Poor and the Working Poor

The following discusses stratification and social class in the United States. It defines stratification, social class, and poverty. Sociological perspectives including the functionalist belief in a system of meritocracy and the conflict theories surrounding the Marxian two-class system of the bourgeoisie or capitalist class and the proletariat or working class, as well as Max Weber's indices of social class, including wealth, power, and prestige, are discussed. The distinction is made between social classes in the United States based on socioeconomic status and the difference between absolute and relative poverty is explained. The structural and economic reasons for inequality in the United States are examined in terms of race, gender, and other categorizations that can affect wealth. The current state of social class and poverty in the United States is discussed along with ideas for improving the conditions of the poor and the working poor in the nation.

Keywords Absolute Poverty; Alienation; Bourgeoisie; Capitalist Class; Class Conflict; Feminization of Poverty; Income; Meritocracy; Poverty; Power; Prestige; Proletariat; Relative Poverty; Social Class; Social Inequality; Socioeconomic Status (SES); Stratification; Underclass; Wealth; Working Class; Working Poor

The Poor & the Working Poor

Overview

Although the United States was founded upon the ideals of equality, meritocracy, and social mobility, the United States is one of the most stratified high-income countries in the world and, beyond that, has the distinction of keeping its poor in their state of poverty longer than any other Western country (Stephen, 2007). According to data aggregated by the World Bank, the United States has higher rates of income inequality than most other high-income countries, including Canada, Australia, South Korea, and the countries of Europe (Luhby, 2011).

Sociological Perspectives on Social Class

Sociologists use various theoretical perspectives to look at and explain social class differences and how they relate to social inequality. This article will discuss social class, stratification, and poverty, as well as the sociological perspectives on each. Social class and stratification refer to how people are grouped into various hierarchical social categories based on individuals’ accumulation of wealth, power, and prestige. These inequalities help to determine the ownership and control of resources and the type and status of the work that people perform. Thus, in the United States, a large portion of the population is not only poor but also less able to participate fully in society (Koepke, 2007).

Differences in the ability for some to accumulate more than others have historically turned into conflicts between groups of people who have felt that they were not receiving their fair share of society's wealth. This inequality continues to exist today in the United States. In fact, among the wealthy nations of the world, the United States receives the distinction of being first in a list of societies with inequality of income distribution (Rothchild, 1995). Although the United States may enjoy more economic equality than most other parts of the world, particularly certain countries of Africa and South America where income inequality is highest, the United States ranks last among the developed countries of the world.

Functionalist Perspective

Functionalists look for the factors in a society that make it stable and help it to run smoothly and efficiently. The functionalist perspective finds that inequality must exist and is not necessarily harmful. This view holds that certain positions in society are more important than others and they must be filled by the most qualified people. These people must have the ability and the talent to perform these jobs and therefore are best compensated with a high level of income, wealth, prestige, and power. For example, a heart surgeon must spend years in school and in training and has the the entire life of an individual in his or her hands. This system of rewarding people for their work with wealth, power, and prestige for jobs that are unique and demanding is called meritocracy. A meritocracy rewards people based on their abilities and their credentials. It is a hierarchical system based on merit.

Conflict Perspective

The most well-known conflict perspective regarding social class is the work of Karl Marx, who believed that one’s wealth and position in society is based on how he or she fits into the system of production as either the owners of the means of production of goods, such as the factories, or as sellers of our labor for an hourly wage. Marx recognized only the two classes: the capitalists, or bourgeoisie who own and control the land, capital, natural resources and the working class, or proletariat, who work for the capitalists to earn a living wage. Marx explained that exploitation of the proletariat by the capitalists occurs because of the excesses production produces, which do not go to the workers, but becomes profit for the capitalists. This makes for an unequal distribution of the accumulated wealth produced. When this occurs, the workers feel a sense of alienation, exploitation, or powerlessness within the equation of capitalist over proletariat. Marx believed that the exploitation of workers would ultimately lead to class conflict and an overthrowing of the capitalists and a more equal distribution of wealth overseen by a more just government.

