Sociology In Conflict and Order: Chapter 8: Structural Sources of Social Change: Economic and Demographic

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What Are The Three Societal Earthquakes Occurring In America?
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Three massive changes are in progress: (1) The globalization and transformation of the US economy, which have profound effects on jobs and security here and abroad (2) The \”new immigration,\” which is changing the racial composition of the US, as Latino and Asian American populations increase dramatically (3) The aging of the population, which is transforming families, politics, work, and public policies. These social changes are more far-reaching and are occurring more rapidly than at any other time in human history.
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What Were the Two Fundamental Turning Points in Human History?
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The Neolithic agricultural revolution began about 8000 BC, marking the transition from nomadic pastoral life, during which the animal and vegetable sources of food were hunted and gathered, to life in settlements based on agriculture. During this phase of human existence, tools were created and used; animals were domesticated; language, numbers, and other symbols became more sophisticated; and mining and metalworking were developed. The second fundamental turning point, the Industrial Revolution, began in Great Britain in the 1780s. With the application of steam power and later oil and electricity as energy sources for industry, mining, manufacturing, and transportation came fundamental changes to the economy, the nature of work, family organization, and a transition from rural to urban life. In effect, societies are transformed with each surge in invention and technological growth.
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Globalization
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Globalization involves the processes by which everyone on Earth becomes increasingly interconnected economically, politically, culturally, and environmentally. Although trade between and among nations is not new, global trade entered a new phase after WWII. What have evolved are a global trade network, the integration of peoples and nations, and a global economy, with a common ideology: capitalism. The US emerged as the strongest economic and military power in the world, with US corporations vitally interested in expanding their operations to other societies for profit. The shift to a global economy has been accelerated by the tearing down of tariff barriers.
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Is Globalization a Neutral Process?
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The globalization of the economy is not a neutral process. Decisions are based on what will maximize profits, thus serving the owners of capital and not necessarily workers or the communities where US operations are located. In this regard, private businesses, in their search for profit, make crucial investment decisions that change the dynamics in families and communities.
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Capital Flight
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Most significant are the corporate decisions regarding the movement of corporate money from one investment to another (called capital flight). This shift of capital takes several forms: investment in plants located in other nations, plant relocation within the US, and mergers. While these investment decisions may be positive for corporations, they also take away investment (disinvestment) from others (workers and their families, communities, and suppliers).
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Where do US transnational companies move?
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Most of the manufacturing by US transnational corporations is now done in low-wage economies. Manufacturers have moved offshore because profits are greater and because giant retailers have compelled manufacturers to move offshore in search of lower prices for consumers and higher profits for themselves.
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Offshoring and Outsourcing
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Offshoring is when a company moves its production to another country, producing the same products in the same way, but with cheaper labor, lower taxes, and lower benefits to workers. Outsourcing refers to taking some specific task that a company was doing in-house—such as research, call centers, accounting, or transcribing—and transferring it to an overseas company to save money and reintegrating that work back into the overall operation.
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Negative Effects of Offshoring and Outsourcing
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This move to low-wage economies from outsourcing and offshoring has three negative effects on US workers. 1) US jobs are exported 2) The wages of those production workers who have not lost their jobs remain relatively low because if they seek higher wages, their employers threaten to move the jobs elsewhere. 3) Workers’ unions have been weakened because they, too, have lost clout.
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Roots of Outsourcing
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The phenomenon of outsourcing has three roots. 1) There is the worldwide communications revolution spawned by the Internet 2) There is a supply of qualified workers in English-speaking countries, most notably India but also the Philippines, Barbados, Jamaica, Singapore, and Ireland 3) These workers are willing to work for one-fifth or less the salary of comparable US workers.
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Structural Transformation of the Economy
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Just as the shift from an agrarian economy to one dominated by manufacturing represented a structural transformation of the economy, so too is the current shift from a manufacturing economy to one characterized by service occupations and the collection, storage, manipulation, and dissemination of information. Every new era poses new problems of adjustment, but this one differs from the agricultural and industrial eras. The earlier transformations were gradual enough for adaptation to take place over several decades, but conditions are significantly different now. The rate of change now is phenomenal and unprecedented.
