V. Income vs, Wealth

LET’S TALK ABOUT MONEY! WEALTH, INCOME, & CONSTRUCTING SOCIAL CLASS SOC 3300 – Social Inequality Dr. M. C. Sengstock Professor of Sociology http://users.wowway.com/~marycay910 1

ISSUES FOR DISCUSSION: WHAT IS INCOME? … WEALTH? HOW DO THEY DIFFER? • What Do We Mean By Income? – What Does Thomas Shapiro (#5) Mean by Income?

• What Do We Mean By Wealth? – What Does Shapiro Mean By Wealth? 2

INCOME • Earnings From Work: – Salaries or Wages

• Substitutions for Earnings: – Pensions, Social Security – Disability Payments, Unemployment Insurance, Other Social Assistance

• Resources Obtained Over a Specific Period (Annually, Monthly, etc.) 3

WEALTH • Total Value of a Family’s Financial Resources – Minus All Debts • Includes: Stocks, Money in Banks, Other Investments • Business(es) • Property Owned: Home(s), Cars, Planes • Debts Are Subtracted from Above • Remainder Are the Family’s “ASSETS” 4

COMPARING INCOME & WEALTH • How Much INCOME Do YOU (Personally) Have? – Regular, Full-time Job? – Part-time Job? – Salary? Or Wages? What’s the Difference? • Salary: Known Amount Per Month/Week • Wages: Amount Per Hour – Changes With Number of Hours

– Regular Income from Social Security or Pension? – Irregular Income from Day Jobs? – No Regular Income?

• How Much WEALTH Do YOU Personally Have? Your FAMILY? – – – –

Own a Home or Condominium? A Business? Or Several? Own a Vacation Home? Own Any Other Real Estate (Rentals)? Have a Bank Account? How Much Is In It? Own Stocks, Bonds, Other Investments? 5

IMPORTANCE OF WEALTH What Does Wealth Do? … Allow People to Do? • Tide You Over for a “Rainy Day” • Save for the Future – Plan for Retirement • Save for the Future: Children, Grandchildren • Build Up FAMILY Resources For Posterity • Ethnic Community Goals: “He Has PROPERTY!”

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The Hidden Cost of Being African American: How Wealth Perpetuates Inequality (Thomas Shapiro, 2004 – #5)

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Interviewed Nearly 200 Families Asked About Their “Wealth” – Their “Assets” How They Plan to & Actually Acquire Wealth How They Use Their Assets

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WHAT PEOPLE SAID ABOUT “WEALTH” “Wealth”: Treated Differently from “Income” • People SPEND Income – They PRESERVE Assets • Wealth There for Emergencies: Personal Safety Net, Cushion Against Unexpected Job Loss, Health Crisis • Quotes: “Income Supplies Life Support; Assets Provide Opportunities.” • “Income is Limited. Assets You Hold Onto For the Future.” • “Wealth is Definitely Long Term. We Act As If It’s Not Even There.” 8

CORRELATING WEALTH & INCOME • Wealth in America (Lisa Keister, 2000) • Finds Little Correlation Between Wealth & Income • What Does This Mean? – – – – – –

People Who Have Wealth Primarily Have It From the PAST It Was INHERITED They Keep It In Reserve for Unexpected Expenses It Helps Them Get a Good Education, Perhaps Good Jobs But They Don’t Necessarily Make the Largest Salaries They Live a Life Style Which Those With ONLY Income: • Cannot Afford – Cannot Understand! • They Always Have a “Back-Up” 9

People Confuse Wealth & Income • True of General Public • Also True of Many Social Scientists & Research Studies – – – –

Research Almost Always Focuses on INCOME! Rarely Uses Wealth As a Variable! We Compare High – Middle – Low Income People We Do Not Look At How Much Wealth People Have – Or How “Wealthy” Differ From Those Without Wealth

• Perpetuated By the American Media 10

EXAMPLES OF WHAT WEALTH CAN DO • Assets to: – – – –

Send Kids to Private Schools “Good Contacts” Support Children in College  No School Loans “Legacy” Admission to College (vs. Affirmative Action) Provide Down Payments for Children’s Homes  Larger Homes, Better Neighborhoods, Better Schools – Provide Jobs/resources in Family Businesses • EX: Republican Nat’l Committeewoman: “Get a Job!” • Ann Romney: “Had To Get Use Daddy’s Stocks & Loans To Get Through College! 11

IMPACT ON AFRICAN-AMERICANS • • • • •

“Wealth Dearth” Main Impact: African-Americans Not Been In a Position to Accumulate Wealth Wealth Is Accumulated Over GENERATIONS Wealth Is Not the Work of 1 Individual Getting A Good Education & Good Job: – Provides a Good INCOME – It Does Not Produce WEALTH • That Requires Several Generations! 12

APPLICATION TO WHITE ETHNICS • Similar Impact on Other American Ethnic Groups – Jews Have Done Fairly Well in Getting Ahead – How Jews Came to Be Seen as “White” (Karen Bodkin) – Irish, Italian, Greek, Jewish Became Doctors, Judges, etc. (Mary Waters #2) – May Be Over-Stated Re Wealth – Many Italian & Polish & Some Irish Still Have Little Wealth

