rest of us (e.g., social workers, pawn shop owners, less qualified doctors and lawyers)
  2. The Conflict Perspective views social stratification as avoidable, unnecessary, and not promoting the optimal functioning of society.
    • Stratification is created and maintained by classes and powerful groups in order to protect and enhance their interests; focuses on competition over scarce societal resources (e.g., power, wealth, and prestige).
    • The risk of poverty is far greater for certain groups of people-racial minorities and women-than others. Single mothers, for example, are ten times more likely than single fathers to be poor.
  3. Symbolic Interactionism focuses on the meanings that people attach to those who are poor.
    • William Ryan described the process of blaming the victim where one finds the cause of a social problem in the behavior of people who suffer from it. Blaming the victim comes easily in a society that stresses individual responsibility. This process of blaming involves four steps:
      1. Pick a social problem (e.g., poverty)
      2. Decide how people who suffer from the problem differ from everyone else (e.g., dress, language, education, housing)
      3. Define these differences as the cause of the problem
      4. Respond to the problem by trying to change the victim rather than changing the larger society

Politics and Poverty

The Conservative Position

The Liberal Position

The Radical Position