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Joseph Schumpeter
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Joseph Schumpeter (1950) described a process inherent to capitalism that he called \”creative destruction.\” By this he meant that as the economic structure of capitalism mutates, some sectors will lose out while others gain. Manufacturing is no longer dominant. It has been replaced by the service sector and knowledge- based companies.
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Sunset Industries
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The shift away from manufacturing to services and information/knowledge means that some sectors of the economy fade in importance or will even die out completely. These sectors are known as sunset industries.
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Sunrise Industries
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While jobs have shrunk by the millions in the last two decades, many millions more have been created in sunrise industries (those industries characterized by increasing output and employment). Such jobs are involved in the production of high-tech products.
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Contingent Employment
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The employer/employee relationship is also being reshaped. The Internet is revolutionizing how business is transacted. More than 30 million American workers work in temporary, contracted, self-employed, leased, part-time, and other \”nonstandard\” arrangements. These workers under contingent employment (that is, employees who work part-time, in temporary jobs, or as independent contractors) typically lack an explicit contract for ongoing employment and thus receive sporadic wages. They earn less than their counterparts who do the same work, and they have fewer benefits such as health insurance, family leave, and retirement, thus costing their employers up to 30% less than regular employees.
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Homeshoring/Homesourcing
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One version of contingent employment is homeshoring or homesourcing in which independent contractors work from their homes. These workers make a wage but pay for their own health care and retirement plan and furnish their own equipment. Typically, these folks work as reservation agents and in other call center activities. The company benefits from this arrangement by saving on employee benefits and by not having to provide workspace and equipment. The independent contractor benefits by having flexible work hours and saving on child care, transportation, and clothing.
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Temporary Workers/ \”Temps\”
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Another type of contingent employment is that of temporary workers (\”temps\”). This trend represents a dramatic change in work. Businesses argue that they need this arrangement for flexibility in a rapidly changing competitive economy. These growing numbers of temporary workers are not tied to an employer, which makes them free to choose from available work options. There is a downside to this trend, however: about 60% of these nonstandard jobs are low quality, paying less than regular full-time jobs held by similar workers. Temps earn on average 40% less per hour than full-timer workers. In short, this trend has meant the proliferation of marginal jobs, with employers now shifting the burden of fringe benefits to individual workers and their families.
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Gender and Contingent Employment
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About 3/4ths of those working in contingent work arrangements are women, many of whom work out of their homes. Employers contract women to do home-based work because money is saved—the employers pay only for work delivered, they avoid unions, and they do not pay benefits such as health insurance, paid leaves, and pensions.
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Official vs. Actual Unemployment Rate
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The official unemployment rate is misleading, because it understates dramatically the actual magnitude of unemployment. The unemployment rate does not include those discouraged persons who have stopped looking for jobs, within the past four weeks. The official rate also does not include those part-time workers who would prefer to work full-time. If both of these categories are included, the actual rate of unemployment/underemployment would be 17%. The official data of the government, by undercounting joblessness, diminish the perceived severity of unemployment and therefore reduce the zeal to do anything about the problem.
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Benefits Insecurity
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With relatively weak unions and competition from low-wage economies, US corporations have been reducing their benefits to workers. Others have negotiated with unions to set up a two-tiered benefits system. The first maintains benefits to those already hired. New hires, on the hand, will receive not only lower wages but a greatly reduced benefits package. Another strategy has been for employers to shift retirement plans from defined-benefit (a guaranteed retirement benefit based on years of service) to one based on the employee investments. This relieves the employer from any future obligations. In effect, then, corporations are shifting the risks of old age and ill health off the corporate ledger and on to the worker.
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Wages
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Average wages, taking into account inflation, have not caught up with the level reached in 1973. Moreover, in this time of stagnant or declining wages, the cost for health care and college tuition has skyrocketed. Ironically, wages declined during this prolonged period while worker productivity (that is, output per hour worked) actually rose. This increased productivity is a consequence of technology, efficiency of production, workers fearing that they will be laid off if they do not produce, and fewer workers working more.
