SOC 203 Social Problems/week 1 discussion

Chapter Outline

2.1 Is Economic Inequality a Social Problem?

2.2 21st-Century Inequality in the United States

2.3 Theoretical Perspectives on Economic Inequality

2.4 Economic Inequality, Poverty, and Homelessness

2.5 How Sociologists Are Addressing Economic Inequality

Summary & Conclusion

Economic Inequality, Poverty, and Homelessness

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Section 2.1 Is Economic Inequality a Social Problem? CHAPTER 2

Every Christmas, the Parent-Teacher Association (PTA) at the school Elizabeth and Grace attend collects donations of presents for students from low-income families. Both girls wonder who among their classmates must rely on presents from strang- ers, and secretly hope that they will never have to do so. Grace started to worry about this possibility even more after recognizing class divisions among her classmates. Grace knows that Elizabeth receives more expensive presents than she does, and unlike Grace Elizabeth almost always gets what she wants for Christmas. Grace takes some comfort in the knowledge that her presents come from her parents and not the PTA, but she realizes that that could change.

Keenly aware of the long hours her parents work, Grace can’t help thinking that if money were granted based on effort, her parents should have as much money as Elizabeth’s par- ents. Elizabeth’s parents, though, seem to be home much more often and can go on great vacations every year. It has become clear to Grace that the distribution of money in U.S. society benefits some people more than others—and that life is not fair. Who knows whom the PTA might be helping next year?

What is your economic situation? Are you financially stable? Do you believe you have your fair share of income and wealth? Do you think income and wealth are distributed equitably, or do you think economic inequality in the United States is a social problem? Chapter 2 examines the extent of economic inequality in the United States and compares it to that found in other nations. It also looks at the repercussions of this inequality, socio- logical explanations for inequality, and the efforts of some sociologists to address related social problems.

2.1 Is Economic Inequality a Social Problem?

Economic inequality refers to the unequal distribution of income and economic assets. Whether economic inequality in the United States is a social problem can be determined by using the criteria for defining a social problem laid out in Chapter 1: • Is economic inequality in the United States part of a social pattern? • Does economic inequality violate a core value of society? • Does economic inequality negatively impact those in power? • Can society do something about economic inequality if enough people choose to

confront it?

The answers to these questions rely upon conducting research, using the sociological lens view. Without using the sociological lens, it’s possible to overlook social patterns of inequality and draw incorrect conclusions. Most Americans tend to consider social issues in terms of only the people with whom they tend to interact, rather than considering social patterns across the United States or the globe. Sociologists focus on trends rather than individual examples of social phenomena. For example, when looking at economic inequality in a society, sociologists would measure the distribution of wealth and income throughout the population they are studying and across whatever subgroups they are interested in, such as racial, ethnic, and gender subgroups.

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Section 2.1 Is Economic Inequality a Social Problem? CHAPTER 2

Inequality and Social Patterns

A recent study (Norton & Ariely, 2011) reveals that most Americans are unaware of the degree of economic inequality in the United States. A nationally representative online sample of Americans, randomly drawn from a panel of more than 1 million Americans, was given the following definition of wealth:

Wealth, also known as net worth, is defined as the total value of everything someone owns minus any debt that he or she owes. A person’s net worth includes his or her bank account savings plus the value of other things such as property, stocks, bonds, art, collections, etc., minus the value of things like loans and mortgages. (Norton & Ariely, 2011, p. 9)

The respondents were then shown three charts that illustrated different distributions of wealth, ranging from somewhat equitable to very unequal—the distribution of wealth is how wealth is divided among a population. When asked which of the three charts dis- played how wealth is distributed in the United States, most respondents selected the chart that actually described the distribution of wealth in Sweden, which, of all nations, provides the most economic equality.

Figure 2.1 illustrates the actual United States distribution of wealth plotted against what respondents chose as the estimated and ideal distributions across all respondents. The bar labeled “actual” represents the actual distribution of wealth in the United States at the time of the study. The bar labeled “estimated,” the one chosen by the majority of respon- dents, represents the actual distribution of wealth in Sweden. And the bar labeled “ideal,” the chart most often picked by respondents as an ideal distribution of wealth, represents an even more equitable distribution of wealth than that found in Sweden. Overall, the fig- ure reveals the lopsided distribution of wealth in the United States and the inaccuracy of how most Americans perceive that distribution.

Figure 2.1: Distribution of wealth in the United States

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percent Wealth Owned

Actual

Estimated

Ideal

Top 20% 2nd 20% Middle 20% 4th 20% Bottom 20%

As this graph shows, the distribution of wealth in the United States is different from what many people think it is.

Source: From Norton M. & Ariely D. (2011) Building a better America— One wealth quintile at a time. Perspectives on psychological science, 6(6), Fig. 2, p. 22. Reprinted by permission of Sage Publications.

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Section 2.1 Is Economic Inequality a Social Problem? CHAPTER 2

Why do Americans see themselves as better off than they are? Most Americans tend to live in proximity to those with comparable levels of wealth and income—it is relatively rare to find millionaires living next door to working-class people. This may be one of the reasons why most Americans describe themselves as middle class, when many academic models shows that only about 45% of Americans can be categorized as lower or upper middle class. By contrast, between 1% and 5% of Americans are considered upper class, rich, or “super-rich,” and the remaining population, over 50%, is considered working class and poor (Gilbert, 2002; Thompson & Hickey, 2005; Beeghley, 2004). However, examining issues of economic inequality requires looking at the world from a sociological rather than an individual perspective. The high level of economic inequality in the United States can be examined only by looking beyond one’s immediate circumstances and the individual experiences of the people one knows.

Using the sociological lens for a broader look beyond one’s own neighborhood brings to light social patterns that reveal systems of social stratification, or the ranking of groups of people according to their access to and possession of the things valued in society such as wealth, power, and status. Looking through the sociological lens also reveals that U.S. society is economically stratified, with some Americans having a much higher level of income and wealth than others. In fact, annual income, which is the amount people earn from wages, investments, or selling property or goods, has fallen for most Americans over the past decade. The median annual income is the midpoint of the incomes of all Ameri- cans, with half of incomes higher and half lower. In 2010, the median annual household income of the United States was $49,445. Adjusted for inflation, it was 6.4% lower than in 2007, and 7.1% lower than in 1999, the year of the highest recorded U.S. median income (DeNavas-Walt, Proctor, & Smith, 2011). However, annual income for the very wealthy has increased tremendously in recent years. Between 1975 and 2008, the share of U.S. income taken in by the top 0.1% of earners grew from 2.6% to 10.4% ((Not) spreading the wealth, 2011). By 2007, the top 1% took in almost 20% of all the income made in the United States (Congressional Budget Office, 2011a).

Figure 2.2 shows that the growth in income inequality in the United States is closely related to increases in compensation for top earners and stagnation of wages for the rest of the workforce. Between 1978 and 2005, the average pay for CEOs jumped from 35 times to almost 262 times the pay of the average worker (Sawhill & Morton, n.d.). The distribu- tion of wealth is even more inequitable. In 2011, the top 20% of Americans held 84% of the wealth, while the bottom 40% held less than one-half of 1% of the total wealth in the nation (Norton & Ariely, 2011). Moreover, in 2010 those in the top 1% held more wealth at 35.6% than the entire bottom 90% of the population at 25% (Frank, 2010).

A Closer Look: Ideal Distribution of Wealth Listen to a description of this study at http://www.npr.org/2011/04/16/135472478/study-americas -wealth-not-widely-distributed. Which chart do you think you would select as the most ideal distri- bution of wealth? What would influence your choice?

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Section 2.1 Is Economic Inequality a Social Problem? CHAPTER 2

Figure 2.2: Percentage change in income, adjusted for inflation, since 1979

400

350

300

250

200

150

100

50

1979 1985 1990 1995 2000 2005 2007

Top 1 percent

21st to 80th percentiles

81st to 99th percentiles

Lowest quintile

Recession

Since 1979, top earners in the United States have seen marked, steady growth of income whereas the income of the rest of the workforce has remained stagnant.

Source: Based on data from the Congressional Budget Office, 2011, Trends in the Distribution of Household Income Between 1979 and 2007.

Inequality and Core Values

The growing gap in economic inequality between the very rich and everyone else strikes at a core American value: economic mobility, the ability to move from one social class to another. According to a 2011 survey, 7 out of 10 Americans believe that they have or will achieve the American Dream of upward mobility, rising in social class (Economic Mobil- ity Project [EMP], 2011). Americans are far more likely than citizens of other countries to believe that they can influence their social class status through hard work. However, com- paring parents’ incomes with their adult children’s incomes reveals that there is actually less upward mobility in the United States than in other developed nations, including Den- mark, Norway, Finland, Canada, Sweden, Germany, and France (Sawhill & Morton, n.d.).

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Section 2.1 Is Economic Inequality a Social Problem? CHAPTER 2

And, as economic inequality increases, the ability to achieve upward mobility decreases. (Blanden, 2009).

Recognizing the growing economic divide, a majority (59%) of Americans now say that their children will have a harder time moving up the economic ladder than they did (EMP, 2011). This belief coincides with a dramatic recent increase in the percentage of Americans who believe there are “strong” or “very strong” conflicts between the rich and the poor in the United States. While 47% perceived this level of class conflict in 2007, 66% did in 2011 (Morin, 2012). The threat to the American Dream posed by increasing economic inequality could threaten the social cohesion and stability of the nation.

