Transcript SOC101Y Introduction to Sociology Professor Robert Brym Lecture #8, Social Stratification 7 Nov 12

SOC101Y
Introduction to Sociology
Professor Robert Brym
Lecture #8, Social Stratification
7 Nov 12
Survivors of the Titanic Disaster
by Class, 1912 (percent)
Children
First
Second
class
class
100
100
Third
class
34.2
Crew
n.a.
Women
97.2
86.0
46.1
n.a.
Men
32.6
8.3
16.2
21.7
Total
62.5
41.4
25.2
21.7
The Functional Theory of
Stratification
 Some jobs are more important than
others.
 Jobs that are more important require more
training and sacrifice.
 To motivate talented people to undergo
training and sacrifice, high rewards must
be offered.
 Therefore, stratification is necessary; it
performs a useful function.
Attack of the Class-Specific
Killer Virus
CASE 1
CASE 2
Criticisms of the Functional
Theory of Stratification
 The question of which occupations are
more important is far from clear.
 The functional theory ignores the pool of
talent that lies unused because of
inequality.
 The functional theory fails to examine how
advantages and disadvantages are passed
from generation to generation.
Canada’s Twenty Wealthiest, 2012
World Rank
35
121
205
248
248
296
296
377
401
401
464
491
634
634
634
719
804
804
804
854
Surname
Thomson
Weston
Irving
Desmarais
Pattison
Saputo
Sherman
Riddell
Azrieli
Wilson
Laliberté
Miller
Bronfman
Fidani
Katz
Stroll
Coutu
Edwards
Jarislowsky
Goldhar
$ US bil.
17.5
7.6
5.0
4.3
4.3
3.7
3.7
3.0
2.9
2.9
2.6
2.5
2.0
2.0
2.0
1.8
1.6
1.6
1.6
1.5
Source
Publishing
Retail food
Oil refining, etc.
Fin. serv., comm.
Advertising, etc.
Dairy
Pharmaceuticals
Oil & gas
Real estate
Clothing
Entertainment
Electronics
Liquor
Real estate
Pharmacies
Retail
Pharmacies
Oil & gas
Finance
Real estate
Born rich
Born
advantaged
Born
disadvantaged
Marx’s Theory of Stratification
 The ability of capitalists to hire and fire wage workers
at first encouraged rapid technological change and
economic growth.
 The drive for profits also caused capitalists to
concentrate many workers, keep wages low, and
spend little on improving working conditions.
 The result: class polarization, the growth of class
consciousness and working-class organizations, and a
growing demand on the part of workers to end
capitalist exploitation.
 Because capitalism could produce more than workers
could consume, ever-worsening crises of
overproduction would result in the fall of capitalism.
Critique of Marx’s Theory of
Stratification
 Industrial societies did not polarize into two




opposed classes engaged in bitter conflict.
Capitalism persisted by stimulating demand.
Investment in technology made it possible for
workers to earn higher wages and work fewer
hours in better conditions.
Workers fought for, and won, state benefits.
Communism took root in semi-industrialized
countries and witnessed the emergence of
totalitarianism and new forms of privilege.
Weber’s Theory of Stratification
 Class position is determined by “market situation”:
the possession of goods, opportunities for income,
level of education, and level of technical skill.
 The four main classes: large property owners, small
property owners, propertyless but highly educated
employees, and propertyless manual workers.
 Status groups (distinguished by differences in
prestige) and parties (distinguished by differences in
power) also stratify the social order, to some degree
independently of class.
 Class conflict may occur but classlessness is unlikely.
Weber’s Stratification Scheme
 Three “pillars” of
stratification based on market
position, prestige and power.
 More rewards for categories
in which there are fewer
people.
High
c1 sg1 p1
c2
Value of
rewards
c3
Low
class 4
MARKET POSITION
Large
sg2
p2
sg3
status group 4
PRESTIGE
Small
Number of people
p3
party 4
POWER
Large
Implications
 There is nothing inevitable about the level of
social stratification. We are neither headed
inexorably toward classlessness nor are we
bound to endure high levels of inequality.
 The level of social stratification depends on
the complex interplay of class, status, and
party and their effect on social mobility.
 For example, in a democracy, citizens decide
which party is in office, and the political party
in office enacts policies that have implications
for social mobility; we decide how much
inequality there should be.
SOC101Y
Introduction to Sociology
Professor Robert Brym
Lecture #9
Social Stratification
14 Nov 12
The 100,000,000,000,000 Zimbabwe dollar is the highest
denomination bill ever printed. This bill was purchased in
Toronto in 2008 for 12 Canadian dollars. The currency was
abandoned by the government of Zimbabwe in 2009.