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Factors That Depress The Wages of Workers
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1) Union membership has declined significantly, and union members make approximately 30% more than their nonunion peers. 2) Competition from low-wage countries depresses wages in the US. 3) Corporations, if not moving overseas, have moved to the largely nonunion South and the less unionized West, and to rural areas where wages are lower. 4) Corporate management has systematically replaced workers with machines as well as contingent workers.
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The Working Poor
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The government’s official definition of the working poor is that they are individuals who were in the labor force for at least 27 weeks during the year, but still had income below the official poverty level. Having a job is not necessarily a path out of poverty. Despite working, people remain poor because they hold menial, dead-end jobs that have no benefits and are paid the minimum wage or below. The working poor are disproportionately women, single parent families, and racial/ethnic minorities.
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The New Poor
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Millions of workers have lost their jobs when companies closed, as companies sought cheaper labor outside the US, and when they were replaced by robots or other forms of automation. Many of these displaced workers find other work, but usually at lower-paying jobs. They are poorer but not poor. Many others, though, especially those over forty, find gaining employment difficult because their skills are outmoded and they are considered too old to retrain. These new poor are quite different from the \”old poor.\” The old poor—that is, the poor of other generations—had hopes of breaking out of poverty. The new poor, however, are much more trapped in povertythese people are displaced or misplaced. Hard physical labor is rarely needed in a high-tech society. This phenomenon undercuts the efforts of the working class, especially minorities who face the additional burden of institutional racism.
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Immigration
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Immigration, the movement of people across political boundaries, is one manifestation of globalization.
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Demographic Change
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The latest wave of immigration—the new immigration—is shaking up society. This demographic change challenges the cultural hegemony of the White European tradition; creating incredible diversity in race, ethnicity, language, religion, and culture; and leading, often, to division and hostility.
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The New Immigration
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This new immigration represents two trends that set it apart from past immigration. First, the volume of immigration is relatively large. Second, the racial landscape and rate of population growth are greatly affected, as approximately 1 million immigrants annually set up permanent residence in the US. These new residents are primarily Latino and Asian, not European as was the case in earlier immigration eras.
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Historic Four Major Waves of Immigration in US
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The first wave of immigrants arrived between 1770 and 1820 and consisted mainly of English-speaking Britons. The second wave, mostly Irish and German, came in the 1840s and 1850s and challenged the dominance of Protestantism, which led to a backlash against Catholics. The third wave between 1880 and 1914, brought over 20 million, mostly Southern and Eastern Europeans who found factory jobs in large cities. In the 1920s, the US placed limits on the number of immigrants it would accept, the operating principle being that the new immigrants should resemble the old ones. The fourth immigration wave began in 1965 and continues. The Immigration Act amendments of 1965 abandoned the quota system that had preserved the European character of the US for nearly half a century. The new law encouraged a new wave of immigrants, only this time the migrants arrived from the Third World, especially Asia and Latin America.
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Settling Patterns of the New Immigration
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Whereas previous immigrants settled primarily in the industrial states of the Northeast and Middle Atlantic regions, or in the farming areas of the Midwest, recent immigrants have tended to locate on the two coasts in the Southwest. Asians have tended to settle on the West Coast, Mexicans in the Southwest. California is a harbinger of the demographic future of the US.
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Facts of the New Immigration and Increasing Diversity
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1) About one-third of the people in the US are African American, Latino, Asia, or Native American. 2) Racial minorities are increasing faster than the majority population. 3) African Americans have lost their position as the most numerous racial minority. This demographic transformation will make two common assumptions about race obsolete: that \”race is a \”black and white\” issue, and that the US is a \”White\” society. 4) Immigration now accounts for a large share of the nation’s population growth. 5) New patterns of immigration are changing the racial composition of society.
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Do Immigrants Take Jobs From US Citizens?
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Recent immigrants from Mexico can earn five times the wage rate in the US that they can earn in Mexico. This is the lure. Because most do not speaking English and their skills are limited, they tend to work at low-wage occupations. The evidence is that immigrants do not have negative effects on the wages of most Americans, but they do on the low-wage/poorly skilled/poorly educated segment of workers. The wages of the lowest 15% of the workforce receive about 5% less in their paychecks because of competition from a large number of immigrants who are relatively uneducated, unskilled, and eager to work. This problem will increase in the future as the federal and state governments no longer provide welfare benefits to legal immigrants. Also pushing wages lower are the shrinking manufacturing sector, the decline in union membership, the outsourcing of jobs, and the Great Recession.