Inequality and Power Structure

Leaders throughout the world have reason to worry about rising economic inequality. The Arab Spring that began in 2010 and sparked revolutions in many Arab nations provides a recent example of the threat of economic inequality to national leaders. Satisfaction with the standard of living in Egypt and Libya fell during the years leading up to the revolutions in those nations and increased dissatisfaction with old regimes (Breisinger, Ecker, & Al-Riffai, 2011). In the United States, the protesters of the Occupy Wall Street movement that devel- oped in 2011 have, with their chants of “We are the 99%,” focused a spotlight on the growing gap in income inequality between the top 1% of Americans and the rest of the nation, forc-

ing politicians to begin talking about ways to curb inequality and provide more opportunities for upward mobility.

Politicians know that high lev- els of economic inequality, par- ticularly in a nation with great wealth, can lead to feelings of relative deprivation, a sense among many citizens that oth- ers have what they do not. These feelings can prompt a sense of dissatisfaction and injustice, which can lead to political insta- bility. To gain power or remain in power, political leaders feel they need to convince the public that they will increase opportunities for upward mobility.

Remedies for Inequality

A large majority of Americans (83%) say they want the government to take action to improve the economic situations of the poor and middle class. This desire for govern- ment to come up with remedies for the growing U.S. economic inequality spans political parties, with 91% of Democrats, 84% of independents, and 73% of Republicans agreeing that the government should address economic inequality (EMP, 2011). According to a 2011

Allison Joyce/Getty Images

The Occupy Wall Street movement highlights the growing income gap between the top 1% of Americans and the rest of the country.

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Section 2.2 21st-Century Inequality in the United States CHAPTER 2

national poll (EMP, 2011, p. 4), Americans believe that the top five goals for government in helping people move up the economic ladder should be to

1. ensure all children get a quality education (88%), 2. promote job creation (83%), 3. ensure equal opportunity (79%), 4. let people keep more of their money (78%), and 5. provide basic needs to the very poor (75%).

A majority of Americans also maintain that the government should improve education, reduce the government debt, and retain jobs in the United States to prevent people from falling into the lower class (EMP, 2011).

2.2 21st-Century Inequality in the United States

Governments alone, though, cannot mitigate economic inequality. There are many interconnected and complex reasons for the current high level of economic inequal-ity in the United States. Some relate to changes in the U.S. social structure and oth- ers to cultural influences.

Structural Forces

A social structure is a framework of established patterns of social interaction between people and groups, guided by accepted norms and shared values. Structural forces are fundamental patterns within a social structure that shape and influence our lives, as opposed to the individual and personal choices we make. Examples of structural forces include a society’s use of a common language and the influence of large social institutions, such as schools or the economy. Over the past few decades, changes in one significant structural force, the global economy, have influenced the rise in levels of inequality in the United States and across the globe. These include

• the decline of unions, • higher incomes for CEOs and lower tax rates for the wealthy, • the move away from manufacturing to a service economy, • supply-side economic policies, • the Great Recession, the mortgage crisis, and the bursting of the housing bubble,

and • increasing unemployment.

Let’s explore the influence of each of these structural forces on economic inequality in the United States.

The Decline of Unions Modern labor unions emerged from the industrial revolution of the mid- to late 1800s, when workers commonly labored in unsafe conditions for low pay. Since the time of the first factories, workers have made attempts to band together to have the power to more

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effectively demand better working conditions and higher wages. Before unions, workers had no recourse when they were exploited by their employers. Just a few of the victories won by organized labor are the minimum wage, child labor laws, improved working con- ditions, and the 40-hour week. The bumper sticker, “Unions: the folks who brought you the weekend,” sums up just one way unions have changed the lives of working Americans. Union workers tend to make more money and have better benefits than nonunionized workers. In 2010, the average weekly salary of a unionized worker was $917, compared to $717 for a nonunionized worker (Bureau of Labor Statistics [BLS], 2011c). In this sense, for many Americans a union job has been a ticket into the middle class.

The number of Americans in unions increased dramatically after the Wagner Act of 1935 protected nongovernmental workers’ right to form unions and to strike to try to achieve their goals. However, in the late 1940s legislative efforts began to curtail the rights of unions. For example, the National Labor Relations Act of 1947 placed restrictions on strikes and blunted some of the unions’ power. Right-to-work laws, now in place in 23 states (including all Southern states), prohibit employers from requir- ing workers to belong to a union or pay union dues, even if the workers are represented by a union. One of the greatest politi- cal blows to unions occurred when President Ronald Reagan fired striking air traffic control- lers in 1981, effectively destroy- ing their union and delivering a chilling message to all unions.

Other factors over the past three decades have contributed to the decline of unions, includ- ing deindustrialization, auto- mation, globalization, supply-side economics, and a political backlash from those who oppose taxpayers’ contributions to public employee unions. For example, recent attempts have been made in such states as Wisconsin and Ohio to curtail the bargaining rights of public employee unions. In 1983, when comprehensive data was first compiled, one out of five Americans belonged to a union. Today, though, just slightly more than one in ten Americans is a union member (BLS, 2011c), and the percentage of unionized workers var- ies tremendously among states. For example, 1 out of 4 workers in Alaska and New York is unionized but just 1 out of 20 workers in Georgia and North Carolina (BLS, 2011c).

Higher Pay for CEOs and Lower Tax Rates for the Wealthy While the wages of workers have declined or stagnated, the pay for the top 1% has increased dramatically since the 1960s. The average CEO currently makes 243 times what the average worker earns.

Carlos Osorio/Domestic News/AP

The efforts of organized labor unions have resulted in child labor laws, the minimum wage, 40-hour work weeks, and other regulations that have improved conditions for workers.

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Moreover, while many Ameri- cans complain about taxes, the federal tax rate for high-income Americans is at a historic low. In 2011, the highest paid earners contributed 35% of their income exceeding $379,150 in federal taxes (Tax Foundation 2011). In 1945, the top tax rate was 94% in order to support the war effort, and it was never lower than 70% until the 1980s. Under President Reagan, the Tax Reform Act of 1986 lowered the tax rate dra- matically, but also closed some loopholes that allowed many people and corporations to pay much less than the actual rate. Since 1986, more tax loopholes

have been created, and demands to close them and make the system more equitable are increasing (Citizens for Tax Justice, 2011).

Today, the U.S. government taxes income at a much higher rate than it does wealth. Much of the income of wealthy Americans comes not from wages and salaries but from capi- tal gains, defined as the income earned from investments. The reduction of the capital gains tax has therefore contributed to increased economic inequality in the United States. In 2011, the capital gains tax was at the historically low rate of 15%, down from 40% in the late 1970s. This means that all workers who earn wages or salaries of $34,500 a year or more pay a higher percentage of their income in federal taxes than wealthy Ameri- cans, whose incomes come primarily from stocks, bonds, and real estate profits (Mufson & Yang, 2011).

American billionaire and investment expert Warren Buffett famously pointed out in 2011 that he and others whose income is based primarily on investments have a lower tax rate than do their secretaries, who must pay the higher tax rate for wages and salaries. Since 1990, just one tenth of the wealthiest 1% of the population (0.1%) earned over half of all capital gains income in the United States, with the wealthiest 5% of the population earn- ing 80% of capital gains income (Mufson & Yang, 2011). Only a very small percentage of the population earned capital gains income, and the same small number of people ben- efited from the dramatic decrease in the capital gains tax. The result is that, proportionally, the wealthy keep more of their money and contribute less tax revenue to provide human services and maintain infrastructure that benefits all Americans.

The Move Away from Manufacturing to Service Deindustrialization, the reduction of industrial activity, or manufacturing, has played a major role in the increasing economic inequality in the United States. The percent of work- ers in manufacturing (excluding farming) dropped from 24% in 1973 to 10% in 2007 (Lee

Image Source/Thinkstock

Since the 1960s, the gap between what CEOs and average workers typically earn in a year has increased dramatically.

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& Mather, 2008), in part because of globalization, the global distribution of the production of goods and services. With the rise of globalization and technology making it easier and cheaper to move goods and people across the globe, owners of corporations have used this new mobility to relocate their businesses outside of the United States in countries where labor is cheaper. For example, computer maker Apple Inc. has chosen to outsource manufacturing of many of its products, contracting with roughly 700,000 people in China and other parts of the world (Duhigg & Bradsher, 2012). As American businesses adapt to the global market, many American workers are left looking in vain for the decent-paying manufacturing jobs that previously allowed many Americans with just a high school edu- cation to attain a middle-class life.

In addition, although the United States has maintained some man- ufacturing jobs, it has shifted to a predominantly service-oriented economy. Service-oriented occu- pations are those in which work- ers provide their knowledge and time but not a tangible end prod- uct. The highest-paid workers in the service sector—lawyers, computer engineers, doctors— often have acquired a great deal of education, whereas and the lowest-paid—retail salespeople, nursing aides, security guards— require minimal training. The jobs that don’t require a lot of skills or education typically do not pay well, certainly not as

well as manufacturing jobs tend to pay. Thus, the move from manufacturing to service- oriented jobs has contributed to the expansion of the growing income and wealth divide.

The transition to a service economy also has led to a gap between eligible candidates and the jobs that are available. That is, despite high levels of unemployment, many compa- nies struggle to find qualified workers for jobs in areas such as information technology and other skilled trades. To meet their personnel needs, business leaders have begun to advocate for restructuring education and on-the-job training systems (Manpower Group, 2011).

A Closer Look: The Skill Gap Read an article about the gap between employers’ needs and workers’ skills at http://www.man powergroup.com/investors/releasedetail.cfm?ReleaseID=545028. Does providing restructuring and on-the-job training seem like an effective response to the social problem of income inequality? Does this response seem more or less effective than increasing manufacturing jobs in the United States? Why or why not?