Inflation and Real Dollars
 Inflation is the increase over time
in the cost of a standard basket of
goods and services.
 Real dollars are nominal dollars
minus inflation (so cost in real
dollars is the cost of a standard
basket of goods and services minus
inflation, and income in real dollars
is nominal income minus inflation,
or purchasing power).
Illustration
 Year 1: a typical basket of goods and services
costs $100.
 Year 2: a typical basket of goods and services
costs $105.
 Therefore, the annual inflation rate = 5%; $105
year2 dollars = $100 year1 dollars
 How much are $100 year2 dollars worth in year1
dollars (i.e., what is the real value or purchasing
power of year2 dollars using year1 as a base)?
 The real value of $100year 2 is $95.24year 1
(x+.05x=100; 1.05x=100; x=100/1.05;
x=95.24)
 Check: $95.24+5%=$100.00
The inflation rate between year 1 and year
2 is 3%. The inflation rate between year 2
and year 3 is 4%. What are $1,000year 3 in
year 1 dollars?
1.
2.
3.
4.
5.
$930
$1,070
$933.53
$1,071.20
No clue
Answer
 Year3  Year2:
 x+.04x=1,000; 1.04x=1,000;
x=1,000/1.04=961.54
 Year2  Year1:
 x+.03x=961.54; 1.03x=961.54;
x=961.54/1.03=933.53
 Check:
 933.53+3%=961.54;
961.54+4%=1,000
Average Market Income of Canadian Families,
Before Taxes and Government Transfers, 1951 to
2004 (in 2003 dollars)
Income in
dollars
80000
70000
60000
50000
40000
Two main reasons for rising curve:
1. Increased productivity.
2. Entry of women into paid labour force.
30000
20000
10000
0
1951
NB: Market income is income before taxes and transfers.
2004
Income of Income Tax Filers,
Canada, 2004, by Income Class,
(in percent)
3.0
0.5
16.5
<50K
50K-99,999
100K-249,999
250K+
80.0
It’s a Long Way to the
Top: Canadian Income
Inequality, 2004
 Let the top of the CN Tower represent
the average annual income of the top 5%
of Canadians.
 Then the average annual income of the
bottom 5% of Canadians would be
represented by a tree 5.99 meters high.
 The average annual income of all
Canadians would be represented by a
worker 27.5% of the way up the CN
tower.
CN Tower, 533.33 meters
(top 5%)
Worker at 146.66
meters, 27.5% to
the top of the CN
Tower (average)
Tree, 5.99 meters
(bottom 5%)
Share of Total After-Tax Income, Families,
Canada 1951, 1976 and 2007 (in 2007 dollars)
% Change, 1976-2007
Top 1/5
+3.1
2nd 1/5
+1.5
Middle 1/5 -1.0
4th 1/5
-2.2
Bottom 1/5 -1.3
bottom 1/5
4.8%
fourth 1/5
10.7%
bottom 1/5
4.9%
fourth 1/5
11.5%
bottom 1/5
6.1%
fourth 1/5
12.9%
top 1/5
41.0%
top 1/5
41.1%
middle 1/5
17.9%
top 1/5
44.2%
middle 1/5
17.4%
second 1/5
22.4%
1951
second 1/5
23.9%
second 1/5
24.7%
1976
middle 1/5
16.4%
Note: The diameter of the 2007
pie chart is 16.5 percent bigger
than that of the 1976 pie chart,
reflecting change in average
real income.
2007
Share of Income by Canada’s
Top 1%, 1920-2007
Median Net Worth of Families,
Canada, 1984, 1999, 2005 (1999$)
$ ‘000s
599000
+64.2%
499000
1984
1999
2005
399000
299000
+48.3%
199000
+26.0%
99000
-1000
-$1,000
-11.3%
lowest
20%
second
20%
middle
20%
+26.0%
fourth
20%
top 20%
all
families
To make the three surveys comparable, the following items are not included: employer-sponsored pension plans, contents of the
home, collectible and valuables, annuities, and registered retirement income funds. If it were possible to include these
items, wealth inequalities would be greater than shown.
Taxes and Transfers
Redistribute Family Income
 Taxes and transfers cause the market income
of the top quintile to fall about 20 percent.
 Taxes and transfers cause the market income
of the bottom quintile to rise about 80 percent.
 Before taxes and transfers, the top quintile
earns about 10 times more than the bottom
quintile does.
 After taxes and transfers, the top quintile
earns about 5 times more than the bottom
quintile does.
How Tax Laws Reinforce Inequality
 Half of Canadian taxes are progressive (based
on the ability of the taxpayer to pay) and half
are regressive, so only modest redistribution of
income taxes place.