While neo-Marxists continue to follow the predictions of Marx, others find that because the relationship between ownership and labor has blurred, with workers being compensated with company stock, or partial ownership, in the companies which employed them, that a workers' revolution as envisioned by Marx will not likely occur. With the advent of the credit card and the ease of obtaining credit, the workers often feel that they can afford the things in life that they equate with wealth. They can purchase big-ticket items, such as a car or a home, using credit and still have money left in their accounts for groceries. With this surface of material complacency, it is more difficult to find the deep alienation that Marx observed.

Another prominent social scientist, Max Weber, pointed out that the relationship between the haves and the have-nots was more than simply a two-class conflict between the capitalists and the proletariat. Weber identified three dimensions of stratification—wealth, prestige and power—which determine a person's social class.

Wealth is identified as one's owned assets such as property, income, and investments. Those who have similar levels of such assets are included in the same social class. The more wealth one has, the higher the social class to which he or she belongs. A case in point is Bill Gates, the founder of Microsoft Corporation, who enjoys not only wealth, but also two other dimensions, prestige for his accomplishments and his philanthropy and power for his ability to affect the lives of others using his wealth and prestige.

One can also be elevated in social class even without a lot of wealth if he or she commands prestige: the respect of others based on life work, position, or celebrity. For example, Mother Teresa, a nun from Macedonia who won the 1979 Nobel Peace Prize (Nobel Foundation, 1979), spurned the accumulation of wealth and chose to live in poverty, but she was influential worldwide because of her prestige as a champion of the poor.

A third dimension of Weber's notion of social class is power, through which a person can achieve his or her will despite the objections of others. Power may be economic, social, or political and affects one’s level of influence in society.

Symbolic Interactionist Perspective

While functionalist and conflict sociological perspectives take in the "big picture" of society and look at large groups of people, the symbolic interactionist perspective takes a micro level view of topics such as social class and stratification. A symbolic interactionist would study the effects of poverty, for example, on a group of high school students and their grades and ability to attend college. Or, the symbolic interactionist might study the language used in the workplace to identify workers, noting that those with less prestige are often called by their first names, while those with a higher office might be referred to by a title and last name (Rollins, 1985).

What Is Stratification?

Because the United States is divided into social classes based on wealth, prestige, and power, it is said to have a system of stratification; this is a hierarchical system that puts those with the most wealth, power, and/or prestige at the top of the hierarchy and those with the least at the bottom.

Several classes have been identified in American society, beginning at the top, with 0.5 percent of the population belonging to the upper-upper class. These people have accumulated wealth over long periods of time typically through inheritance or have come into a great deal of money through the financial services or banking industry, real estate development, or government contracting. People in this class tend to have a great deal of influence on the economy and society, despite the fact that there are few of them (Gilbert, 2003). This group enjoys a disproportionate share of wealth, influence, and power in the United States, such as the ability to borrow money at extremely low rates, to keep profits and production overseas, to divert personal assets to tax havens, and to influence legislation.

The 99th to 99.5th percentiles largely include physicians, attorneys, upper management executives, and small business owners whose businesses have done well. This group earns a disproportionately large share of income, but its members typically have less economic, social, and political power as those in the 99.5th to 99.99th percentiles.

The upper-middle class makes up about 14 percent of the population and is also largely made up of professionals with postgraduate degrees who work in white-collar jobs as physicians, attorneys, and stockbrokers, and those in upper managerial positions.

According to the Pew Research Center, the percentage of Americans living in middle-income households has fallen from 61 percent of all Americans in 1971 to 51 percent in 2011.

The working class makes up another 30 percent of the population and includes factory, clerical, and retail sales workers.