Ryasick/Vetta/Getty Images

The transition to a service-oriented economy has contributed to the growing income gap in the United States.

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Another factor that has led to economic inequality in the United States is automation, the use of machines to produce goods or provide services. Automation in and of itself is not a bad thing—since the creation of the first factory, machines have replaced human effort, helped humans do their jobs more safely and efficiently, and made the American economy more productive. However, automation can hurt workers who lose or can’t obtain jobs because of it. Thanks to automation, the amount of goods created in U.S. factories has continued to increase, despite fewer workers in manufacturing (Davidson, 2012). In this sense, automation can benefit factory owners at the expense of factory workers.

Recent advances in technology have sped up the automation process and allowed machines to take over more of the tasks that used to require human workers. For example, many jobs have been lost to computers that now can respond to phone calls, pay highway tolls, handle interactions with banks, and even tally up the cost of groceries. Similarly, com- puter programs exist that can do the work once reserved for highly paid lawyers (Mar- koff, 2011). As a result, upper middle–class, middle-class, and low-wage workers have been pushed out of jobs that can be done by more efficient and cost-effective machines.

Finding the most cost-effective way to produce goods is a priority for business. Capitalist nations like the United States have economies based on private ownership and competi- tion in free markets. These types of economies naturally favor owners rather than workers. Capitalism is driven by profits, and workers are just one of the resources that allow owners to operate profitable businesses. However, governments create laws and regulations that enforce limits and restrictions on businesses, sometimes prohibiting monopolies or unfair business practices and ensuring that workers are treated fairly. Likewise, on the global level, organizations, such as the World Trade Organization, set up agreements that estab- lish trade rules among nations and promote the ability of “producers of goods and services, exporters, and importers to conduct their business” (World Trade Organization, 2012.).

In the United States and across the globe, there has always been a continuous struggle for power between those who want to limit government interference in the marketplace and those who advocate for more control. Many scholars now argue that global corpora- tions, rather than nations, have the most power over the global marketplace (Derber, 2002; Johns, 2007). The recent growth of the global economy—with corporations gaining greater influence while individual nations struggle for control—allows businesses to easily move from one country to another in search of cheaper wages and less government interfer- ence. Businesses have developed a global perspective, which means they do not necessar- ily value Americans over citizens of other countries, both as employees and customers. Thomas Wilson, the CEO of Allstate, recently stated, “I can get [workers] anywhere in the world. It is a problem for America, but it is not necessarily a problem for American busi- ness . . . . American businesses will adapt” (Freeland, 2011, n.p.).

Supply-Side Economics The reduction of government regulation associated with the supply-side economic poli- cies of President Reagan in the 1980s helped speed up deindustrialization in the United States. Supply-side economic theory assumes that economic growth is stimulated by reducing taxes and freeing businesses of government regulation. The wealth thus created will be invested in things that increase “supply”—factories, new businesses, goods, and services. One key aspect of this theory is that if corporations receive tax cuts, they will

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reinvest that money to create more jobs for people, who will then spend their earnings creating more tax revenues and supporting the economy. Thus, the wealth of those at the top of the economic pyramid will “trickle down” to those below—hence critics of the the- ory referring to it as “trickle-down economics.” In addition, it argues that if government policies lower the barriers to production, consumers will benefit from a greater supply of goods and services at lower prices.

However, decreased government regulation resulted in no strings being attached to the tax breaks. This allowed many corporations to keep their profits and establish factories outside the United States, where labor costs less, thus eliminating reinvestment in Ameri- can workers and subsequently the U.S. economy. As a result, there were fewer jobs, lower wages, and reduced power of unions for American workers. When owners can simply say, “If you don’t agree to these wage and benefit cuts, we will move this factory out of the United States,” workers and their union representatives have little negotiating power.

The Great Recession and the Mortgage Crisis In late 2007, a cascade of complex economic events converged, leading to a dramatic drop in American housing prices, the collapse of huge financial institutions, and downturns in global stock markets. These events, referred to as the Great Recession, or the Global Financial Crisis, peaked in 2007–2008 and continue to have a profound effect on the United States and the world, including lingering high unemployment and ongoing housing fore- closures. The Great Recession is the worst financial crisis since the Great Depression that began after the stock market crash of 1929.

One of the countless factors that led to this crisis was related to supply-side policies freeing businesses from regulation. In the midst of the Great Depression, in 1933, Congress passed the Glass-Steagall Act, which separated commercial banking (which accepts deposits and lends money) from investment banking (which issues securities and invests with credit). This law was designed to prevent banks from taking investment risks that could jeop- ardize their solvency. For decades, banks pressed for the repeal of the act, which finally occurred in 1999 under President Clinton. This freed commercial banks to again invest their clients’ deposits and practice both investment and commercial banking. During the same period, under a push to provide home ownership to as many people as possible, government mortgage providers Fannie Mae and Freddie Mac lowered their standards and began issuing mortgages to people who could not afford them. Meanwhile, as gov- ernment regulators turned a blind eye, other mortgage lenders followed suit and housing prices soared as more and more people bought homes.

In the absence of government regulation, mortgage lenders profited enormously by col- lecting fees from homeowners who were assuming mortgages they could not afford. But the original lenders did not hold onto these risky mortgages; instead, these residential mortgages became the basis for another level of investment. Lenders bundled these so- called “toxic mortgages,” whose owners were likely to default, into a type of pooled secu- rities called collateralized debt obligations (CDO). The lenders sliced these bundles into more CDOs and sold them to banks, who sold them to investment firms, which purchased insurance against possible losses on the bundled mortgages.

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Companies that insured the investors who bought CDOs failed to maintain the resources needed to fund insurance claim payments for those they insured. Lax government rules and oversight allowed these insurance companies to say they could insure far more than their resources on hand would allow. As a result, when homeowners defaulted on loans and investors filed claims to cover their losses on the CDOs, the insurance companies shirked their responsibility and the entire system crumbled.

At the same time, credit rating agencies, which rate securities so that potential investors will know the risks associated with them, also failed to sound an alarm. These credit rating agen- cies (Moody’s, Standard and Poor’s, and Fitch), in a clear con- flict of interest, are paid by the banks to whom they issue credit scores. Without looking care- fully into the problems with the CDOs, they granted them high credit ratings, leading investors to think their money was not at risk (Morgenson, 2008). When these CDOs started to fail, many investors lost money and some banks, such as Bear Stearns and Lehman Brothers, went bankrupt while others were saved through government bailouts to prevent further damage to the economy (Financial Crisis Inquiry Commission, 2011).

With banks reluctant to lend money, homeowners and new businesses could not obtain the funds they needed to keep the housing market and the overall economy healthy and functioning. At the same time, big businesses, fearful of further economic downturns, refused to risk major investments such as hiring new employees (Leonhard, 2011). As a result, in 2011 the national unemployment rate doubled, standing stubbornly between 9 and 10% (BLS, 2011a), and consumer confidence, which indicates people’s willingness to purchase goods and services, sharply decreased (Conference Board, 2011).

The housing crisis and the Great Recession caused a catastrophic drop in the wealth of Americans. Housing prices, which had peaked in 2006, dropped precipitously, as did home equity, pensions, retirement funds and other savings and investment assets. This bursting of the housing bubble had a dramatic impact on the level of economic inequal- ity, particularly harming many working- and middle-class Americans. The wealth of this group most commonly relies on the value of their houses. Those who do not own a home tend to have few other assets. When houses declined in value with the fall of the hous- ing market, much, or in some cases all, of the wealth of many Americans disappeared. When adjusted for inflation, the median net worth of U.S. households fell 28% from 2007 to 2009 (Kochhar, Fry, & Taylor, 2011). People with other types of wealth such as stocks were shielded from losses by the diversity of their assets. The result was greater economic inequality between people who could afford many assets and people whose only signifi- cant asset was their home.

Paul J. Richards/AFP/Getty images

Government mortgage providers Fannie Mae and Freddie Mac were among the lenders whose practices helped lead to the housing bubble burst in 2008.

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To see an illustration that traces the events of the Great Recession, click on the links pro- vided in the Closer Look box titled “The Great Recession.”

These events in the United States resulted in huge declines in the stock market and the housing market and ignited a worldwide economic crisis. In April of 2009, the Interna- tional Monetary Fund (IMF) declared that the global economy had not been in such dire condition since the end of World War II (Knowlton, 2009). By 2009, Europe was in the midst of its own, related, economic crisis. With the burst of its own housing bubble and huge debts in both banking and the governments of European Union nations, housing prices plummeted and borrowing money became much more difficult and expensive. Since the fall of 2009, the European Union has been struggling with enormous debts faced by Greece, Portugal, Ireland, Italy, and Spain. A series of negotiations and bailouts have attempted to stop this slide. Riots and strikes protesting austerity measures throughout the region illustrate the political dangers to leaders during times of rising inequality and relative deprivation.

Increasing Unemployment The Great Recession continues to have a profound effect on the global economy. But in the United States, it has taken a much higher toll on people without a college education and on people of color. A 2010 study by the Brookings Institution concluded that during the Great Recession employment dropped much less steeply among college-educated work- ers than other workers. The employment-to-population ratio dropped by more than 2 percentage points from 2007 to 2009 for working-age adults without a bachelor’s degree, but fell by only half a percentage point for college-educated individuals (Berube, 2010). The Bureau of Labor Statistics found in September 2011 that jobless rates for people of all races and ethnicities were much higher than before the Great Recession began. However, unemployment rates continued to be higher for Blacks and Hispanic-Latinos. Tables 2.1 and 2.2 break down the unemployment rate by education and by race and ethnicity.

