Sociology in Conflict and Order: Chapter 10: Class – Flashcards

Ten days after the terrorist attacks on the World Trade Center and the Pentagon, Congress created the Victim Compensation Fund to compensate the families of the 3000 who died. The total government outlay was nearly $7 billion, with the individual compensation ranging from $250,000 to $7.1 million (tax-free). The variation depended on the age, estimated lifetime earnings, and family obligations of the victim. Is that fair? The counterargument is that the government's compensation plan was to provide for the victim's families with a safety net to ensure that they maintain their current standard of living, in short, to allow them to remain in the same economic strata in the stratification system. So, what is a life worth? Apparently, it depends on one's social class.

The ranking based primarily on economic resources.

1) Wealth 2) Income 3) Education 4) Occupation

Wealth is a person's net worth (assets minus liabilities).

Income is the amount of money earned.

While income is annual, wealth is generational (that is, it is cumulative and passed from generation to generation). The distribution of both is highly unequal in US society.

The top 1% of Americans take in nearly one-fourth of all personal income. Income inequality is increasing in US society.

In the US, people also vary considerably in educational attainment. The amount of formal education an individual achieves is a major determinant of his or her occupation, income, and prestige.

There is not only a generational correlation between education and income but an intergenerational one as well. The children of the poor and uneducated tend not to do well in school and eventually drop out (regardless of ability), while the children of the educated well-to-do tend to continue in school (regardless of ability).

African American, Latino,, and Native American students lag behind their White peers in graduation rates and most other measures of student performance

Occupations vary systematically in prestige. The degree of prestige and difference accorded to occupations is variable.

The culture provides a ready-made, well-understood, relatively uniform ranking system based on several related factors: (1) the importance of the task performed (that is, how vital the consequences of the tasks are for the society), (2) the degree of authority and responsibility inherent in the job, (3) the native intelligence required, (4) the knowledge and skills required, (5) the dignity of the job, and (6) the financial rewards of the occupation.

Society also presents us with warped images of occupations, which leads to the acceptance of stereotypes. The media, for example, through advertisements, television, and movie portrayals, evoke positive images for middle- and upper-class occupations and negative ones for lower-prestige occupations.

The ever-increasing wealth and income inequality has implications for democracy, crime, and civil unrest. The greater the wealth and income inequality in society, the greater the economic and social fragmentation. The income gap in American is eroding the social contract. The US, compared to other advanced industrial societies, has the highest proportion of its population below the poverty line, a withering bond among those of different social classes, a growing racial divide, and an alarming move toward a two-tiered society.

Evidence for this is found in our political discourse. A high degree of inequality causes the comfortable to disavow the needy. It increases the psychological distance separating these groups, making it easier to imagine that defects of character or differences of culture, rather than an unpleasant turn in the larger schemes of economic history lie behind the separation. Since politicians represent the monied interests, the wealthy get their way, as seen in the decline in welfare programs for the poor, the demise of affirmative action, and tax breaks that benefit them disproportionately. Most telling, the inequality gap is not part of the political debate, nor is the plight of those with no effective access to health care.

Democracy is on the wane as many opt out of the electoral process. The affluent are more likely to vote, because the politicians of both parties are in tune with their wishes. The poor, near-poor, and working classes, in contrast, are not likely to vote, presumably because they are not connected to either political party and the political process works against their interests. As a result, the US has the lowest voter turnout among the industrialized nations, further evidence of the inequality gap and the erosion of social solidarity in society.

Social class is a complex concept that centers on the distribution of economic resources. That is, when a number of individuals occupy the same relative economic rank in the stratification system, they form a social class.

The dominant view is that there are no clear class boundaries, except perhaps those delineating the highest and lowest classes. A social class is not a homogeneous group, given the diversity within it, yet there is some degree of identification with other people in similar economic situations. Also, people have a sense of who is superior, equal, and inferior to them.Similarly, there tend to be commonalities in lifestyles and tastes among people in a similar economic position. But even though we can make fairly accurate generalizations about people in a social class, the heterogeneity within in precludes accurate predictions about each person included.

Sociologists agree that social classes exist and that money is a central criterion for classification, but they disagree on the meaning of social classes for people.