In 2011, according to the US Census Bureau, about 15 percent of the US population (46.2 million) lived below the official poverty level; of those Americans living in poverty, 10.4 million individuals were among the working poor, spending at least twenty-seven weeks in the labor force but earning incomes below the official poverty level. In 2011, according to the Bureau of Labor Statistics, the ratio of the working poor to all individuals in the labor force for at least twenty-seven weeks was 7 percent (US Bureau of Labor Statistics, 2013). The working poor include laborers and service industry workers. These people are called the working poor because while they work full time, they do not earn enough to support themselves or their families. Women, African Americans, and Hispanic Americans were more likely than Asian Americans, white Americans, or men to be among the working poor (Gilbert, 2003).

According to sociologists H. Luke Shaefer and Kathryn Edin, in 2011, approximately 1.65 million US households were categorized as living in extreme poverty, or living on less than two dollars per day per person. In 1996, only 1.7 percent of households lived in extreme poverty; by 2001, that number had risen to 2.3 percent and ballooned to 4.3 percent in 2011 (Shaefer & Edin, 2012). The lower class is predominantly made up of temporary, seasonal, or part-time workers, many of whom also receive some form of public assistance. Members of this group generally do not have an education beyond high school and may not work consistently (Gilbert, 2003).

Applications

What Is Poverty?

As the categories of the working poor and extreme poverty indicate, many people in the United States work yet live in poverty. Poverty is defined by the Social Security Administration as the minimum amount of money needed to maintain a subsistence lifestyle. In 2000, approximately 33.3 million people lived below the official poverty line in the United States, or 12.2 percent of the total population. By 2012, the percentage of Americans living in poverty had increased to 15.9 percent, or 48.8 million Americans.

Who are the Poor?

Statistics show that poverty in the United States affects all races and ages, but that those considered most poor are children under the age of eighteen as well as those in the eighteen to twenty-four years bracket, for all races. In other words, nearly one out of four persons below the official poverty line is under eighteen years of age and many are only lingering slightly above that poverty line. In 2012, the poverty rate for children under the age of eighteen was 21.8 percent, compared to a rate of 13.7 percent for Americans aged eighteen to sixty-four years. (The poverty rate for Americans aged sixty-five and older was 9.1 percent in 2012.) The US Census Bureau uses a set of income thresholds that vary by family size and composition to determine who is in poverty. These thresholds are applied across the contiguous United States and do not vary geographically, so they do not account for variability in the cost of living across geographic regions in the United States. In 2012, the poverty threshold for one person under the age of sixty-five was $11,945; for a family of four, the poverty threshold was $23,492. Regarding education, those with no high school diploma live in poverty at higher rates than those who have completed high school. More than 20 percent of people with no high school diploma in all races are classified as working poor (Proctor & Dalaker, 2003). For high school graduates with no college education, 9.2 percent were classified as working poor in 2011. Among workers with an associate’s degree, 4.6 percent were considered poor, while only 2.4 percent of workers with a bachelor’s degree or higher were classified as poor.

Who Are the Working Poor?

Though employed, the working poor often find it difficult to make ends meet. In 2011, the working poor made up about 7 percent of the US labor force. Among Americans with full-time jobs, 4 percent were classified as working poor in 2011. About 14 percent of part-time workers were classified as working poor. About 13 percent of all service workers; 17 percent of workers in farming, fishing, and forestry jobs; and 10.6 percent of construction and extraction workers were classified as working poor in 2011. Wages for these professions of have not kept pace with the rising costs of housing, fuel, health care, education, and food, leaving many Americans struggling to afford necessities even while working.

Relative & Absolute Poverty

When people have no means to meet their basic needs, such as to adequately feed or house themselves or their dependents, they are said to live in absolute poverty. Homeless people fall into this category for obvious reasons. If people can afford the basic necessities of food and shelter for themselves and/or their dependents, but they cannot afford any of the other material comforts that an average working person might provide for herself, they are said to live in relative poverty. In other words, compared to others in society, they are living in poverty.

Income Distribution in the United States: How Equal Is It?

According to the categories determined by social scientists, even if they differ somewhat in percentages and terminology, it is obvious that income distribution in the United States is unequal and that wealth is concentrated in a small percentage of the American population. The top 1 percent of the American population controls about 43 percent of all the wealth in the country; the next 4 percent controls an additional 29 percent of the nation’s wealth. This leaves only 28 percent of the nation’s wealth distributed amongst the remaining 95 percent of all Americans (Dunn, 2012).