A Closer Look: The Great Recession Go to http://www.mint.com/blog/trends/a-visual-guide-to-the-financial-crisis/ for a graphic illus- tration of the events of the Great Recession in the United States. In addition, listen to an excellent, easy-to-follow explanation of the economic crisis and the bursting of the housing bubble at http:// www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money.

A Closer Look: The Financial Crisis in Europe Go to http://www.economist.com/blogs/dailychart/2011/05/europes_economies to see an inter- active illustration that depicts the European economic crisis. Which countries seem worst-affected based on presented data?

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Section 2.2 21st-Century Inequality in the United States CHAPTER 2

Table 2.1: Unemployment rate by education (25 years and older), September 2011

Less than a high school diploma 14.3%

High school graduates, no college 9.6%

Some college or associate’s degree 8.2%

Bachelor’s degree or higher 4.3%

Source: Current Population Survey, September 2011 (http://www.bls.gov/cps/)

Table 2.2: Unemployment rate by race (16 years and older), September 2011

White 8.0%

Black 16.7%

Hispanic-Latino 11.3%

Asian 7.1%

Source: Current Population Survey, September 2011 (http://www.bls.gov/cps/)

This situation has increased the inequality that already existed among Americans based on educational level and race. An analysis of 2009 government data by the Pew Research Center concluded that the median wealth of White households was 20 times that of Black households and 18 times that of Hispanic-Latino households. The study found that such “lopsided wealth ratios are the largest since the government began publishing such data a quarter century ago and roughly twice the size of the ratios that had prevailed between these three groups for the two decades prior to the Great Recession” (Kochlar et al., 2011). Bureau of Labor Statistics data continue to show a sizeable gap in jobless rates ranging among those with no high school diploma, high school graduates, those with some col- lege, and those with bachelor’s degrees.

Cultural Forces

Culture is comprised of the shared values, norms, and artifacts that characterize our society. As discussed in Chapter 1, values are the ideas a society deems important, such as the impor- tance of hard work. Norms are a society’s guidelines for behavior and interaction, such as working hard to earn a good income. Artifacts are the tangible objects created by members of a society, such as a nice house or an expensive car that symbolize one’s economic success.

Cultural forces since the end of the 20th century and beginning of the 21st century have made society in the United States increasingly materialistic, even as wages have stagnated, fueling an increased desire for consumer goods, or things created for people to use or con- sume, such as food, clothing, automobiles, and phones. Sociologists have noted that expo- sure to the lifestyles of wealthy Americans through television and other media has changed consumers’ desires and their purchases (Schor, 1998). The result is that increasing numbers of Americans feel they must have what the wealthiest 20% of the population owns.

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Section 2.2 21st-Century Inequality in the United States CHAPTER 2

Sociologists have long noted the use of consumer goods as a way of signifying superiority over others. Through conspicu- ous consumption, people wear expensive jewelry and clothing, build expensive homes, and so forth in order to signal to others that they are wealthier and there- fore more important (Veblen, 1994). The impulse to demon- strate superiority is encouraged by the media, advertisers, and consumers themselves, who develop norms in which certain cars, clothes, and other goods acquire more social prestige and gratification than others. (One

example might be driving a Porsche as opposed to driving a Ford.) This link between wealth and superiority is one way economic inequality can lead to social inequality, a situation in which individuals or groups in a society have unequal status. Social inequal- ity is reinforced by the belief that some groups are better than others and therefore deserve more of what society values, such as material goods, nice housing, and good schools.

Credit Cards and Increased Inequality Credit cards have enabled many Americans to fulfill their material desires and attain goods that they aren’t able to purchase with their regular income. However, the over- reliance on credit cards by many consumers has led to increased economic inequality as consumers, able to instantly acquire goods and services they cannot really afford, have to spend their income paying off debt and interest instead of saving and investing.

The widespread use of credit cards is a relatively recent phenomenon. Prior to the mid- 1970s, banks were conservative about issuing credit cards, granting them to only rela- tively well-off consumers who were considered good credit risks. In 1978, at a time when wages for most Americans were stagnating, the U.S. Supreme Court made a ruling that transformed Americans’ use of credit cards. The court ruled that state usury laws, which prevent banks from charging high interest rates, don’t apply to nationally chartered banks based in other states. The court decided that nationally chartered banks can “export” the interest rates allowed in their own states to customers anywhere in the country. This helped credit card companies make profits by moving to states that allowed them to charge high interest rates. South Dakota and Delaware, for example, repealed their usury laws to lure credit card companies and jobs to their states (Stein, 2004). This sparked growth in credit card companies and the more widespread use of “plastic,” allowing most people to acquire credit cards fairly easily. According to the American Bankers Association, in 1977 about 38% of American households had at least one credit card. Today, it’s about 75%.

Stockbyte/Getty Images

Cultural forces in the United States have fueled an increased desire for consumer goods.

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Section 2.2 21st-Century Inequality in the United States CHAPTER 2

The Culture of Poverty As the examples of Grace’s family illustrate, people can follow the cultural norm of work- ing hard, but if they do not have the education needed to attain a well-paying job in an increasingly service-based economy, their chances of moving up in social class are low. People learn how to function and participate within their culture and in the world through socialization, the process by which individuals acquire the norms, values, and expectations of their family and society. Some sociologists maintain that growing up in a poor neighborhood can lead to children learning behaviors and attitudes that perpetuate an inability and, often, lack of desire to move up the economic ladder (Banfield, 1970; Mayer, 1997). The concept is known as the culture of poverty. In a poverty-stricken neigh- borhood, children may learn different norms and values than those taught in middle-class and wealthy areas. For example, a child raised by uneducated, underemployed parents and surrounded by similar families is naturally influenced by that experience. If the child’s parents don’t value working hard in school and none of the child’s friends do, why should the child? If that child has never met anyone who has a well-paying job, why would that child believe he or she could, or even should, attempt to move up the social class ladder?

Sociologists who adhere to the perspective of the culture of poverty have a pessimistic view of structural efforts, such as job training and low-cost housing, to help people raised in such neighborhoods to rise out of poverty. Instead, they tend to argue that poor people must adopt and adhere to dominant values and norms, such as hard work and attaining and maintaining a job. If they do not, there is not much hope that, for example, even if they were given a job, that they would be able to keep it. Critics of the culture of poverty theory (e.g., Ryan, 1976; Steinberg, 2007) maintain that it is simply a means of “blaming the victim” and supporting social inequality.

Living in poverty while being part of a consumer culture that values material goods such as expensive homes and cars lead to discontent, hurt feelings, and a sense of deprivation for both adults and children. The American core values of fairness and the availability of social mobility to all clash with the values of our consumer culture. Adults may envy those who have more possessions, while children may feel removed from and disconnected to the experiences of those around them. This can bring about feelings of powerlessness and unworthiness. As noted earlier, some adults use ownership of material goods as a means to feel superior to those who have less, while children use them as a means of signifying belonging to their peer groups (Pugh, 2011). Youngsters who do not have the same things as their peers can feel left out and isolated, the way Elizabeth and Grace imagine their classmates must feel when they receive holiday gifts from the PTA.

A Closer Look: Credit Cards and Economic Inequality Go to http://www.pbs.org/wgbh/pages/frontline/shows/credit to see and read more about how credit cards came to be used so frequently by Americans and became so profitable for banks. In what ways do you think society could address the mismanagement of credit cards by both consumers and banks? For example, would school programs that educate high school and college students about wise money management help alleviate economic inequality? Explain your answer.

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Section 2.3 Theoretical Perspectives on Economic Inequality CHAPTER 2

While some young people who grow up poor may feel hurt and isolated but adhere to the dominant cultural norms and values, others may develop an oppositional culture (Ogbu, 2003). They consciously embrace norms and values that provide them with a sense of belong- ing in their own subculture but prevent them from succeeding in the dominant culture. For example, they may deliberately fail their classes in school and challenge authority figures.

2.3 Theoretical Perspectives on Economic Inequality

Now that we have explored economic inequality in the United States and the rea-sons behind it, we have determined that it is a social pattern that affects broad cat-egories of people and not just random individuals. Now we can begin to address the other three parts of the definition of a social problem. Does economic inequality vio- late the core values of our society? Does it negatively impact those in power? Can we, as a society, curb economic inequality if we choose to do so? An examination of different theoretical perspectives will help to answer these questions as each perspective provides its own view of economic inequality.

Functionalist Perspective

Sociologists who adhere to the functionalist perspective do not always see economic inequality as a social problem. In fact, many would argue that some level of inequality acts as a positive force in society. They believe that those who provide services most valu- able to society and have the most training and talent to fulfill those services should be rewarded by being granted the highest ranks and greatest available rewards in society (Davis & Moore, 1945).

Likewise, some theorists believe that poverty serves positive functions. For example, hav- ing a class of poor people ensures the availability of a labor pool willing to do the dirti- est and most unpleasant work, such as housecleaning and yard work, at low wages. This frees the middle and upper classes, who can afford to hire someone to clean their house or mow their lawn, to pursue more pleasant activities. Some would argue that having an underclass cre- ates service jobs for the middle class, such as social workers and police officers, and consumers for old or used products such as day-old bakery goods and used clothes, A class of poor provides examples of “deviants” who can be used to uphold traditional norms, making others feel supe- rior because they are not “lazy,”

Bloomberg/Getty Images

Functionalists believe that society can benefit from some level of inequality.

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Section 2.3 Theoretical Perspectives on Economic Inequality CHAPTER 2

“spendthrift,” “promiscuous,” or have other stereotypical qualities that are ascribed to poor people (Gans, 1971).