Order theorists use the terms income, occupation, and education as the fundamental indicators of social class, with occupation as central. Occupational placement determines income, interaction patterns, opportunity, and lifestyle. Lifestyle is the key dependent variable. Each social class is viewed as having its distinct culture. There are believed to be class-specific values, attitudes, and motives that distinguish its members from other classes. The orientations stem from income level and especially from occupational experiences.

1. The Upper-Upper Class: Sometimes referred to as the old rich, the members of this class are wealthy, and because they have held this wealth for several generations, they have a strong in-group solidarity. They belong to exclusive clubs and attend equally exclusive boarding schools. Their children intermarry, and the members vacation together in posh, exclusive resorts around the world.

2. Lower-Upper Class: The wealth of the members is of relatively recent origin. The new rich differ from the old rich in prestige, but not necessarily in wealth. Great wealth alone does not ensure acceptance by the elite as a social equal. The new rich are not accepted because they differ from the old rich in behaviors and lifestyles. The new rich is composed of the self-made wealthy. These families have amassed fortunes typically through business ventures or because of special talent. Additionally, some professionals may become wealthy because of their practice and/or investments. Finally, a few people may become very wealthy by working their way to the top executive positions in corporations, where high salaries and lucrative stock options are common.

3. Upper-Middle Class: The key distinguishing feature of this class is high prestige (but not necessarily high income) jobs that require considerable formal education and have a high degree of autonomy and responsibility. This stratum is composed largely of professional people, executives, and businesspeople. They are self-made, having accomplished their relatively high status through personal education and occupational accomplishments.

4. Lower-Middle Class: These are white-collar workers who work primarily in minor jobs in bureaucracies.

5. Upper-Lower Class: These people work at repetitive jobs with little autonomy that require no creativity. They are blue-collar workers who, typically, have no education beyond high school. They are severely blocked from upward mobility.

6. Lower-Lower Class: This class is composed of unskilled laborers whose formal education is often less than high school. The chronically unemployed are in this class. When they do work, it is for low wages, no fringe benefits, and no job security. Minority-group members are disproportionately found in this category. These people are looked down on by all others in the community. They live on the other side of the tracks. They are considered by other people to be undesirable as playmates, friends, organization members, or marriage partners. Lower-lowers are thought to have a culture of poverty.

Conflict theorists argue that order theorists understate the centrality of money in determining where people fall in the class system. Conflict theorists, in contrast to order theorists, focus on money and power, rather than on lifestyle. Conflict theorists also differ from order theorists in how they view occupation as a criterion for social class. A social class, in this view, is a number of individuals who occupy a similar position within the social relations of economic production. What is important about social classes is that they involve relationships of domination and subordination that are made possible by the systematic control of society's scarce resources. Using these three criteria—money, relation to the means of production, and power—conflict theorists tend to distinguish five classes.

1. Ruling Class. The people in this class hold most of the wealth and power in society. The richest 1% own as much as or more than the bottom 90% of the population. But the ruling class is smaller than the richest 1%. These are the few who control the corporations, banks, media, and politics. They are the very rich and the very powerful. The key is that the families and individuals in the ruling class own, control, govern, and rule the society. They control capital, markets, labor, and politics. In Marxist terms, the great wealth held by the ruling class is extracted from the labor of others.

2. Professional-Managerial Class. Four categories of people are included in this class—managers, supervisors, professionals in business firms, and professionals outside business but whose mental work aids business. The most powerful managers are those near the top of the organizational charts who have broad decision-making powers and responsibilities. They have considerable power over the workers below them. There are also lower-level managers, forepersons, and other supervisors. They have less training than do the organizational members, have limited authority, and are extensively controlled by top and middle managers. These people hold a contradictory class position. They have some control over others, which places them in this category, but their limited supervision of the routine work of others puts them close to the working class. The key for inclusion in this class, though, is that the role of supervisor places the individual with the interests of management in opposition to the working class. Another social category within this class includes professionals employed by business enterprises. These professionals have obtained their position through educational attainment, expertise, and intellect. Unlike the ruling class, these professionals do not own the major means of production, but rather they work for the ruling class. They do not have supervisory authority, but they influence how workers are organized and treated within the organization. They are dominated by the ruling class, although this is mediated somewhat by the dependence of the elite on their specialized knowledge and expertise. Finally, there are professionals who have substantial control over workers' lives but who are not part of business enterprises. Their mental labor exists outside the corporation, but nonetheless their services control workers. Included in this category are social workers, educators, doctors, and psychologists.