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Positive Effects of Immigration
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On the positive side, immigrants are more likely than the rest of the population to be self-employed and to start their own businesses, which in turn creates jobs and adds strength to local economies. Also, they pay many taxes over a long period that contribute positively to government programs.
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Are Immigrants a Drain on Society’s Resources?
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In the short run, immigrants consume more in public services and benefits than they pay in taxes. There are two reasons immigrants require more resources from the state than do nonimmigrant families. First, they have relatively large families, and these children go to public schools. Second, they pay less in taxes because they tend to earn low wages and have relatively little discretionary income. In the long run, however, immigrants are a good investment for society.
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Will the Increasing Proportion of Non-Whites, Fueled by Immigration, Lead to a Burring of Racial Lines or a Heightening of Tensions among the Racial/Ethnic Groups?
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Today’s immigrants are coming from Latin America and Asia. They are non-White and have distinctly non-European cultures. When these racial and ethnic differences are added to economic fears, the mix is very volatile. The situation is worsened further by where the new immigrants locate. Typically, they move where immigrants like themselves are already established. This tendency of migrants to cluster geographically by race/ethnicity provides them with a network of friends and relatives who provide them with support. This pattern of clustering in certain areas also tends to increase the fear of nonimmigrants towards them. A second tendency is for new immigrants to locate where other poor people live for the obvious advantage of cheaper housing. A problem often arises when poor Whites live side by side with one or more racial minorities. Despite their common condition, tensions in such a situation are heightened as groups disadvantaged by society often fight each other for relative advantage. The result of these factors is commonly an anti-immigrant backlash. White supremacy groups are growing. Vigilante groups have organized to watch the borders.
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Immigration and Agency
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Immigration can be forced or freely chosen. Immigration in this latter sense is clearly an act of human agency (rather than passively accepting structural constraints, people cope with, adapt to, and change their social situations to meet their needs).
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Problems That Immigrants Face
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Typically, new immigrants face hostility from their hosts. Recent immigrants also face language barriers as they seek jobs. Often, most especially for undocumented immigrants, their initial jobs are demeaning, poorly paid, and without benefits.
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Overcoming Problems That Immigrants Face
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How do they adapt to these often very difficult circumstances? Most commonly, immigrants move to a destination area where there is already a network of friends and relatives. These networks connect new immigrants with housing (often doubling up in very crowded but inexpensive conditions), jobs, and an informal welfare system (health care, pooling resources in difficult times). These mutual-aid efforts by immigrant communities have been used by immigrant networks throughout US history. To overcome low wages, all able family members may work in the family enterprise or at different jobs and combine family resources. To overcome various manifestations of hostility by others, the immigrant community may become close
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Assimilation
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Assimilation is the process by which individuals or groups adopt the culture of another group, losing their original identity. A principal indicator or assimilation is language.
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Effects of Immigration on Immigrants: Ethnic Identity or Assimilation?
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If the past is a guide, the new immigrants will assimilate. But conditions now are different.An argument countering the assumption that the new immigrants will assimilate as did previous generations of immigrants is that the new immigrants are members of racial/ethnic groups, not Whites. A commonly held assumption is that when new immigrants do not assimilate easily or if they continue to be poor, it is their fault. The current political mood is to eliminate affirmative action and to reduce or eliminate social programs that help level the playing field so that minorities would have a fair chance to succeed. Some legislation is especially punitive toward recent immigrants, particularly the undocumented. Such public policies make it more difficult for new immigrants to assimilate than did their predecessors, should they wish to do so.Another factor facing this generation of immigrants is that they enter the US during a critical economic transformation, and, since 2007, an economic crisis where the middle class is shrinking and the working class faces difficult economic hurdles. A possible result is that the new immigrants, different in physical characteristics, language, and culture, will become scapegoats for the difficulties that so many face. Moreover, their opportunities for advancement will be limited by the new economic realities.