What Key Factors Produce Inequality in Wealth in the United States?

Inequality is an economic, political, and social issue. One major cause of social inequality and poverty is low wages. Fifty percent of all families living in poverty live on a family member's wages and one-third of those who are earning the family wages work full time (Proctor & Dalaker, 2003).

From Industrial to Post-Industrial Economy

There are problems inherent within the infrastructure of the United States economy, as well, that contribute to inequality and poverty. Most important, the United States has moved from an industrialized society with many factory and manufacturing jobs, to a postindustrial society based largely on services and data/information processing. US corporations have outsourced most manufacturing jobs to other countries where they can obtain cheap labor and avoid many of the restrictions on workplace safety and environmental integrity, leaving millions of American workers unemployed or needing to learn new job skills. These new jobs exist not in the industrial sector but in the service sector (Bluestone & Harrison, 1982). Service sector workers such as housekeepers, restaurant and fast food workers, and retail workers typically do not earn as much as manufacturing workers and these jobs often are part time or have little or no benefits attached to them.

Inheritance & the "Old Boys" Network

About 42 percent of the people who are considered the wealthiest people in the United States achieved their wealth through inheritance (Gilbert, 2003). In other words, these people are born into wealth and maintain their position by buffering their lives from the rest of society. The super-rich tend to affiliate themselves and their offspring with one another exclusively in what is typically referred to as an "old boys' network." They attend the same schools, move in the same social circles, and often sit on one another's corporate boards. Wealth then becomes a self-fulfilling prophecy for these people, and while Americans believe that the class system in the United States is an open system, with anyone being able to achieve the American dream and beyond with hard work, the chance of the bottom 95 percent of the population breaking through the barrier into the super-rich realm is very slim indeed. Beyond that, it has become increasingly difficult in the past three decades for the working poor to enter into the middle class and for members of the middle class to remain there.

Race & Ethnicity

While some two-thirds of those who live below the official poverty level are white, that figure can be misleading. About 12 percent of Americans who identified as white alone were living in poverty between the years 2007 and 2011. Disproportionately, about 25.8 percent of all African Americans and 27 percent of all American Indians and Alaska Natives continue to live below the poverty line (Proctor & Dalaker, 2003). About 22 percent of Americans of Hispanic origin reported living in poverty between 2007 and 2011. These statistics indicate that discrimination based on race and ethnicity and the social capital of “old boys” networks (which have historically excluded non-white Americans) continue to affect wages, social mobility, and wealth in American society.

Gender

Women make up about two-thirds of all adults living below the poverty line. More than 30 percent of families led by single mothers were living in poverty in 2012, compared to 16.4 percent of families led by single fathers. In total, 14.5 percent of American women lived in poverty in 2012, compared to 11 percent of American men. This "feminization of poverty" means that women are disproportionately represented among the poor because of their primary role in childrearing, inadequate family leave policies, and a persistent gender wage gap. Even the women who work steadily and full time continue to earn only about 78 cents for every dollar men earn in the United States.

Age

A high degree of poverty exists among the elderly and children under the age of eighteen. These statistics increase for African American and Latino children. In fact, American children of all races and ethnicities are poorer today than they were nearly three decades ago because of cutbacks in programs originally designed to alleviate the problems associated with poverty such as poor nutrition and health (Proctor & Dalaker, 2003). Among elders, women over the age of sixty-five years have twice the likelihood of being poor than older men (Proctor & Dalaker, 2003).

The Consequences of Inequality

The United States enjoys a class system, which, while imperfect, does allow some upward mobility between classes and from generation to generation. Consider the proud working class parents with a high school education background as they sit together at their child's graduation from law school. They can almost feel their child's graduation not only in academic terms, but socially, from working class to upper middle class. Of course, in the parent's school days, one only needed a high school diploma to land many good paying jobs. Today, a well-paying working- class job increasingly requires at least a two-year college degree. Post– high school education has become another big business in America.