3. Small-Business Owners. The members of this class are entrepreneurs who own businesses that are not major corporations. They may employ no workers or a relative few. The income and power over others possessed by members of this class vary considerably.

4. Working Class. The members of this class are the workers in factories, restaurants, offices, and stores. They include both white-collar and blue-collar workers. White-collar workers are included because they, like blue-collar workers, do not have control over other workers or even over their own lives. The distinguishing feature of this class is that they sell their labor power to capitalists and earn their income through wages. Their economic well-being depends on decisions made in corporate boardrooms and by managers and supervisors. They are closely supervised by other people. They take orders.

5. Poor. These people work for minimum wages and/or are unemployed. They do society's dirty work for low wages. At the bottom in income, security, and authority, they are society's ultimate victims of oppression and domination.

Wright and his colleagues (1982) made an empirical investigation of the US class structure using the conflict approach. Among their results are several interesting findings. First, it is incorrect to rank occupations, as order theorists do, because within the various occupational categories there are managers/supervisors and workers. Second, social class is closely related to gender and race. Wright and his associates found that women are more proletarianized, regardless of occupational category.

In the conflict vision, class divides society into two conflicting camps that contend for control. In this dichotomous image, classes are bounded, identifiable collectives, each one having a common interest in the struggle over control of society. In the order vision, class sorts out positions in society along a many-runged ladder of economic success and social prestige: in this continuous image, classes are merely relative rankings along the ladder. People are busy climbing up or slipping down these social class ladders, but there is no collective conflict organized around the control of society.

Occupation is critical to both, but for very different reasons. For the order theorist, occupations vary in how people evaluate them; some occupations are clearly superiors to others in status. Thus, the perceptions of occupations within a population indicate clearly that there is a prestige hierarchy among them and the individuals identified with them. The conflict theorist also focuses on occupations, but without reference to prestige. Where a person is located in the work process determines the degree of control that individual has over others and himself or herself. The key to determining class position is whether one gives orders or takes orders. Moreover, this placement determines one's fundamental interests because one is either advantaged or disadvantaged.

Second, order theorists focus on commonalities in lifestyles among individuals and families similar in education, income, and occupation. These varying lifestyles are real. Although real, the emphasis on lifestyle misses the essential point, according to conflict theorists. For them, lifestyle is not central to social class: giving or taking orders is. Conflict theorists also point to two important implications of the emphasis on lifestyle. First, although culture is a dependent variable, the culture of a social class is assumed to have power over its members that tends to bind them to their social class. A second implication is the implicit assumption that these cultures are themselves ranked, with the culture of the higher classes being more valued. Conflict theorists have the opposite bias—they view the denigration of society's losers as blaming the victim. From this perspective, the higher the class, the more its members are guilty of oppressing and exploiting the labor of those below.

Finally, each view of social class is useful for understanding social phenomena. The order model's understanding of inequality in terms of prestige and lifestyle differences has led to research that has found interesting patterns of behavior by social location, which is one emphasis of sociology. Similarly, the focus of the order model has resulted in considerable research on mobility, mobility aspirations, and the like, which is helpful for the understanding of human motivation as well as the constraints on human behavior. The conflict model, on the other hand, examines inequality from differences in control. The resulting class division is useful for understanding conflict in society.

One's wealth is the determining factor in a number of crucial areas, including the chance to live and the chance to obtain those things that are highly valued in society.

Economic position has a great effect on how long one will live, or, in a crisis, who will be the last to die. Apparently, even in a disaster, socioeconomic position makes a difference—the higher the economic status of the individual, the greater the probability of survival. Health and death are influenced greatly by social class. Economic disadvantage is closely associated with health disadvantages. An obvious health advantage of the affluent is access to health-promoting and health-protecting resources and, when needed, access to medical services, paid for, at least in part, typically, with health insurance. Health insurance in the US is typically tied to employment, with employers and employees splitting the cost. Structural changes in the US economy have resulted in a decline in employment-related heath insurance coverage. And the lower the prestige and the lower the wages in the job, the less likely the pay will include a health benefits package. The common belief is that the poor are accountable for their health deficiencies. The essence of this argument is that the problems of ill health that beset the poor disproportionately are a consequence of their different lifestyle. This approach, however, ignores the fundamental realities of social class—that is, privilege in the social stratification system translates both directly and indirectly into better health in several major ways.