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Immigrant Assimilation Variables
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The issue of immigrant adaptation to the host society is complex, depending on a number of variables. Zhou (1997) describes a number of these critical variables, including the immigrant generation, their level in the ethnic hierarchy at the point of arrival, what stratum of US society absorbs them, and the degree to which they are part of a family network. The retention or abandonment of the ethnic ways depends on structural variables. These variables include the socioeconomic resources of the ethnic community, the extent of continued immigration from the sending society, the linkages between the ethnic community and the sending society, and the obstacles to obtaining equal opportunity in the new society.
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Options for Assimilation
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Immigrants who move to the US permanently have four options regarding assimilation. Many try to blend into the US as quickly as possible. Others resist the new ways by either developing an adversarial stance toward the dominant society or resisting acculturation by focusing more intensely on the social capital (that is, social networks) created through ethnic ties. The fourth alternative is to move toward a bicultural pattern.
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Demographic Aging Trends
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Until the 20th century high fertility and high mortality kept the US a youthful nation. During the last century, however, the birthrate fell, resulting in fewer children as a proportion of the total population. Most important, greater longevity because of advances in medical technology has increased the life expectancy of Americans. The surge in the number of elderly during the next few decades is the consequence of three demographic forces: a continued low fertility rate, ever-greater life expectancy rates, and the baby boom generation reaching old age.
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Sex Ratio of the Current Elderly Population
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Older women outnumber older men by a ratio of 3 to 2. As age increases, the disparity becomes greater. A combination of biological advantages for women and social reasons explain this difference. The secondary status of women in US society has provided them with extra longevity. Traditional gender roles have demanded that men be engaged in the more stressful, demanding, and dangerous occupations.
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Problems with the Sex Ratio of the Current Elderly Population
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Meanwhile, though, the current situation creates problems for the majority of elderly women, who are often widows and have low incomes.Elderly women are more likely than men to live alone usually as widows. This is the result of two factors: the greater longevity of women and the social norm for men to marry younger women. Thus, to the extent that isolation is a problem of the aged, it is overwhelmingly a problem for elderly women. Because of pensions through work and the traditional bias of Social Security toward women who had not worked outside the home, elderly women are much more likely than elderly men to be poor. African American and Latino elderly women have an even higher probability than their male counterparts of being poor.
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Racial Composition of the Current Elderly Population
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Because racial minorities have a lower life expectancy than do Whites, they form a smaller proportion of the elderly category than of other age groups. There are several reasons for minorities being underrepresented among the elderly. The gap for Latinos is explained in part by immigration, because most immigrants are young adults. But the primary reason for the relatively low proportion of minorities among the elderly, compared to Whites, is that they do not live as long because large numbers do not have health insurance, they receive poor health care, and they often work at physically demanding and sometimes dangerous jobs. Most significant, the elderly who are members of racial/ethnic groups are disproportionately poor. Whites are overrepresented among the elderly population. The trend is for the elderly population to become more racially diverse.
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Longevity of the Current Elderly Population
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Life expectancy at birth is now about 78 years. This average masks some differences: (1) women live longer than men, and (2) there are racial gaps that show little signs of closing.
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Geographic Distribution of the Current Elderly Population
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Many rural states have a relatively high proportion of elderly, as these states experience a large out-migration of young people. Most elderly remain in their communities after retirement, but those who move tend to migrate to the favorable climate found in the Sun Belt states. The elderly who migrate are not representative of the elderly. They tend to be younger and more affluent than those who stay in their home communities. Thus, they benefit their new communities by broadening the tax base through home ownership, strong purchasing power, and not burdening the local job market. The communities they left in the Snow Belt are negatively affected. The elderly who remain are disproportionately older and poorer and require more public assistance from a lower community tax base.