Yet many parents do not have the pleasant experience of seeing their children graduate from college at all. Those who do finish high school and go on to college find that student loans have become a big business in the United States, with many students graduating from college owing enough money in student loans to equal a mortgage payment on a house. Others attempt to attend college on a part-time basis while they work or continue to live at home. This type of schedule takes perseverance and discipline.

Stratification in the Future

With the reduction in well-paying jobs through outsourcing and with inflation outstripping wage growth in the United States, many people are feeling the pinch. Some current economic conditions such as rising fuel prices may be short lived. But they are doing economic damage to all Americans except for the super-rich, who maintain a buffer from such hardships due to their extreme wealth and extensive political and economic power. Growing economic inequality in the United States will likely create significant political and social challenges. High levels of economic inequality have been found to stifle economic growth.

But the greatest hardship moves to the bottom of the social equality hierarchy: the poor and the working poor. The poorest of the poor, of course, suffer the most and have difficulty meeting the basic necessities of daily living and providing food, shelter, health care, and heating or cooling. Those who have lived in relative poverty are in danger of moving into the category of absolute poverty, where they cannot provide for the welfare of themselves and their families.

Viewpoints

Solutions to the Problem of Poverty in the United States

While the United States is among the wealthiest countries in the world, it is home to millions of impoverished people who are struggling to make ends meet. The US government is making efforts to alleviate poverty in the United States and reduce economic inequality that is hampering growth.

Education

Some experts cite high-quality early education for low-income children, with the federal government providing matching funds for state-sponsored programs, as a promising solution to ease poverty and facilitate social mobility. There is evidence that a good early childhood education sets the tone for success later on in high school and college. Furthermore, job training and higher education should be made accessible to a larger number of Americans through subsidies.

Others look at college education as the primary means of escaping poverty. Yet they also point to the high cost of college education for the poor and the working poor. Student aid does not fully cover costs for poor students. Furthermore, there needs to be reform in the financial aid system, the welfare system, and the taxation policy on higher education. Families with low incomes cannot be expected to contribute to a student's college finances to the extent currently required. It has also been recommended that college attendance count as work under welfare-to-work programs. These measures would help more poor students achieve the college education that could help pull them out of poverty (Ashburn, 2007).

Postpone Childbearing

Families, communities, schools, and individuals need to encourage young women to postpone childbearing until they are older and more capable of caring for children both emotionally and financially. Because poverty has been linked to gender and age, as well as to educational achievements, the government can support young women in choices regarding remaining in school and postponing childbearing (Sawhill, 2007).

Provide a Living Wage

Nearly one-third of working families in the United States struggled to make ends meet in 2012. Between 2002 and 2012, wages were stagnant or declined for the entire bottom 70 percent of the wage distribution (Mishel & Shierholz, 2013). Since the 1980s, economic growth has been diverted from worker paychecks to corporate profits; in 2012, after-tax corporate profits reached their greatest percentage of gross domestic product (GDP) in US history while workers’ wages fell to lowest share of GDP. The growing prevalence of the working poor in the United States underscores the importance of a living wage. This can be achieved with raising the minimum wage and with programs for affordable child and health care (Sawhill, 2007).

Programs such as New Hope strive to help the working poor by offering a social contract with volunteer participants to help supplement a worker's earnings. A host of cost-effective benefits become available to the participants as long as they work the minimum of thirty hours per week in a job they can obtain with help from the program. These benefits can change as a worker’s life circumstances change. For example, the person may become a parent and need health care or day care assistance (Gennetian, 2008).

Government Assistance

According to Shaefer and Edin, government aid, including food stamps, housing subsidies, and refundable tax credits such as the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), reduced the extreme poverty population by more than 60 percent in 2011 (Shaefer & Edin, 2012). With basic necessities met such as food, heat, and housing, the extremely poor can focus on returning to work or achieving at school.