1. The privileged live in home, neighborhood, and work environments that are less stressful. The disadvantaged are more subject to stresses. 2. Children of privilege have healthier environments in the crucial first 5 years of life. 3. The privileged have better access to and make better use of the health care system. 4. The privileged have health insurance to pay for a major portion of their physician, hospital, diagnostic test, and pharmaceutical needs.

The lower the status, the greater the proportion of divorce or desertion. The lack of adequate resources places a burden on intimate relationships.

Involuntary conscription into the US Army—the draft system—works to the disadvantage of the uneducated. The Supreme Court has further helped the educated by ruling that a person can be a conscientious objector on a basis of either religion or philosophy. Young intellectuals can use their knowledge of history, philosophy, and even sociology to argue that they should not serve. The uneducated will not have the necessary knowledge to make such a case. Educated young men who end up in the armed services are more likely to serve in noncombat supply and administrative job. The nonskilled will generally end up in the most hazardous jobs. When the draft is not used, as is the case at present in the war in Afghanistan, the personnel in the lower ranks of the military come disproportionately from the disadvantaged segments of society. This occurs because the military offers a job and stability for young people who find little or no opportunity in the job market.

Low-income people are more likely to be arrested, to be found guilty, and to serve longer sentences for a given violation than are people in the middle and upper classes. Why is the system of justice unjust? The affluent can afford the services of the best lawyers for their defense, detectives to gather supporting evidence, and expert witnesses such as psychiatrists. The rich can afford to appeal the decision to a series of appellate courts. The poor, on the other hand, cannot afford bail and must await trial in jail, and they must rely on court-appointed lawyers, who are usually among the least experienced lawyers in the community and who often have heavy caseloads. A class bias held by most citizens affects the administration of justice. This bias is revealed in a set of assumptions about people according to their socioeconomic status.

In general, life chances depend on wealth—they are purchased. The level of educational attainment is the crucial determinant of one's chances of income. Inequality of educational opportunity exists in all educational levels in many subtle and not-so-subtle forms. It occurs in the quality of education when schools are compared by district. Districts with a better tax base have superior facilities, better-motivated teachers, and better techniques than do the poorer districts. Within each school, regardless of the type of district, children are given standardized tests that have a middle-class bias. Armed with these data, educators place children in tracks according to ability. These tracks thus become discriminatory, because the lowest track is composed disproportionately of the lower socioeconomic category. These tracks are especially harmful in that they structure the expectations of the teacher.

This emphasis fits with the order model. It assumes that status (as opposed to class) differences are gradations, corresponding with occupation. Moreover, there is the assumption that a high degree of social mobility exists in US society, with a growing middle mass of workers enjoying a high standard of living. The US has a relatively open system. Social mobility is not only permitted, but is also part of the US value system that upward mobility is good and should be the goal of all people in the US. The US, however, is not a totally open system. All US children have the social rank of their parents while they are youths, which in turn has a tremendous influence on whether a child can be mobile (either upward or downward). Actually, the US is less mobile than other wealthy nations.

Social mobility refers to an individual's movement within the class structure of society.

Vertical mobility is movement upward or downward in social class.

Horizontal mobility is the change from one position to another of about equal prestige.

Intergenerational mobility refers to vertical movement comparing a daughter with her mother or a son with his father.

Intragenerational mobility is the vertical movement of the individual through his or her adult life.

Some societal factors increase the likelihood of people's vertical mobility regardless of their individual effort. Economic booms and depressions obviously affect individuals' economic success. Technological changes also can provide increased chances for success as well as diminish the possibilities for those trained in occupations newly obsolete. Finally, the size of one's age cohort can limit or expand opportunities for success.

The long-term trend in social mobility has been upward, but since the 1970s this trend has reversed.

While there are many individual exceptions, the overall trend by race/ethnicity is that the gap in wealth/income between African Americans and Latinos and the more privileged Whites has remained about the same.

In sum, the commonly accepted belief of people in the US that ours is a meritocratic society is largely a myth. Equality of opportunity does not exist because (1) employers may discriminate on the basis of age, race, sex, ethnicity, or sexuality of their employees or prospective employees; (2) educational and job training opportunities are unequal; and (3) the family has great power to enhance or retard a child's aspirations, motivation, and cognitive skills.