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Wealth, Income, and Cumulate Advantage or Disadvantage in the Current Elderly Population
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The wealth accrued over a lifetime of work affects the quality of life during retirement. The economically challenged will continue to struggle with the exigencies of life after retirement, while those with economic advantage retain it in their later years.many who thought they had more than enough saved for retirement found that they did not. Many had to postpone retirement, remaining in the labor force indefinitely. Of course, although losing money, many of the affluent old, remained comfortable affluent. The elderly who are members of a racial or ethnic minority are disproportionately poor. This relative lack of resources for racial minorities translates into a reduced likelihood of their receiving adequate health care and living in nursing homes with full-time skilled nursing care under a physicians’ supervision. Elderly married couples tend to have greater net worth than elderly singles. Households maintained by unmarried elderly males have a greater worth than households maintained by unmarried elderly women. Similarly, White, married-couple households with a householder age 65 or older will likely have higher family incomes than racial minority married couples. Personal income is usually reduced by one-third to one-half after retirement. The important point is that those groups with advantage before becoming old maintain their economic advantage in old age—and the poor get poorer.
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Wealth, Income, and Cumulate Advantage or Disadvantage in the Current Elderly Population Continued
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The inequalities from income and privilege tend to be magnified among elderly peoplethe government is partly responsible for these skewed advantages to the affluent. The relatively affluent are encouraged by the government, because of tax incentives, to invest in retirement income programs. Thus, the already advantaged are given preferential tax treatment, which amounts to tax subsidization, thereby increasing their economic advantage over the disadvantaged after age 65. About 10% of people age 65 and older are poor. This poverty rate, slightly below the poverty rate for the nation as a whole, is perceived typically as a success. However, over 3 million elderly are poor, and another 30% of them are in the economically vulnerable category. The elderly spend about 20% of their incomes on health care, with the poor elderly spending about 35% of their incomes on health care. Roughly half of the incomes of the poor elderly go for food. Thus, they are especially affected by inflation at the grocery store. The only recourse for the poor in inflationary times, when their incomes do not increase with spiraling costs, is either to eat less or to eat cheaper, less nutritious food. The elderly poor spend about 20% of their incomes on energy for heat and electricity, both of which increase with inflation. Those on fixed incomes are likewise negatively affected by inflationary increases in the cost of rents, taxes, and health care. Health costs for the elderly are almost four times those for people under age 65. The result is that the elderly poor tend to live in substandard housing, receive inadequate medical care, and have improper diets.
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The Main Two Problems of an Aging Society
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(1) Inadequate income from pensions or Social Security (2) The high cost of elderly health care
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Social Security
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Since the introduction of Social Security in the 1930s, this program has been a significant aid to the elderly. Social Security has reduced poverty significantly among the elderly. In addition to a monthly income for seniors, Social Security provides life insurance benefits to the survivors in cases of the death of a breadwinner and disability payments when a wage earner is unable to work. Most fundamental, Social Security expresses the belief that society takes responsibility for the welfare of all of its citizens.
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Problems with Social Security
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Despite its considerable strengths, the Social Security program has several serious problems that place a disproportionate burden on certain categories of the elderly and on some portions of the workers paying into the program. An immediate problem is that not all workers are covered by Social Security. Some groups of workers are unable to participate because they work for states with alternative retirement programs. Also, legislation has specifically exempted certain occupations such as agricultural workers from Social Security. For workers who are eligible for Social Security, there are wide disparities in the benefits received. The amount of benefits depends on the length of time workers have paid into the Social Security program and the amount of wages on which they paid a Social Security tax. In other words, low-aid workers receive low benefits during retirement. On the surface, the Social Security system is gender-neutral. However, gender-related differences in the American work culture mean that, in reality, Social Security provides different levels of retirement security for men and women. Social Security recognizes only paid work. Social Security benefits are based on the number of years worked and the amount earned from wages. Since women are in the workforce fewer years than men, and because women generally earn less than men, women will receive smaller retirement benefits than men. The Social Security system is financed through taxes on wages and salaries. Most economists agree that the burden of the tax is on the employee because employers finance their share by paying their employees that much less. The method of financing Social Security is not equitable, because it disproportionately disadvantages lower-income wage earners. In other words, it is a regressive tax: It takes a larger percentage from people with the lowest incomes.