However, Durkheim and other functionalists would be concerned about the negative impacts of economic inequality, when certain people are given greater access to good schools and other positive educational and socializing influences. These are examples of external inequality that harms society by preventing people from achieving their potential and contributing fully, possibly leading to a lack of social cohesion.

Functionalists such as Merton believe that while high levels of poverty can be beneficial for some groups in society, such as those seeking careers in social work and criminal justice, it hurts overall productivity. According to the Bureau of Labor Statistics (2011d), between September 2008 and September 2011, local governments eliminated 550,000 jobs, causing even those who normally benefit from high poverty to have difficulty finding jobs in their fields.

Both Durkheim and Merton would acknowledge that high levels of inequality violate core American values of fairness and the idea that hard work should be rewarded. Moreover, functionalists following in the steps of Durkheim and Merton recognize the need for those in power to address the threat to social cohesion and the possibility of civil unrest that often accompanies great inequality. Government leaders can mitigate the economic gap by implementing policies such as establishing progressive taxes, creating jobs, maintain- ing low interest rates and encouraging banks to issue government-backed loans.

Conflict Perspective

Viewing society as a collection of groups competing for power, conflict theorists are not surprised at high levels of economic inequality. In fact, they describe inequality as a normal result of a struggle for economic and political power in capitalist societies. They argue that those who control great wealth have managed to exert their influence over both economic and governmental institutions in order to enrich themselves at the expense of others (e.g., Derber 2009; Kalleberg, 2011). Weber might also find that the incredibly complicated eco- nomic institutions of the 21st century are set up in such a way that they are very difficult to dismantle and are designed to perpetuate the power of those who control them.

If Marx could see the level of economic inequality in the United States today, he might shout, “False consciousness!” The lack of awareness of the extent of inequality would trouble him greatly. He might also grind his teeth in frustration as many workers strug- gling to make ends meet turn against other workers who have better jobs rather than the owners of the means of production. If workers are not aware of the extent of economic inequality and who is behind it, how can they do anything about it?

However, conflict theorists are also aware that high levels of inequality can pose a threat to people in power. Inequality is an expected outcome when groups struggle for power, but when they unite and develop a class consciousness, workers can achieve greater equality. The Occupy Wall Street movement that sprang up in 2011 is an example of one attempt to unite the “99%” into one cohesive group. Those in power can also come to realize that it is in their self-interest to mitigate extreme levels of inequality. It is no accident that social security, workers’ rights, and other safety-net legislation were passed during the Great

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Section 2.3 Theoretical Perspectives on Economic Inequality CHAPTER 2

Depression. American leaders knew that to maintain power during a time when unemployment reached 25% and the Communist Party was actively supporting labor and civil rights efforts in the United States, they had to ensure that suffering citizens were given some relief and a reason not to rebel and overthrow the government (Piven & Cloward, 1993; Wormser, 2002).

Symbolic Interactionism Perspective Maintaining a focus on interactions between individuals and a concen- trated awareness of the power of socialization and symbols, theorists

who use the symbolic interactionist perspective look at how inequality influences how members of different socioeconomic groups view themselves and each other. For example, they examine how media such as television and movies portray social classes and influence how people view themselves and those around them. In an era of high unemployment and increasing poverty, is conspicuous consumption now more likely to symbolize callousness than success?

Symbolic interactionist theorists also focus on the interactions that create and support eco- nomic inequality. For example, through interacting with one another, people can maintain class hierarchies through a variety of intentional or unintentional means, including

• oppressive othering, defining another group as morally or intellectually inferior and thus not worthy of assistance;

• fashioning superior selves, when members of the elite portray themselves in ways that create the impression that they are of high status and should be respected;

A Closer Look: Economic Crisis and American Values Symbolic interactionism notes that high levels of unemployment and economic inequality clash with prevailing American values—for example, that those who work hard should be able to find employ- ment that pays a decent wage. During a time such as the Great Recession—when over 9% of the pop- ulation was actively seeking employment, almost 8% stopped even looking for a job, and only 58.2% of working-age Americans were employed (BLS 2011a)—how do we reconcile stereotypical negative views of the poor and unemployed with the realities of a national economic crisis? Are we finding ways to “blame the victims” of crises like the Great Recession for their misfortune (Treas, 2010)?

Win McNamee/Getty Images

Symbolic interactionist theorists focus on the power of socialization and symbols. The use of symbols by the Tea Party movement is one example.

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Section 2.3 Theoretical Perspectives on Economic Inequality CHAPTER 2

• defensive othering, when a member of the same low-status group turns against others in the group to make himself seem of higher status;

• trading power for patronage, when the members of oppressed groups try to gain favor from the dominant group to aid themselves, while maintaining the system of inequality;

• forming alternative subcultures, which give a person status in a subculture but work to prevent her from effectively challenging the larger system of inequality;

• boundary maintenance, controlling access to people in power; and • cultural capital and the passing down (or not) of the knowledge needed to inter-

act effectively in high-status circles (e.g., knowledge of current events, knowing the difference between a water glass and a wine glass, experience and comfort talking to people in power) (Schwalbe, Godwin, Holden, Schrock, Thompson, & Wolkomir, 2000).

Politics is a common focus of symbolic interactionists, who observe that political lead- ers who seem unable to correct issues of inequality are considered inept and find it dif- ficult to get reelected. Sociologists who take this perspective look at, for example, the growth of the Tea Party movement; its elaborate use of symbols, such as naming itself after the Boston Tea Party and flying flags that depict the “Don’t Tread on Me” motto from the American Revolution; and how it has moved the Republican Party farther to the political right (Williamson, Skocpol, & Coggin, 2011). They also study the attacks on and responding resurgence of unions (Acar, Chiles, Grainger, Luft, Mahajan, Peschan- ski, Schelly, Turowetz, & Wall, 2011) and the efforts of workers’ associations such as the Coalition of Immokolee Workers to frame the struggles of organized, low-paid workers as a fight for economic justice (Coalition of Immokolee Workers, 2012). Symbolic inter- actionists are very aware that economic inequality, like every other aspect of society, is socially constructed, and they maintain that it can be addressed if enough people with enough power take action.

Race-Centered Perspective

Theorists adopting a race-centered perspective note that economic inequality has always existed among different racial groups in the United States, but it did not become a social problem until Whites were affected by it. While the housing crisis and Great Recession hurt all Americans, people of color suffered the most, as indicated in Figures 2.4 and 2.5. Figure 2.3 shows the percentage change in median net worth of households during the housing crisis, and Figure 2.4 shows the change in terms of dollars. While the wealth of White Americans fell 16% between 2005 and 2009, Black American wealth fell by 53%, and Hispanic-Latino wealth by 66% over the same 4 years. Disparity in wealth between Whites and people of color is nothing new. However, those gaps have doubled since the onset of the Great Recession due to the disproportionate amount of wealth Hispanic-Latinos and Blacks had invested into housing (Kochhar et al., 2011). Thus, despite the decline in hous- ing values and the subprime mortgage crisis, the average White American in 2011 still held 20 times more wealth than the average Black American and 18 times more than the aver- age Hispanic-Latino (Kochhar et al., 2011).

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Section 2.3 Theoretical Perspectives on Economic Inequality CHAPTER 2

Figure 2.3: Percentage change in median net worth of households, 2005 to 2009

-0%-10%-20%-30%-40%

Whites

Hispanics

Blacks

-50%

-16%

-53%

-66%

-60%-70%-80%

Although all Americans were negatively affected by the Great Recession and the housing crisis, Hispanic- Latinos and Blacks suffered more than Whites.

Source: From the Pew Research Center tabulations of survey of income and program participation data, http://www.pewsocialtrends.org/2011/07/26/wealth-gaps-rise-to-record-highs-between-whites-blacks-hispanics/.

Used with permission from the Pew Research Center.

Figure 2.4: Median net worth of households, 2005 and 2009

$0 $25,000 $50,000 $75,000 $100,000 $150,000$125,000

Whites

Hispanics

Blacks

Whites

Hispanics

Blacks

In 2009 dollars

2005

2009

$113,149

$134,992

$6,325

$18,359

$5,677

$12,124

Because Hispanic-Latinos and Black Americans invested more of their wealth in housing prior to the bursting of the housing bubble, they lost proportionally more of their wealth than White Americans lost.

Source: From the Pew Research Center tabulations of survey of income and program participation data, http://www.pewsocialtrends.org/2011/07/26/wealth-gaps-rise-to-record-highs-between-whites-blacks-hispanics/.

Used with permission from the Pew Research Center.

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Section 2.3 Theoretical Perspectives on Economic Inequality CHAPTER 2

Race-centered theorists maintain that the disproportionate impact of the housing crisis and Great Recession on racial minorities, as well as the historic record of racism, call for a special focus on the plight of disadvantaged people of color (Alexander, 2010; Cohen, 2010). Theorists from this perspective point out how racist lending practices targeted Blacks and Hispanic-Latinos, leading to the decimation of wealth of those groups. As a New York Times’ (2009) investigative report revealed, major mortgage lenders systemati- cally “pushed expensive refinancing loans” on persons of color and targeted Blacks and Hispanic-Latinos for subprime mortgages that are harder to repay than prime mortgages even, in many cases, where prime mortgages were appropriate (Powell, 2009).

Feminist Perspective

Feminist theorists focus on the influence of gender relations on economic inequality in society. Sociologists and many other social scientists who adopted this perspective note that the Great Recession led, in some ways, to greater economic equality between men and women (Bennett & Ellison, 2010). As more families needed the paid labor of female partners, wives, and mothers, gender roles were affected by the economic reality. Because of the sex-segregated nature of the workforce and the type of jobs that were most vulner- able to layoffs in the early 21st century (such as the male-dominated sectors of construc- tion and manufacturing), in 2011, for the first time more women were employed than men (BLS, 2011a).