The schools play a major part in both perpetuating the meritocratic myth and legitimizing it by giving and denying educational credentials on the basis of open and objective mechanisms that sift and sort on merit. The use of IQ tests and tracking, two common devices to segregate students by cognitive abilities, are highly suspect because they label children, resulting in a positive self-fulfilling prophecy for some children and a negative one for others. Moreover, the results of the tests and the placement of children in tracks because of the tests are biased toward middle and upper class experiences. Educational attainment, especially receiving a college degree, is the most important predictor of success in the US. But a college education is becoming more difficult to attain for the less than affluent.

Christopher Jencks and his associates provide the most methodologically sophisticated analysis of the determinants of upward mobility in their book Who Gets Ahead? Their findings, summarized, show the following as the most important factors leading to success.

1. Family Background is the most important factor.

2. Educational Attainment—especially graduating from college—is very important to later success. It is not so much what one learns in school but obtaining the credentials that counts. The probability of high educational attainment is closely tied to family background.

3. Scores from intelligence tests are by themselves poor predictors of economic success. Intelligence test scores are related to family background and educational attainment. The key remains the college degree. If people with a high IQ do not go to college, they will tend not to succeed economically.

4. Personality traits of high school students, more than grades and IQ, have an impact on economic success. No single trait emerges as the decisive determinant of economic success, but rather the combined effects of many different traits are found to be important. These are self-concept, industriousness, and the social skills or motivations that lead students to see themselves as leaders and to hold positions of leadership in high school.

Not only are the financial, educational, and demographic assets of one's family important to success, but so, too, are the assets of one's social environments. The irony is that although the chances of the poor being successful are small, the poor tend to support the inequality generated by capitalism

The line separating the poor from the nonpoor is necessarily arbitrary. The Social Security Administration (SSA) sets the official poverty line based on what it considers the minimal amount of money required for a subsistence level of life. To determine the poverty line, the SSA computes the cost of a basic nutritionally adequate diet and multiplies that figure by three. This figure is based on a government research finding that poor people spend one-third of their income on food. Thereafter, the poverty level was readjusted annually using the consumer price index to account for inflation. Critics of the measure argue that it does not keep up with inflation, that housing now requires a much larger portion of the family budget than food, that there is wide variation in the cost of living by locality, and that the poverty line ignores differences in medical care needs of individual families. Were a more realistic formula used, the number of poor would likely be at least 50% higher than the current official number.

The official number of poor people is minimized because government census takers miss many poor people. Those most likely to be overlooked in a census live in high-density urban areas where several families may be crowded into one apartment or in rural areas where some homes are inaccessible. Some workers and their families follow a harvest from place to place and have no permanent home, as is the case for transient and homeless people. This underestimate of the poor has important consequences, because US Census data are the basis for political representation in Congress, for the distribution of welfare, and for instituting new governmental programs or abandoning old ones.

Income in the US, as we have discussed, is maldistributed by race.

In 2009, 7.16 million foreign-born individuals in the US (19.0% of the foreign-born) were poor. Of these poor foreign-born, 1.7 million were naturalized citizens and 5.4 million were noncitizens, for poverty rates of 10.8 and 25.1%, respectively.

Women are more likely to be poor than men. This is the consequence of the prevailing institutional sexism in society that, with few exceptions, provides poor job and earnings opportunities for women. This gender disparity, combined with the high frequency of marital disruption and that number of never-married women with children, results in the high probability of women who head families being poor.

The feminization of poverty implies that the relatively large proportion of poor women is a new phenomenon in US society. Thus, the term obscures the fact that women have always been more economically vulnerable than men, especially older women and women of color. But when women's poverty was mainly limited to these groups, their economic deprivation was mostly invisible. The plight of women's poverty became a visible problem when the numbers of poor White women increased rapidly in the past decade or so with rising marital disruption. Even with the growing numbers of poor White women, the term feminization of poverty implies that all women are at risk, when actually the probability of economic deprivation is much greater for certain categories of women. The issue, then, is not only gender but class and race as well.

