That our society is stratified is obvious. Americans talk a lot about equality of opportunity, but we live in a society defined by inequality of condition. Some people have much more of the things that matter: wealth, status, power, leisure, health, etc.
Stratification seems to be a universal characteristic of human societies. It is no surprise, then, that sociologists have long tried to explain the causes and consequences of stratification. We'll briefly survey some of the classical and contemporary explanations.
Kingley Davis and Wilbert Moore articulated the classical functionalist explanation of stratification. In their view, stratification is necessary because of the role it plays in the operation of any society. Although the specific system of stratification varies across communities, its function is constant. Davis and Moore suggest that stratification serves to distribute members of the community into the given social positions, and to motivate them to perform the duties associated with those positions.
The problem which stratification solves, say Davis and Moore, is that some positions are more valuable and/or more desirable than others. If all social positions were equivalent, stratification would not be necessary. But because all positions are not created equal, a society needs some mechanism to put people into positions. Differential rewards, such as income and status, provide the motivation to individuals to take and perform the positions that a society needs.
Since Davis and Moore first explained their view, in 1945, a number of alternative perspectives on stratification have been advocated. Melvin Tumin has suggested that it is not so easy to determine which, if any, social positions are more "functionally important" in a given society, and therefore, which require greater rewards. Often, our perceptions of which positions are important is a consequence of the kind of rewards associated with them in contemporary society. In other words, we think of physicians as more important than teachers not because of some inherent characteristics in the positions, but rather, because they tend to earn higher incomes and enjoy greater prestige. As a result, we can't turn around and claim that the rewards follow from their functional value; to do so would be tautological.
Tumin also points out that societies that are more rigidly stratified are less likely to discover and develop the talents of its members. Because the rewards that are supposed to motivate the most talented into the most important positions are passed on between generations, as a result of inheritance, the relationship between talent and social standing is especially problematic. The advantages of growing up in households with accumulated wealth and status are likely to mask the natural distribution of talents in a community.
Figure 1 shows the trend in family income shares for the five quintiles from 1947 to 1995. The trend toward greater inequality can be observed by the fact that the bar for the top quintile, the 20% of Americans with the largest incomes, grows while the bars for the lowest quintiles shrink. (Point to the animation to see the data in tabular form.)
Figure 1. Income Inequality.
The animation shows two distinct
periods. The first, from 1947 to 1967, is characterized by increasing
equality. Notice that the share of the top quintile declines while the
share of the bottom quintile increases. During the second period, from
1967 to 1995, the reverse trend is shown. Inequality increases. The
share of the top quintile grows at the expense of the bottom 60
percent. Only the share of the fourth quintile remains stable over
this period.
Figure 2 shows the trend in inequality of wealth from 1962 to 1992. Wealth represents a household's net worth, including bank accounts, pensions, insurance, property (e.g., residence), and the various forms of capital (e.g., stocks and bonds, trusts, business equity, commercial property). The latter form of wealth is held primarily by the top quintile. (Point to the animation to see the data in tabular form.)
Figure 2. Wealth Inequality.
The existing inequality of wealth is even
more dramatic than that of income. More than 80 percent of the total
private wealth in the U.S. is held by the top quintile. The bottom
quintile, in fact, possesses negative wealth--that is, their debts
exceed their assets.
The trend for wealth, like that for income, is toward increased inequality. Once again, the top quintile increases its share while the bottom 60 percent is in decline.
Figure 3 shows the trend in median family income, 1973 to 1995, broken down by race. The first bar represents median family income for whites (W), the second for blacks (B) and the third for hispanics (H). (Point to the animation to see the data in tabular form.)
Figure 3. Income Inequality by Race.
As the animation shows, median family income
is, in general, growing. Both white and black families saw a gain of
about $2,000 during this period. Hispanic families, however,
experienced a decline of about $3,500. As a result, black families
moved toward equality with white families; the median black family was
earning 60.9 percent of the median white family income by 1995, up
from 57.7 percent in 1973. Hispanic families, in contrast, fell
further behind, with the median family earning 57.6 percent the white
family income in 1995, down from 69.2 percent in 1973.
In fact, median family income increased for all three groups from 1973 to 1989. White and hispanic families experienced a decline from 1989 to 1995, whereas black families saw a small increase.