In the early 21st century more women than men were highly educated. In 2008, among 23-year-olds, 23.4% of women had at least a bachelor’s degree, compared to just 14.3% of men (BLS, 2011b). This educational gap between men and women adds to a shift in the economic power between women and less-educated men. However, in all occupa- tions combined, women still make only 81.2% of what men earn (BLS, 2011b). In highly paid positions, where compensation is awarded more subjectively, women make even less when compared to men in similar positions (Rampell, 2009). According to feminists, such economic inequality between men and women reveals the persistence of sexism and the unequal distribution of power in society. (For a detailed discussion of gender inequality, see Chapter 5.)

A Closer Look: Rising Economic Inequality and Debt In the video, “Americans Facing More Inequality, More Debt and Now More Trouble?” at http:// www.youtube.com/watch?v=v3ooK39JsLI&feature=relmfu, some economists argue that economic inequality has contributed to consumer debt and even helped bring about the recent economic cri- sis. As you watch the video, think about how theorists from the various theoretical perspectives would focus on different arguments made in the video. Which perspective do you think is most help- ful in understanding the situation of Americans in debt, today? Why?

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Section 2.4 Economic Inequality, Poverty, and Homelessness CHAPTER 2

2.4 Economic Inequality, Poverty, and Homelessness

The effects of the Great Recession have been far-reaching. However, although inequality is rising in many nations and geographic regions, it is decreasing on a global level. In the 5 years between 2005 and 2010, the number of the world’s people living in poverty (defined as an income of less than $1.25 a day) dropped from more than 1.3 billion (25.7%) to less than 900 million (15.8%). According to a 2012 Brookings Institute Report (Chandy & Geertz, 2011), the rapid economic growth of developing nations such as China and India over the past decade has led to this dramatic decrease.

Certainly a decrease in poverty throughout the world is welcome progress. At the same time, there is a still a troubling number of people in the world who struggle with poverty and other inequality issues, such as homelessness. Let’s take a look at how poverty and homelessness affects the United States.

Poverty in the United States

The United States has a higher poverty rate than most other similarly developed nations, with almost one in six Americans living in poverty. However, although the United States is the wealthiest nation in the world, what it considers the poverty threshold, the income level at which people are considered to be in poverty, is very low. This means that, in addi- tion to the one in six Americans officially living in poverty, many people who are unable or barely able to afford a place to live and feed themselves earn too much to qualify as living in poverty. For example, in 2009 the U.S. Census defined an individual with an income of less than $10,956 a year to be in poverty (U.S. Census Bureau, 2011b). The Census Bureau describes how it measures poverty in the following way:

The Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is in poverty. If a family’s total income is less than the family’s threshold, then that family and every individual in it is considered in poverty. The official poverty thresholds do not vary geographically, but they are updated for inflation using Consumer Price Index (CPI-U). The official poverty definition uses money income before taxes and does not include capital gains or noncash benefits (such as public housing, Medicaid, and food stamps). (U.S. Census Bureau, 2011b)

Not surprisingly, the Great Recession led to an increased percentage of Americans living in poverty—the poverty rate rose from 12.5% in 2007 to 15.1% in 2010 (DeNavas-Walt et

A Closer Look: Edging Closer to Equality See how economic inequality across the globe has decreased over the past 200 years (in just four minutes!) by watching the BBC video “Hans Rosling’s 200 Countries, 200 Years, 4 Minutes” at http:// www.youtube.com/watch?v=YaCcXfap9X4. Does any of the information in this video surprise you? Explain your answer.

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Section 2.4 Economic Inequality, Poverty, and Homelessness CHAPTER 2

al., 2011). Many factors affect poverty rates. For example, the differences in poverty rates among racial groups are striking, as seen in Figure 2.5. Similarly, there are notable dispari- ties in poverty rates among states. For example, the poverty rate among Whites is 16% in Arkansas, compared with 8% in New Jersey.

Figure 2.5: Poverty rates by race, 2010

0% 10% 20% 30% 40%

White, Non Hispanic

Black

Hispanic

Asian

50%

Percent

U n

it e d

S ta

te s

9.9

27.4

26.6

12

There is a clear difference in poverty rates among racial groups.

Source: Based on data from DeNavas-Walt et al., 2011 http://www.census.gov/prod/2011pubs/p60-239.pdf

An issue closely related to poverty is food insecurity, the availability and access of enough food to support a healthy life. Many Americans face food insecurity, struggling with hun- ger, uncertainty about having enough food, or both. In 2010, 15.5% of American families did not have, “were uncertain of having, or (were) unable to acquire, enough food to meet the needs of all their members because they had insufficient money or other resources for food” (United States Department of Agriculture, 2011, n.p.). Figure 2.6 demonstrates that food insecurity, like poverty, varies among the states and regions of the United States.

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Section 2.4 Economic Inequality, Poverty, and Homelessness CHAPTER 2

Figure 2.6: Prevalence of food insecurity, average 2008–2010

Food insecurity below U.S. average

Food insecurity near U.S. average

Food insecurity above U.S. average

Food insecurity below U.S. average

F d i it U S

WA

MI

MI

WV

KY

TN SC

NE

MOKS

OK

CO UT

MT

OR

NV

NM AZ

SC

NC

GAALMS

AR

TX

CA

AK

FL

VA

HI

PA

NY

IL OH

WI

IA

MN ND

SD

WY

ID

LA

NH

MA

CT

MD

DE

NJ

RI

VT

Food insecurity is found across the United States, but the level varies by state and region.

Source: Based on calculations by ERS on current population survey food security supplemental data

Homelessness in the United States

Another issue closely tied to poverty is homelessness, which has existed throughout the history of the United States. Cycles of increased homelessness have accompanied the nation’s cycles of economic performance. In the preindustrial era, the homeless popula- tion was primarily made up of unemployed working men. In the “vagabond era” of the late 1800s, men hopped trains to travel to look for jobs, and the Great Depression saw an increase in working-class families without homes (Leginski, 2007). Homelessness has become a much-discussed social problem in recent years due to the following factors iden- tified by social scientist Christopher Jencks:

• outplacement, or the movement into mainstream society, of mentally ill patients formerly treated in psychiatric hospitals;

• steady increase in male long-term unemployment after 1970, due in part to a decline in low and semi-skilled jobs that paid a good wage;

• regulations against “skid row” housing, defined as cheap, single-room occu- pancy housing located in run-down buildings that do not meet safety codes, located above bars, and so on;

• the crack cocaine epidemic; and • creation of more shelters for homeless people (Jencks, 1995).

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Section 2.4 Economic Inequality, Poverty, and Homelessness CHAPTER 2

According to a survey conducted by the U.S. Conference of Mayors (2010, p. 2), “[24] percent of homeless adults are severely mentally ill, 20 percent are physically disabled, 19 percent are employed, 14 percent are victims of domestic violence, 14 percent are also veterans, and three percent are HIV positive.” Although homeless shelters are found in almost all urban areas of the United States, Jencks and other sociologists have helped pro- mote the concept that shelters are not the solution to chronic homelessness among single men, who often suffer from mental illness or drug addiction. Jencks argues instead for providing more supportive services for people who continually circulate through home- less shelters, prisons, or hospitals (Urban Institute, interview of Cunningham, 2009).

Supportive housing services that concentrate on keeping homeless people housed, healthy, and employed actually costs less than the services the homeless population would otherwise use in emergency shelters, hospitals, and jails. (Urban Institute, inter- view of Cunningham, 2009; Culhane & Byrne, 2010). This pragmatic argument is not only supported by research but it also fits with a core value of Americans: the desire to look after those in need. The effort that began in 2000 to provide more services and supportive housing helped decrease the chronic homeless population of single adults in the United States. Further, 95% of the cost of supportive housing was found to be compensated for by the decline in the use of such services as hospitals, prisons, and emergency shelters (Culhane, Metraux, & Hadley, 2002; Urban Institute, interview of Cunningham, 2009).

Nonetheless, since the onset of the housing crisis and the Great Recession, homelessness rates are on the rise again. Families who simply cannot afford to put a roof over their heads represent a large percentage of the increase. Between 2009 and 2010, there was a 9% increase in the number of homeless families (U.S. Conference of Mayors, 2010), with unem- ployment most often reported as the cause of their homeless- ness. In addition, homeowners who faced increases in adjust- able rate mortgages they could not keep up with and renters in foreclosed houses joined the ranks of the homeless (Urban Institute, interview of Cunning- ham. 2009).

Services to accommodate this population have not been suf- ficiently expanded, with 64% of the cities participating in a 2010 U.S. Conference of Mayors survey indicating that they had to turn away homeless families because they did not have the beds to accommodate them. As cities continue to face economic shortfalls due to the Great Recession and reduced federal aid, homelessness is bound to once again become a major social problem that affects many people, conflicts with our core values, and puts pressure on the leaders of U.S. society.

Mitchell Funk/Getty Images

Between 2009 and 2010 the number of homeless families in the United States increased by 9%.

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Section 2.5 How Sociologists Are Addressing Economic Inequality CHAPTER 2

2.5 How Sociologists Are Addressing Economic Inequality

In addition to local and federal government efforts to mitigate homelessness, nonprofit organizations—such as the National Coalition for the Homeless and the National Alliance to End Homelessness—and countless local organizations have attempted to address this social problem. Sociologists, too, have been tackling homelessness and other issues related to economic inequality. Let’s explore how two sociologists, James Wright and Ruth Milkman, have used sociological tools to address two social issues related to economic inequality: attempts to move homeless populations from downtown areas near transportation and supportive services, and unjust labor practices that disproportionately harm the most economically vulnerable workers.