 There is no inheritance tax so the wealthy can
pass advantages from generation to generation.
 Different income sources are taxed at different
rates, with the income sources of the wealthy
taxed at lower rates.
 Many tax benefits are more advantageous to
the wealthy.
Tax rates vary by source of income
and therefore by income class
Source
Salaries, wages
Dividends
Capital gains1
Returns from offshore
tax havens2
Inheritance3
1Mainly
% taxed
Who is taxed
100 Employees
83 Owners of Canadian
stock
50 Owners of capital
0 Owners of capital
0 Heirs of owners of
capital
Barbados, Cayman Islands, Luxembourg, Ireland, Bermuda. Excludes real estate
and other non-financial assets. Subject to bankers’ fees. 2To arrive at taxable capital
gains, capital losses from previous years are subtracted from current capital gains.
3Subject to small probate fee.
RRSP Benefits Increase with Income
Income class
Taxable income
Marginal tax rate
low middle
$0
high
$20K $100K
0%
25%
50%
RRSP deposit
$0
$1K
$1K
Reduction in
taxable income
Tax saving*
$0
$1K
$1K
$0
$250
$500
* RRSP deposit times marginal tax rate
A has $10,000 taxable income and a marginal tax
rate of 15%. B has $20,000 taxable income and a
marginal tax rate of 25%. A and B put $1,000 in
their RRSPs. What are A’s and B’s tax savings,
respectively?
1.
2.
3.
4.
$150 and $500
$150 and $250
$1500 and $2500
I haven’t a clue.
Answer
 A’s $1,000 RRSP deposit results in a $150
tax saving ($1,000 x 15%)
 B’s $1,000 deposit results in a $250 tax
saving ($1,000 x 25%).
Household Income Inequality,
24 Countries (Happiness Rank in Parentheses)
rinequality, happiness = -.484
If Gini = 1, all income is earned by one household.
If Gini = 0, all income is shared equally by all households.
Inequality and Development
High
13
USA
12
Gov’t policy
11
10
Low
9
As private property became an increasingly important stratification principle, inequality rose.
After early industrialization, merit became an important stratifying principle, and inequality
fell. Since the rise of the modern welfare state, government policy has increasingly influenced
the level of inequality and accounts for much of the divergence in inequality. Private property
and merit still exert a power influence on inequality, but a new stratification principle was added
with the creation of the welfare state.
France
Foraging Hort./Pastoral Agrarian E. Industrial L. Industrial Postindustrial
Type of Society
Social Mobility
 Most mobility is upward, not downward
(although downward has been increasing since
the 1970s).
 Most mobility is intergenerational, not
intragenerational.
 Most mobility is structural, (due to changes
in occupational structure) not circulatory (due
to merit).
Common Beliefs about Poverty
 Poverty is chronic.
 Most poor people depend exclusively
on welfare.
 Welfare is generous.
 Poverty is inevitable.
2+ yrs, 12.3%
<1 yr, 80.0%
1<2 yrs, 7.7%
Persistence of After-tax Low
Income, Canada, 2005
LICO = low income cutoff =
63 percent of gross income spent on food, shelter and clothing.
0%
20%
40%
60%
80%
100%
Poor Unattached Individuals Under 65 by
Weeks Worked, Canada, 1995
40-52 wks
28%
20-39 wks
13%
1-19 wks
17%
0 wks
41%
Percent at or below the After-tax LICO and
Unemployment Rate, Canada, 1996-2005
16
14
LICO (%)
Unemployment (%)
12
10
8
6
4
2
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
0
In general, the
percentage of
Canadians falling at or
below the LICO
correlates positively
with the unemployment
rate. An exception (not
shown here) occurred
because of massive
government budget
cuts between 1993 and
1996; in that period,
the correlation was
negative.
Welfare Benefits for Couple with Two
Children, as Percent of Poverty Line,
Canada, by Province, 2001
Welfare as percent of poverty line
70
NFLD
PEI
NS
NB
QUE
ONT
MAN
SASK
ALTA
BC
60
50
40
30
20
10
0
Province
Before-tax LICO by Category,
Canada, 1980-95
Poverty rate in %
70
Single mothers with children
60
50
40
30
Elderly (65+)
20
10
Total
0
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95
Year
Perceptions of Class
 Few North Americans have trouble placing
themselves in the class structure.
 A minority of North Americans believe that a high
level of inequality is needed to motivate people.
 Most North Americans believe that inequality
persists because it benefits the rich and the powerful
and because ordinary people don’t get together to
do something about it.
 Most North Americans don’t want government to
provide a basic income or create jobs.
 These attitudes and perceptions vary by social
class: lower = more radical.