Although there are more White children in poverty, children of color are disproportionately poor: especially noteworthy is that the US has the highest youth poverty rate of any Western nation. The consequences of childhood poverty are grave. Children in poverty are more likely than their more fortunate peers to suffer from stunted growth, score lower on tests and be held back in school, suffer from lead poisoning (which may lead to mental retardation), and suffer a host of other problems.

Contrary to popular belief, the elderly as a category (age 65 and older) have a lower poverty rate than the general population. This seeming anomaly is the result of government programs for the elderly being indexed for inflation, whereas many welfare programs targeted for the young have been reduced or eliminated since 1980. While the elderly are underrepresented in the poverty population, the rate increases with age. This is likely because as the age increases, the proportion of women in that category increases.

Poverty is not randomly distributed geographically; it tends to cluster in certain places. Regionally, the area with the highest poverty is the South (19.9%), compared with 15.3% in the West, 13.9% in the Midwest, and 12.8% in the Northeast. The South and West have the highest poverty rates because they have large minority populations and relatively high concentrations of recent immigrants. The poverty rate in 2010 was higher in the central cities (19.7%) than in suburban areas (11.8%).

With respect to central cities, two trends are significant: The proportion that is poor is increasing in the central cities; and increasingly, the poverty is more and more concentrated (that is, the poor are more and more likely to be living in already poor neighborhoods). This spatial concentration of poverty means that the poor have poor neighbors, and the area has a low tax base to finance public schools, and a shrinking number of businesses because they tend to move to areas where the local residents have more discretionary income. These factors mean a reduction in services and the elimination of local jobs.

Although poverty is generally more concentrated in cities, the highest concentrations exist in four rural regions: The Mississippi Delta, which extends across seven states, where the poor are mostly African American; the Rio Grande Valley/Texas Gulf Coast/US-Mexico border, a four-state region where the poor are largely Latino; the Native American reservations of the Southwest and Plains states; and Appalachia, a twelve-state region characterized by marginal farmland and a declining mining industry where the poor are predominantly White.

There are important differences between the rural poor and the urban poor. The rural poor have some advantages (low-cost housing, raising their own food) and many disadvantages (low-paid work, higher prices for many products, fewer social services, fewer welfare benefits) as compared with the urban poor.

Poverty is greatest among those who do not have an established residence. People in this classification are typically the homeless and migrant workers.

Finally, the US, when compared to other major industrialized democracies, has more poverty, has more severe poverty, and supports its poor people least.

Use of the official poverty line designates all people below it as poor whether they are a few dollars short of the threshold or far below it. Most impoverished individuals and families have incomes considerably below the poverty threshold. An estimated 6.7% of the population (20.5 million Americans) was severely poor (that is, those people living at or below half the poverty line). Typically, the severely poor must use 50% or more of their meager income for housing. This category of the severely poor has doubled since 1979. This upsurge in the truly destitute occurred because (1) many of them live in rural areas that have prospered less than other regions; (2) a decline in marriage (and a rise in divorce) resulted in a substantial increase in single mothers and unattached men; and (3) public assistance benefits, especially in the South, have steadily declined since 1980.

First, about 4 in 5 five poor households contained at least one full-time or part-time worker in 2009. They hold menial, dead-end jobs that have no benefits and pay the minimum wages or less. Low wages are the problem. Second, many of the poor who do not work are too young (under age 18), are too old (65 and older), or have a work disability. Third, people of color are more likely to be poor than Whites in the same working category—that is, unemployed, having worked less than full-time, and worked full-time. Fourth, the main increase in the number of poor since 1979 has been among the working poor. This is the result of declining wages, an increase in working women who head households, and a very low minimum hourly wage that has not kept up with inflation. The lot of the working poor is similar to that of the nonworking poor on some dimensions and worse on others. They do society's dirty work for low pay and no benefits. Like the poor, they live in substandard housing and their children go to underfinanced schools. They are poor but, unlike the nonworking poor, they are not eligible for many government supports such as subsidized housing, medical care, and food stamps. For those poor not officially in the labor force, many work in the informal economy by cleaning, painting, providing child care, repairing automobiles or appliances, or other activities. Clearly, these people are workers, they just are not in the official economy.