Figure 4 shows the trend in poverty rates broken down by gender and age. The graph shows two distinct comparisons. The yellow bars represent households headed by nonelderly men (M) and women (W). The difference between them shows the gender gap in poverty rates. The second comparison involves the poverty rates of the households headed by the nonelderly, as indicated by the yellow bars, and elderly (E), as indicated by the orange bar. The difference in the height of the orange bar compared to the yellow ones suggests the age gap in the poverty rates. (Point to the animation to see the data in tabular form.)
Figure 4. Poverty, Gender & Age.
As the animation shows, the poverty rates
fell dramatically for all groups from 1949 to 1973. This is the result
of both the postwar economic boom and the development of anti-poverty
programs beginning with the Johnson administration, the "War on
Poverty."
In the more recent period, 1973 to 1991, the poverty rate for nonelderly men rose slightly. The rate for nonelderly women fell a little. Only the rate for the elderly showed a significant decline, though it was nowhere near the steep decline of the earlier period. The explosive growth of the postwar years yielded to a cycle of slow growth and recession. Anti-poverty programs were cut as politicians became more concerned with reducing federal spending and less interested in fighting poverty.
The decline in poverty was not evenly distributed. The elderly benefitted most from the social welfare programs associated with the "War on Poverty." The poverty rate for the elderly continued to decline in the 70s and 80s because programs designed to aid the elderly were spared from the most significant cuts in welfare spending.
All the available data tell the same story: in the postwar period, from 1949 to 1972, inequality was on the decline. Since then, inequality has been increasing. Both across the major demographic groups (race, gender, age, household, education) and within them, despite the slow growth of the economy, the gaps between the "haves" and "have nots" are widening.
Social scientists want to do more than describe the social world. We want to explain why things are the way they are. With regard to inequality, we want to account for why inequality diminished from 1949 to 1973 and increased since. Our explanations contribute to our knowledge of the way the social world works and can assist in the development of social policy and programs to improve the quality of life for all Americans.
In the early 1970s, most social scientists believed that the booming economy would solve the problems of poverty and inequality. The postwar period, after all, seemed to justify this optimism. Economist James Tobin (1967) went so far as to predict that poverty, as officially measured, would cease to exist by the end of the decade.
Events proved otherwise. Two things changed after 1973: the economy stagnated and the public commitment to an anti-poverty agenda diminished.
Social scientists have disagreed about the explanation of the trend in inequality. Frequently, this disagreement is rooted in politics: social scientists have values and commitments, just like other social actors, and sometimes these exert influence over the way we think about data, causes and consequences. In general, there are several different kinds of explanations offered about contemporary inequality; we will examine two: (A) institutional changes in the wage structure; and, (B) entry of large cohorts, namely young workers and married women, into the labor market.
One possible cause of the increase in inequality is the relative decline in the minimum wage. The minimum wage was raised periodically, in the 60s and 70s, to keep up with inflation. In the 80s, the Reagan administration made a philosophical decision not to increase the minimum wage, arguing that it did more harm than good. The timing of the change in policy suggests it might play a role in explaining the trend in inequality. Economic simulations performed by Horrigan and Mincy (1993), however, suggest a small effect, at best. Inequality has been increasing since the 80s even for skilled workers, who are unaffected by changes in the minimum wage.
Another possible explanation concerns the trend in unionization. Increases in union membership tend to decrease overall inequality. Union membership has been in decline the 50s, but the pace of the decline increased sharply after 1975. Unionization has fallen to about 18%, from 29% in 1975. According to calculations by Freeman (1993), declines in union membership account for only about 20% of the increase in inequality.
When large numbers of workers enter the labor market, downward pressure on wages results. The more workers of a certain kind there are competing for jobs, the lower their wages tend to be. In the 70s, large numbers of young workers, the Baby Boomers, and married women entered the labor market. The number of new workers expanded by more than two and a half percent in the 70s, up from 1.7% in the 60s. If this influx depressed wages for new workers, inequality would be expected to increase. Even if this helps explains the increase in inequality during the 70s, it cannot account for the continued increases in inequality in the 80s, when the labor force expanded at about the same rate as the 60s.
Another change in the labor force that is sometimes linked to increased inequality is immigration. Immigrants, legal and illegal, are believed to exert a downward pressure on wages at the low end of the market, because immigrants are less likely to have a college degree than the rest of the workforce (Borjas, Freemand & Katz 1992). This fact is peripheral to the trend in inequality, however, because immigration is concentrated in particular areas, such as California, New York and Florida, but the increase in inequality occurred nationwide. In addition, employers did not hire a larger proportion of immigrants, even though they cost less, during the 80s and 90s.
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