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WHY MAJOR IMPACT ON BLACKS? • • • •

Impact of Government Policies Other Institutional Policies AFTER Civil War & Reconstruction Blacks Ineligible for Government Programs: – 1935: Roosevelt – Social Security Act: Passed By Deals With Southern States: STATE Administration – Post WW II Benefits: FHA, VA, GI: Blacks Ineligible – Restrictive Covenants in Housing – Home Ownership: MAJOR Mechanism  Wealth 14

Home Ownership As Major Component of Wealth • For Most People – “The Home” Is the Main (Only ?) Component of Wealth • Minorities – esp. African-Americans – Missed Out on Many Early Aids to Home Ownership • Recent Drop in Real Estate Values  Left Many Families’ Home Investment in Shambles

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CONSEQUENTLY: • White English: Start Accumulating Wealth With a Major Asset – Began Pre-1900 • Other White Ethnic Groups: Began Around 1920 or Later – Had WW II Advantage • African-Americans: Only Begin With the Civil Rights Movement of the 1960s • Consequently: Still Far Behind in Wealth 16

GOVERNMENT IMPACT ON OPINION: ASSET POVERTY LINE (APL) Tool To Examine Resource Condition (“Wealth”) of American Families • Ability to Survive for 3 Months Without Income (Conservative Assumption – Most Need More)

• 1999: Monthly Poverty Line (Family of 4) = $1,392 • 3 x $1,392 = $4,175 – How Many Families Have It? • “Asset Poor” Families Have < $4,175 – Cannot Survive for 3 Months Without Help • What If We Used a 6 or 9 Month Assumption? – Gap Would Be Even Greater 17

EXAMPLES OF ASSET POVERTY • Typical African-American: $100K – Give 2.9% to Charity 25

Poverty: Individual or Systemic? 2 Views of Poverty: • Individual: The Media’s View – If You’re Poor, It’s Your Fault

• Systemic: The Reality: – Direct Result of Economic & Political Policies • Favor the Rich with Tax Cuts, Corp. Aid; • Deprive Poor of Jobs, Adequate Wages, Right to Unionize • Produce a Society in Which General Wages Decrease

– “Blaming the Victim” (Wm. Ryan) 26

Focus on Issues of “Wealthy Class” • Great Attention to Stock Market – Though Few People Own Stock • Attention to Taxes & Need to Decrease Them – Though Most Tax Decreases Favor Very Rich – Even the Poor Convinced Taxes Are Bad!

• Media Concern With “Extreme” Union Power • Little Attention to Corporate Political Influence

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Wealthy Not Defined as a Class • Wealthy Behavior as a “Class” Ignored • Wealthy Influence in Society Ignored – Supreme Court: Corporate Right to Fund Lobbyists

• Most Political Power in Hands of Millionaires! • Wealthy Use Their Influence • Wealthy Image as “Benevolent” – Usually Donate to Arts, Wealthy Causes – Generally Do Not Give to Agencies Helping Poor 28

Middle Class As Major Focus • • • •

If the Poor Are Demeaned … & Rich Are Not Defined As Rich … What’s Left? Emphasis on “Middle Class” – Everyone Not “Poor” Defined as “Middle Class” • Leaves Viewers, Readers Believing: – “We” (Rich & Working People) Are All the Same … – Except for Those Lazy, Good-for-Nothing Poor! 29

Evidence for Huge “Middle Class” • Surveys: Most People (75%-90%) Identify Themselves as “Middle Class” • Upper & Lower Class ID Is Rare (5%-10% Each) • Give Option of “Working Class”: – Divide “Middle Class” in Half – Even Objectively Poor Often ID As Middle Class – Impact of the Media’s Image of “the Poor”?

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Middle Class NOT a Working Class • How Did “Middle Class” Become “Middle”? • Most Started “Poor” – Worked Hard • Assisted By Government Programs: – Home Ownership Assistance – Educational Programs – Social Security, Unemployment, etc.

• Assistance from Labor Unions! (Our Parents?) • Today: Middle Class People Dissociate Themselves from Working Class! – Business Students Believe in Trusting Employers

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Reality of the Upper Class • Very Wealthy Control U.S. Society – Disproportionate Share of “Wealth” (vs. “Income”) – Have a Distinct Life Style – Interact Primarily Among Wealthy (Schools, Clubs) – Are a “Governing” Class – Run for Office, Get Elected, Get into Power – Ensure That Political & Economic Policies Favor Their Own Interests (Taxes, Environment, Trade) – Avoid Societal Problems Through Private Programs • Private Police, Schools, Clubs, etc. 32

Summary • U.S. Has Highly Structured Class System • Mass Media Influence Public Opinion re Economy & Social Class System • Wealthy Control Society’s Economy, Politics – But Not Viewed as “Wealthy” by Society

• Most People ID as “Middle Class” • Middle Class Dissociate Themselves from “Working Class” • Poor Are Demeaned & Blamed for Their Victimization

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