In 1996, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act, which reformed the welfare system. This new law shifted the Aid to Families with Dependent Children (AFDC) welfare program from the federal government to the states, mandated that welfare recipients find work within two years, limited welfare assistance to five years, and cut various federal assistance programs targeted for the poor by $54.5 billion over six years. Thus, the law made assistance to poor families temporary and cut monies to supplemental programs such as food stamps and child nutrition. The assumption by policymakers was that welfare was too generous, making it easier to stay on welfare than leave for work, and welfare was believed to encourage unmarried women to have children.

First, welfare accounted for about one-fourth of the income of poor adults; nearly half of the income received by poor adults came from some form of work activity. Second, about three-fourths of the poor received some type of noncash benefit (Medicaid, food stamps, or housing assistance), but only about 40% received cash welfare payments. Third, the poverty population changes—that is, people move in and out of poverty every year. The average welfare recipient stayed on welfare less than two years. Only 12% of the poor remain poor for five or more consecutive years. Fourth, although the pre-reform welfare system was much more generous than now, it was inadequate to meet the needs of the poor, falling far short. The average poor family of three on welfare had an annual income much below the poverty line. Fifth, contrary to the common assertion that welfare mothers keep having babies to get more welfare benefits and thereby escape working, research from a number of studies shows that most welfare recipients bring in extra money from various activities such as house cleaning, laundry, repairing clothing, child care, and selling items they have made.

We tend to assume that government monies and services go mostly to the poor (welfare, the receipt of financial aid and/or services from the government), when in fact the greatest government aid goes to the nonpoor ("wealthfare," the receipt by the nonpoor of financial aid and/or services from the government). Most of the federal outlays for human resources go to the nonpoor, such as to all children in public education programs and to most of the elderly through Social Security retirement and Medicare payments.

The receipt of financial aid and/or services from the government.

The receipt by the nonpoor of financial aid and/or services from the government.

The upside-down welfare system, with aid mainly helping the already affluent, is accomplished by two hidden welfare systems. The first is through tax loopholes (called tax expenditures). Through these legal mechanisms, the government officially permits certain individuals and corporations to pay lower taxes or no taxes at all. For illustration, one of the biggest tax expenditure programs is the money that homeowners deduct from their taxes for real estate taxes and interest on their mortgages. The second hidden welfare system to the nonpoor is in the form of direct subsidies and credit to assist corporations, banks, agribusiness, defense industries, and the like.

Tax loopholes through which the government officially permits certain individuals and corporations to pay lower taxes or no taxes at all.

Finally, an assessment of the 1996 welfare reform six years after it was passed reveals premature, mixed, and uncertain results. While work has improved the sense of self-worth for former welfare recipients, three-fourths of the women who had been off welfare for two years or less had incomes below the federal poverty line. They were meeting basic expenses with government help such as food stamps. But the longer these women had been off welfare, the less likely they were to have health insurance for themselves and their children. The women facing the greatest difficulties after welfare were those with less education, poorer health, and younger children. In 2001-2002, two powerful forces—The September 11 attacks on the World Trade Center and the Pentagon and a severe and prolonged economic downturn—combined to wreak havoc on the poor, especially those who had left welfare for work. Then the Great Recession hit in late 2007 bringing official unemployment rates to exceed 10%. These rising unemployment rates hit former welfare recipients hard because, as recently hired employees, they were the most likely to be fired when the companies they worked for reduced their workforces. Moreover, the lower end of the service sector of the economy, where former welfare recipients were most likely to find jobs, were especially hard hit in those difficult times.

As we have seen, these subsidies amount to much less than the more affluent receive, and recent legislation has reduced them more and more. Most significant, the poor pay more than the nonpoor for many services. This, along with low wages and paying a large proportion of their income for housing, explains why some have such difficulty getting out of poverty. The urban poor find their money does not go as far in the inner city. The conclusion is obvious: The poor pay more for commodities and services in absolute terms, and they pay a much larger proportion of their incomes than the nonpoor for comparable items. Similarly, when the poor pay sales taxes on the items they purchase, the tax takes more of their resources than it does from the nonpoor, making it a regressive tax. Thus, efforts to move federal programs to the states will cost the poor more, since state and local taxes tend to be regressive (sales taxes), while federal taxation tends to be progressive.

When the poor pay sales taxes on the items they purchase, the tax takes more of their resources than it does from the nonpoor.

While poverty rates are higher for Blacks and Hispanics than for other racial/ethnic groups, they do not make up the majority of the poor.