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Chapter 2

SYG-2010 Chapter Notes - Chapter 2: Level Set, Direct Tax, Racial Segregation In The United States

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Michael Turner

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Chapter 2 Poverty and Wealth
Economic inequality in the United States
Social stratificatio: society’s syste of rakig categories of people i a hierarchy
Social classes: categories of people who have similar access to resources and opportunities
Inequality of income and wealth
Income: salary or wages from a job plus earnings from investments and other sources
Highest earning 20% of US families received 47.8% of all income
Lowest paid 20% of US families received 3.8% of all income
Income inequality increasing since 1980
Wealth: the value of all the economic assets owned by a person or family, minus any debts
Wealthiest 20% of US families own 85% of all privately held wealth
Second 20% of US families own 11% of all privately held wealth
Increasing Economic Inequality
American way of life emphasizes competitive individualism (people receive rewards in
proportion to their talents, abilities, and efforts)
Income inequality widely viewed as social problem
Very high pay goes to leaders of large corporations (rising CEO pay)
Percentage of people who say they believe they can achieve the American dream has
Government levies tax on what we earn and what we buy because
1. Provide government with money it needs to operate
2. Uses taxes to discourage certain types of behavior
3. Way of reducing economic inequality
Progressive taxation: policy that raises tax rates as income increases
Families with lower incomes pay lower tax rate and receive more benefits
Families with higher incomes pay higher tax rate and receive less benefits
Top 1% of families pay more than 1/3 of all income taxes collected
Bottom 50% of families pay 2% of all income taxes collected
Any one tax rate depends on how much money is made and the source of the income
Regressive tax: tax maintains stable regardless of how much consumed (ex. gas)
The Rich and the Poor: A Social Profile
The Rich
People with family income in the top 10% of the distribution
Typically live in large/well-appointed homes, wear expensive clothing, regarded as
Includes important decision makers
Categories of wealthy people
o Older people > younger people
o Men > women
o Married couples > single people
o White people > people of color
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Chapter 2 Poverty and Wealth
The Poor
Poverty line: income level set by the US government for the purpose of counting the poor
Dollar amount of aual ioe elo hih a peso/faily is osideed poo
Amount changed every year by gov to reflect changing costs of living
Absolute poverty line = linked to cost of basic diet
o US: poety = oditio hee people dot hae eough to get y
Relative poverty line = 60% of median income level
o Europe: poverty = relative condition that prevents people from being able to fully
participate in social life
Minimum level of economic security = income 25% higher than poverty line
o Critics believe gov should raise the poverty line to offer increased benefits to
low-income people
Poverty gap: different between the actual income of the typical poor household and the
official poverty line
The greater the poverty gap, the greater the hardship caused by poverty
46.2 million people (15.1% of US pop) as poor [2010]
o Age: children (36% of poor)
o Race: white and non-Hispanic people
Percentage of minority people who are poor > whites
o Gender: women > men
Feminization of poverty: trend of women making up an increased share of the poor
o Family patterns: single people > married couples
Single women with children are highest
o Region: South > West > Midwest > Northeast
Most live in urban areas
Working Families: Working Harder
Belief in the American dream is rapidly declining
Income has stalled or declined
New jobs in service sector pay less than factory jobs they are replacing
Working poor: most jobs that are available pay minimum wage
Non-working poor: health problems, cannot afford child care, lack of available work
Underclass: poor people who live in areas with high concentrations of poverty and limited
opportunities for schooling or work
Most live (inner cities) in hyper-segregation (cut off from the larger society and having
no access to either good schools or good-paying jobs)
Reality of everyday life = persistent poverty or temporary poverty
Problems linked to Poverty
Poor health
o Unable to buy nutritious foods
o Stress = drug abuse and/or violence
o Lack health insurance and medical care
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