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Future Problem of Social Security
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There is an overarching problem facing Social Security—how to finance it in the future. Three demographic factors make financing the program problematic. The first is that more people are living to age 65, and the second is that people live much longer after reaching 65 than in earlier generations. The obvious consequence of this greater longevity is that the Social Security system pays out more and more to an ever-expanding pool of elderly who live longer and longer. The third demographic factor working against the system is a skewed dependency ratio (the proportion of the population who are workers compared to the proportion not working). Social Security is financed by a tax on workers and their employers. AT present, the Social Security Administration collects more in taxes than it pays out, with the surplus going into a trust fund. But as people live longer and the baby boomers reach retirement, this system will no longer support itself.
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Dependency Ratio
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The proportion of the population who are workers compared to the proportion not working.
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Solutions for Future Problem of Social Security
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To deal with this pending crisis in funding Social Security, Congress will have to either raise Social Security taxes, use other revenues, or cut benefits. Other options include raising the age of eligibility. Raising the eligibility age is unfair to certain groups. Some ethnicities don’t have the life expectancy of Whites. Blue collar workers also die earlier than professionals. Another plan is the reduction or elimination of the cost of living adjustment, which allows the payments to keep pace with inflation. This proposal hurts the poor most because it is regressive. Another strategy is to tax Social Security benefits as income, which would protect the poor because they pay little federal income tax. Another solution that is popular with the Republican Party is to privatize Social Security. Generally, this would allow each individual to invest part of his or her Social Security taxes in the stock market. This plan would be beneficial when the stock market goes up, but it also makes retirement savings vulnerable to stock market declines.
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Paying for Health Care
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Most older people are in reasonably good health. Of all age groups, however, the elderly are the most affected by ill health. Health problems escalate especially from age 75 onward, as the degenerative processes of aging accelerate. The medical expenses of the elderly are three times greater than those of middle-aged adults, yet their incomes are typically much less. Because Medicare does not pay for most long-term care, long-term care insurance is expensive, and Medicaid will help only after the patient’s resources are exhausted, resulting in many elderly spending their last years impoverished.
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Medicare
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Medicare, begun in 1965, is the federal health insurance program for those aged 65 and older. Everyone is automatically entitled to hospital insurance, home health care, and hospice care through this program. The supplemental medical insurance program helps pay for doctor bills, outpatient services, diagnostic tests, physical therapy, and medical supplies. People may enroll in this program by paying a relatively modest monthly free. Overall, Medicare is financed by payroll taxes, premiums paid by recipients, and a government subsidy.
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Three Major Problems With Medicare
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There are three major problems with Medicare. 1) It is insufficiently financed by the government. 2) From the perspective of the elderly, only about half of their health care bills are paid through the program, leaving many with substantial costs. 3) Physicians believe the program pays them too little for their services. As a result, many physicians limit the number of Medicare patients they will serve.
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Disengagement
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Some researches have argued that senior citizens respond to the aging process by retreating from relationships, organizations, and society (called disengagement). This behavior is considered normal and even satisfying for the individual, because withdrawal brings a release from societal pressures to compete and conform. Other researchers have quarreled with the disengagement theory, arguing that many elderly people are involved in a wide range of activities.
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The Elderly and Voting Influence
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People age 65 and older consistently vote in higher proportions than other age groups. A striking number of retired people become politically active in an attempt to change some of the social conditions especially harmful for them. Senior citizens are most politically active than any other age group in society. Faced with common problems, many join in collective efforts both locally and nationally. Just how effective these organizations are or will be is unknown. But as the elderly increase in numbers, their sphere of influence should increase as well. Elderly citizens could be a significant voting bloc if they developed an age consciousness and voted alike.
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Consequences of the Three Structural Transformations of Society
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The consequences for US society, then, of the convergence of these three powerful macro social forces are (1) a dislocation for many workers as some jobs become obsolete, their skills are no longer needed in a service/knowledge economy, their jobs have been replaced by automation, or their jobs have moved to a lower-wage environment; (2) an increasing wealth/income gap; (3) the downward economic spiral for racial minorities; (4) an increased proportion of people on the economic margins; (5) growing social unrest by the have-nots but also by workers who fear for their economic future; (6) an increase in scapegoating as animosities intensify because of economic tough times and a revival of racism; and (7) an increasing economic burden on the working population who must finance pension plans and other assistance for an ever larger elderly population.

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