Equal Opportunity for Women & Minorities

The feminization of poverty is well documented. Women must be given the opportunity to earn a living wage for themselves and their families. With divorce rates and single parent families on the rise, the income disparity between men and women must be eradicated for women to be better able to contribute to their households and to society.

Poverty in the United States still moves along racial lines. Statistics show that while many Americans are affected by low income and poverty, the numbers increase dramatically for African Americans, Latino Americans, and American Indians. The institutional racism that continues to exist in the United States must be eradicated with continuation and expansion of equal opportunity programs.

Terms & Concepts

Absolute Poverty: A level of economic deprivation that exists when individuals or families cannot obtain the most basic necessities of life such as food and housing.

Alienation: A state of being identified by Karl Marx regarding the workers, or proletariats, who realize their powerlessness over the bourgeoisie, or ruling class.

Bourgeoisie: Marx referred to the owners of the means of production, of two classes he believed society was comprised of, as the capitalists, or the bourgeoisie.

Capitalist Class: The term Karl Marx used to identify the owners of the means of production.

Class Conflict: A Marxian term that refers to the struggle between the two classes he identified, the capitalists and the workers, or the bourgeoisie and the proletariat.

Feminization of Poverty: A phenomenon in which women are disproportionately represented among those categorized as living in poverty.

Income: Economic gain which comes from wages, salaries, government assistance, and other assets.

Meritocracy: A hierarchical social system in which all positions are rewarded based on abilities and credentials rather than on connections with those in power.

Poverty: Lack of means or ability to provide basic necessities of life for oneself.

Prestige: How a person is regarded by others, either respectfully, or not, which determines status.

Proletariat: Karl Marx's term for working-class individuals.

Power: Being able to achieve one's will, or goal, despite opposition from others.

Relative Poverty: The condition of being able to afford basic necessities, but not able to maintain a standard of living compared to others in the same society.

Social Class: One grouping of people within a hierarchical system that is determined by the members' accumulation of wealth, power, and prestige.

Social Inequality: A society where certain groups of people receive more or fewer life chances based on their race, age, gender, socioeconomic status, and other factors.

Socioeconomic Status (SES): The measurement of income, occupation, and education to determine social class.

Stratification: Established inequalities in power, wealth, and status between categories of people within a single social system such as a class or caste system.

Wealth: The value of all of an individual's or a family's economic assets including income, personal property, and income-producing property, minus any debts.

Working Poor: Includes laborers and service-industry workers who work full time but do not earn enough to support themselves or their families.

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Suggested Reading

Blank, R. (1998). It takes a nation. Princeton: Princeton University Press.

Brady, D., Fullerton, A. S., & Cross, J. M. (2010). More than just nickels and dimes: A cross-national analysis of working poverty in affluent democracies. Social Problems, 57, 559–585. Retrieved November 19, 2013 from EBSCO online database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=55328072

Harding, D. (2003). Counterfactual models of neighborhood effects: The effect of neighborhood poverty on dropping out and teenage pregnancy. American Journal of Sociology, 109, 676–719.

Iceland, J. (2006). Poverty in America: A handbook (2nd ed.). Berkeley, CA: University of California Press.

Jencks, C., & Mayer, S. (1990). The social consequences of growing up in a poor neighborhood: Inner-City poverty in the United States. L. E. Lynn and M. G. H. McGeary, eds. Washington, D.C.: National Academy Press.

Rossi, M. M., & Curtis, K. A. (2013). Aiming at half of the target: An argument to replace poverty thresholds with self-sufficiency or ‘living wage’ standards. Journal of Poverty, 17, 110–130. Retrieved November 19, 2013 from EBSCO online database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=84918175

Rycroft, R. S. (2013). The economics of inequality, poverty, and discrimination in the 21st century. Santa Barbara, CA: Praeger. Retrieved December 31, 2014 from EBSCO online database eBook Academic Collection (EBSCOhost). http://search.ebscohost.com/login.aspx?direct=true&db=e000xna&AN=578959&site=ehost-live