James Wright: Improving Facilities Rather Than Relocating Them

One of the many times sociologist James Wright used sociological tools to assist the home- less population in Orlando, Florida, came about when the city of Orlando tried to relo- cate the city’s homeless population (Korgen, White, & White, 2011). As a member of the board of directors of the Coalition for the Homeless of Central Florida and a member of the board’s Research and Evaluation Committee, Wright was in a good position to take action when the city attempted to move the site of the Coalition for the Homeless from the central business district to an area in Orlando that was out of sight and out of reach of the public transportation and other services heavily used by the homeless population.

Wright and his graduate students at the University of Central Florida conducted focus groups with homeless men and women to determine how the proposed move would affect them. They also conducted research identifying other cities that had tried to “revi- talize” downtown business districts by removing services for homeless people and had either failed in their efforts to find other places for such services or, if they had managed to move the services, had not reduced the number of homeless people spending time down- town. These findings helped influence the final decision by Orlando’s city government to let the coalition remain in the central business district and to create a new and improved facility for the homeless population on that site.

Ruth Milkman: Labor Laws and Inequality

Working Americans can thank Ruth Milkman for her research and advocacy work on such issues as immigrant labor organizing, minimum wage and overtime violations, and paid family and medical leave. With colleagues, she conducted a groundbreaking report, Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America’s Cities (Bernhardt, Milkman, 2009), “exposing systematic and routine violations of employment and labor laws in core sectors of the economy.”

This study revealed, among other findings, that all workers, no matter their race, gender, or citizenship status, may face unfair and illegal work practices, with low-wage workers most vulnerable. Over one quarter of low-wage workers surveyed were not paid even the minimum wage during the week prior to the survey, and over three quarters of par- ticipants who worked over 40 hours the week prior to the survey were not paid overtime

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Section 2.5 How Sociologists Are Addressing Economic Inequality CHAPTER 2

wages as required by law. U.S. Labor Secretary Hilda Solis took note of the report and indicated that she was hiring more wage-and-hour investigators to tackle the issues of wage theft and other labor law violations (Greenhouse, 2009).

A Closer Look: Economic Inequality and Global Health The increased wealth gap in the United States has led to a corresponding gap in health and life expec- tancy among social classes that is much wider than those in other highly developed nations. As the video In Sickness and in Wealth: Health in America (2008) reveals, there is “a health-wealth gradient” in the United States, in which “every descending rung of the socioeconomic ladder corresponds to worse health.” The result is that, in terms of life expectancy, the United States is ranked 50th in the world (Central Intelligence Agency, 2011b). Watch a clip of the video at http://www.youtube.com/ watch?v=w98GSXBEyQw. How does viewing the world through a sociological lens reveal patterns of economic inequality and their repercussions in other nations, as well as in the United States? How does this knowledge influence and support your view on whether or not economic inequality is a social problem?

Using the Sociological Lens: Arab Spring, American Autumn

Is the Occupy Wall Street movement an extension of the Arab Spring, or are the two completely different movements?

On December 17, 2010, a Tunisian street vendor named Mohamed Bouazizi set himself on fire in the ultimate gesture of protest. Bouazizi, like his fellow Tunisian citizens, had lived for two decades under the repressive leadership of President Zine El Abidine Ben Ali, where they lacked freedom of speech, freedom of the press, the right to democratically elect their own leaders, and suffered other injustices. On the day of his death, corrupt police confiscated property crucial to Bouazizi’s business, while local authorities ignored his requests to have it back. Fed up, Bouazizi immolated himself. In doing so, he unknowingly gave rise to the revolutionary movement known as the Arab Spring, a populist uprising that has swept through half a dozen countries in the Middle East, causing regime change in at least two.

Less than a year later, on the other side of the world, shared issues of economic inequality and social injustice gave rise to an American protest movement known as Occupy Wall Street. Inspired by growing anger at economic disparity in the United States and taking its cues from the Arab Spring, the movement began on September 17, 2011, when at first dozens, then hundreds of protesters set up tents in Zuccotti Park, in the financial district of Manhattan. For months, protesters marched, chanted, and otherwise demonstrated their frustration with income inequality. Occupy sites sprang up in nearly every state, and sizeable demonstrations occurred in dozens of other countries, too. The movement became immediately defined by its catchy, populist slogan, “We are the 99%,” a reference to the prosperity of the top 1% of wealthiest Americans compared to the rest.

Both movements have featured calls for economic and social justice, and protestors in each demand an overhaul of the social frameworks that structure both Western and Arab societies. Yet how much the two movements have in common is a point of fascinating debate. (continued)

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Section 2.5 How Sociologists Are Addressing Economic Inequality CHAPTER 2

The Arab Spring and Occupy Wall Street are Twin Movements

According to data from the independent, nonpartisan, Congressional Budget Office and the White House, the richest 1% of Americans earn nearly 20% of the nation’s income. They have seen their incomes grow by 275% since 1979, compared with 60% of Ameri- cans, who have seen their incomes grow by just 40%. The top 1% also, according to data from the University of California, Santa Cruz, and the Institute for Policy Studies, own 40% of the nation’s wealth; 50% of its stocks, bonds, and mutual funds; and carry just 5% of the nation’s personal debt. These eye-opening statistics are at the heart of the Occupy Wall Street movement, which demands redistribution of wealth, social justice, and eco- nomic equality for all Americans, no matter their class.

Occupy Wall Street has been both praised and vilified for its populist approach to solving America’s social problems. Because of its circus-like nature and tendency to oversim- plify complex economic and social issues, Occupy Wall Street was often criticized for lacking a distinct message, and sometimes ridiculed for being immature and unrealistic. Yet the group’s arguments reflected real and growing frustration found in the general population. An October 2011 poll taken jointly by CBS News and the New York Times, for example, found that although just 25% of Americans had a favorable impression of the Occupy Wall Street movement, 66% said they agreed with the movement’s fundamental charge, that money and wealth are unfairly distributed.

By December 2011, the Pew Research Center recorded even higher dissatisfaction with economic equality. That month, more than three in four Americans—77%—said too much power is in the hands of just a few rich people and large corporations. Furthermore, 61% said the economic system unfairly favors the wealthy, while just 36% said the system is fair to the majority of Americans. Wall Street, too, remained unpopular: 51% of Americans thought Wall Street hurts America more than helps it, while just 36% thought the opposite.

In the following perspective, author Rebecca Solnit likens the spirit of the Occupy Wall Street Movement to the Arab Spring, arguing they are twin movements that share at their core a disenfranchised populace fed up with inequality and injustice. Tracing the Occupy Wall Street’s birth to the shocking origins of the Arab Spring, Solnit links it to social justices movements of the past and makes an impassioned plea for a more eco- nomically equitable society.

Rebecca Solnit, “How the Arab Spring and Occupy Wall Street Started With One Tunisian Man,” Mother Jones, October 18, 2011. http://motherjones.com/politics/2011/10/arab-spring-occupy-wall -street-protests

Occupy Wall Street Is No Arab Spring

Arab Spring protestors generally demand regime change, free and fair democratic elec- tions, economic and social justice, and a bevy of human, political, and social rights. The movement was born after the death of Tunisian street vendor Mohamed Bouazizi, whose 2010 suicide provided a match that exploded the region’s subjugated populace.

After Bouazizi’s death, growing numbers of Tunisian protestors demanded justice, and then regime change. President Zine El Abidine Ben Ali sent police after them. Violent clashes grew increasingly intense until finally, after a month of unrest, Ben Ali was forced out of power on January 15, 2011.

Using the Sociological Lens: Arab Spring, American Autumn (continued)

(continued)

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Section 2.5 How Sociologists Are Addressing Economic Inequality CHAPTER 2

The victory reverberated east, where politically and socially repressed citizens of other nations took note of what the Tunisians had accomplished. Weeks after Ben Ali resigned, protests began in Egypt, where conditions under dictator Hosni Mubarak, who held power for nearly 30 years, were even worse. The Egyptian protests were bloodier—hun- dreds were killed in violent clashes with police. In a dramatic, overwhelming outpour- ing, hundreds of thousands, possibly millions of people flocked to Cairo’s Tahrir Square. They protested with one voice, demanding freedom, justice, economic opportunity, and democracy. After less than 3 weeks of aggressive demonstrations, Mubarak stepped down on February 11. Mubarak was one of the most iconic Middle Eastern leaders and Egypt a stable U.S. ally. The turn of events was astonishing.

The Arab Spring next bloomed in Bahrain, Syria, and Yemen, where in November 2011 Yemeni leader Ali Abdullah Saleh promised to step down after nearly a year of similarly fierce protests to his leadership. In Bahrain, tens of thousands of protestors gathered in Pearl Square, in the capital city of Manana. King Hamad temporarily avoided the fate of Ben Ali and Mubarak by responding to some of his protestors’ demands. He dismissed members of his cabinet, made payments to Bahraini families, and released certain politi- cal prisoners. But thousands more have been arrested and dozens killed in the protests and uprisings that were ongoing through 2012. Hamad’s hold on power is tenuous, as throngs of people flocked back to Pearl Square in mid-February 2012 to commemorate the 1-year anniversary of the uprising.

Protestors in Syria have been the victims of the worst of the Arab Spring’s violence, as tyrant Bashar al-Assad clings to power. The United Nations human rights commis- sioner estimates more than 5,000 protestors (including more than 300 children) have been killed in Syria since the uprisings began in January 2011. Ruthless to his people and defiant of the international community’s demands that he stop the violence, al-Assad is unlikely to step down and may go the way of Muammar Qaddafi, the former leader of Libya. When the Arab Spring spread there in mid-February 2011, Qaddafi had ruled with an iron fist for more than 40 years. Unlike in Tunisia and Egypt, most of the Libyan mili- tary sided with Qaddafi during the initial unrest, making large-scale protests like those in Tahrir Square and Pearl Square impossible. Instead, a civil war-like state erupted. Qaddafi was eventually forced into hiding in October and killed by rebels on October 20, 2011.

From Libya, to Syria, to Egypt, to Yemen, the Arab Spring is an ongoing movement that is reinventing the Middle East, though it remains to be seen whether it will be changed for better or for worse. In the following perspective, Ehab Zahriyah argues it is inappropriate to compare the Arab Spring with the Occupy Wall Street movement. Occupy Wall Street pro- testors, they explain, largely opposed economic injustices, such as gigantic CEO bonuses, widespread layoffs, and corporate greed. Arab Spring protestors, on the other hand, fought and are fighting to achieve basic human rights, democracy, and to be free from torture and intimidation. For Zahriyah, there is no reasonable comparison between the two.

Ehab Zahriyah, “Occupy Wall Street is No Tahrir Square,” CNN.com, November 2, 2011. http://www.cnn .com/2011/11/02/opinion/zahriyeh-occupy-tahrir-square/index.html

Critical Thinking and Discussion Questions

1. Mohamed Bouazizi was the Tunisian street vendor who immolated himself after police took from him electronic scales he needed to conduct business. After his pleas for

Using the Sociological Lens: Arab Spring, American Autumn (continued)

(continued)

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Section 2.5 How Sociologists Are Addressing Economic Inequality CHAPTER 2

their return were ignored, Bouazizi reportedly yelled, “How do you expect me to make a liv- ing?” moments before he set himself on fire. Solnit argues Bouazizi’s plea is echoed in the thousands of Americans who, because they have been laid off in the Great Recession, have also lost their ability to make a living. Zahriyah, on the other hand, says Americans have little in com- mon with Bouazizi because they live in a society that offers various paths to economic mobility without violating human rights. With which characterization do you ultimately agree, and why?

2. In your opinion, does the Occupy Wall Street movement lack authenticity or legitimacy because it takes place in a “first world,” rich country, as opposed the poor, “third world” nations involved in the Arab Spring? In other words, does the social construct of poverty in each country affect the legitimacy of either movement?

3. Critics of the Occupy Wall Street movement, including Zahriyah, point out that Occupy Wall Street protestors did not have to risk their lives in the way the Arab Spring protestors did. What bearing do you think this has on the discussion? Does the danger involved in protesting an injustice inform its importance? Why or why not?

4. What characteristics and qualities do the Occupy Wall Street and Arab Spring protestors have in common? What differences do they exhibit?

5. Zahriyah argues that comparisons of the Arab Spring and Occupy Wall Street movements are culturally insensitive. Do you agree or disagree, and why?

6. How have leaders of countries involved in the Arab Spring and Occupy Wall Street movements been affected by each movement? How have they responded to protests? What does a lead- er’s reaction to such a movement say about the seriousness or depth of a social problem?

For Further Consideration

What Global Protest Movements Have in Common Nouriel Roubini. (2011, October 3). World class warfare: Why almost every continent on earth is expe-

riencing social and political turmoil. Slate.com. Retrieved from http://www.slate.com/articles/ business/moneybox/2011/10/what_occupy _wall_street_the_arab_spring _the_chilean _students_and.html

From a Reporter’s View Mohyeldin, A. (2011, October 12). Is Occupy Wall Street the American Fall? Time. Retrieved from

http://ideas.time.com/2011/10/12/from-the-arab-spring-to-the-american-fall/

Not Twin Movements, but Cousins Kristof, N. (2011, October 2). The bankers and the revolutionaries. New York Times. Retrieved from

http://www.nytimes.com/2011/10/02/opinion/sunday/kristof-the-bankers-and-the-revolu- tionaries.html?_r=1&ref=nicholasdkristof

More About Boredom Than Justice Pennington, M. (2011, November 28). Occupy Wall Street’s ‘American Spring’ is a weak imitation of its

revolutionary original. Forbes. Retrieved from http://www.forbes.com/sites/maurapennington/ 2011/11/28/occupy-wall-streets-american-spring-is-a-weak-imitation-of-its-revolutionary -original/

Nothing in Common Smith, R. (2011, October 6). Occupy Wall Street and the Arab Spring . . . Enough already. American Spec-

tator. Retrieved from http://spectator.org/blog/2011/10/06/occupy-wall-street-and-the-ara

Using the Sociological Lens: Arab Spring, American Autumn (continued)

(continued)

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Summary & Conclusion CHAPTER 2

Summary & Conclusion

Economic inequality, the unequal distribution of income and economic assets, is an issue that meets all of the four criteria for defining a social problem laid out in Chap-ter 1. However, research indicates that most Americans are unaware of the extent of economic inequality in the United States. Looking at the issue through a sociological lens reveals that existing patterns of economic inequality have grown more severe since the Great Recession that began in 2007. Structural factors, such as the decline of unions, lower tax rates for the wealthy, the growth of a service economy, and supply-side economic poli- cies have contributed to this inequality, as have cultural factors such as the increased use of credit cards and the growth of materialism.

The Great Recession and mortgage crisis have profoundly affected the global economy, and in the United States its effect has been more dire for people of color and those with less education. Economic inequality has led to political instability in several countries and the threat of it in the United States, and an increase in other, related, social problems, such as homelessness. Theorists from the various sociological frameworks view social inequality from different angles, with different points of focus. However, theorists from all perspectives view high levels of inequality as a social problem. The rise in inequality over the past few decades violates a core American value: that people, whatever their cir- cumstances, always have the opportunity for upward mobility.

Economic inequality can be mitigated through various means, including economic expan- sion, redistribution of income and wealth through taxes, and investments in education. As will be discussed in Chapter 3, in order for education to be an effective means of reducing economic inequality, inequality must also be reduced within the educational system.

Advice from Tahrir Square for Zuccotti Park Keating, J. E. (2011, October 5). From Tahrir Square to Wall Street. Foreign Policy. Retrieved from

http://www.foreignpolicy.com/articles/2011/10/05/from_tahrir_square_to_wall_street ?page=0,1

Different Movements, Different Contexts Barrett, R. (2011, October 18). Occupy Wall Street is not the Arab Spring. HuffingtonPost.com. Retrieved

from http://www.huffingtonpost.ca/robert-barrett-phd/occupy-wall-street_b_1012891.html

Recommended Video Link:

An Egyptian’s View of Occupy Wall StreetPublic Radio International. (2011, November 15). An Egyp- tian view of Occupy Wall Street. The World. http://www.theworld.org/2011/11/egypt-occupy -wall-street/

Using the Sociological Lens: Arab Spring, American Autumn (continued)

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Key Terms CHAPTER 2

Key Terms

automation The use of machines to pro- duce goods or provide services.

capital gains Income earned from invest- ments rather than from wages.

conspicuous consumption Spending on expensive goods and services in order to signal wealth to others.

culture The shared values, norms, and artifacts that characterize a society.

culture of poverty The social concept that growing up poor can foster behaviors and attitudes that perpetuate an inability and lack of desire to move up the economic ladder.

deindustrialization The reduction of industrial activity, or manufacturing.

distribution of wealth How wealth is divided among a population.

economic inequality The unequal distri- bution of income and economic assets.

economic mobility The ability to move from one social class to another.

economic stratification The ranking of groups of individuals according to their level of income and wealth within a society.

food insecurity The availability and access of enough food to support a healthy life.

globalization The global distribution of the production of goods and services.

Great Recession In late 2007, the conver- gence of a cascade of complex economic events that led to a dramatic drop in U.S. housing prices, the collapse of huge finan- cial institutions, and downturns in global stock markets. Also known as the Global Financial Crisis.

income The amount people earn from wages, investments, or selling property or goods.

oppositional culture A culture in which participants embrace norms and values that provide them with a sense of belonging in their own subculture but prevent them from succeeding in the dominant culture.

poverty threshold The income level at which people are considered to be in poverty.

relative deprivation A sense among many individuals within a society that others have what they do not.

social inequality A situation in which individuals or groups within a society have unequal status.

social stratification The ranking of groups of individuals according to their access to and possession of the things valued in society, such as wealth, power, and status.

social structure A framework of estab- lished patterns of social interaction between individuals and groups, guided by accepted norms and shared values.

socialization The process by which indi- viduals acquire the norms, values, and expectations of their family and society.

supply-side economic theory An economic theory that assumes economic growth is stimulated by reducing taxes and freeing businesses of government regulation.

upward mobility The change in an indi- vidual’s social status resulting in him or her rising to a higher social class.

wealth The total value of everything an individual owns minus any debt that he or she owes.

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Critical Thinking and Discussion Questions CHAPTER 2

Critical Thinking and Discussion Questions

1. Do you think that economic inequality is a social problem? By what criteria are you making your decision?

2. Discuss the role of upward mobility in achieving the American Dream. How is it defined? Do you believe it’s often achieved, according to this definition? Explain.

3. What do the Arab Spring and the Occupy Movement have in common? What role has the idea of relative deprivation played in these protests? What have been some of the outcomes, positive and negative?

4. Of the structural forces of inequality described in the text, which do you believe influence the U.S. economy most? Support your response with examples.

5. How do American business practices influence inequality among American workers?

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