4.2 Components of Social Class: Income, Education, Prestige and Power and Location

Announcement regarding next week:

Both of next week's classes will be asynchronous.  I will post post lessons that you can do a time convenient for you.  I will require that you answer questions and submit them in a Google form.

As you saw in the previous lesson, sociologists have concluded that social class does exist in the U.S. and it is made up of a complex set of factors, one of which is wealth.  This lesson will examine other factors that create and maintain social class.

Lesson Focus:

• What does the median or average American look like in terms of social class?
• How does this compare to your own unique experience(s)?
• How do all of these components of social class connect to each other to either limit or advantage those in them?

Social Class Component #2:  Income

What is income and what are some different types of income?

The first component of social class that we will examine is income.  Income is usually what Americans think of first when they think of social class.  Income is how much money a person or household takes in each year.  Income can come from different sources.  It can be hourly wages such as a secretary or construction worker that makes $25 per hour and they only get paid for the hours they work.  Or it can be a salary like a teacher or a manager who makes a salary of $75,000 per year, regardless of the number of hours they work.  A third type of income is from capital gains which are profits made off of investments.  An example of capital gains might be a stock trader who buys Apple stock at $100 per share and then sells it 2 years later for $200 per share.

What is the typical American family income?

What do you think the median household income in the United States is - please guess if you are not sure.
(Median is the middle, whereas mean is the average).


2.  What is the actual median household income?


Click on the Census Data finder here and search "income".  Here is 2021 Data:

3.  How do you think your family compares to the average income?  Higher or lower? By how much?  If you do not know what your family's income is (or if you are not comfortable writing about it, use the average incomes below)

 

This 2014 graph from NPR shows the way occupations fall into various income levels.  The graphic is posted below, but if you click on the link it will allow you to highlight occupations that fall into more than one income level.

If you don't know your parents' incomes but you know their jobs, you can use this 2010 graph (below), which displays the income inequality by occupation.  The actual incomes may have gone up since then, but the relative placement has not changed much.  Notice where the median is.

Income by percentile

Another way to examine income is through percentile.

This link provides percentile data from the website dqydj.com (don't quit your day job). 

Here is the 2022 data:

Note the difference between median and mean and the resemblance to the curve from our coin flipping activity.

Four Pillar Freedom gives an overview (2019) of income by percentile.

Income by Zipcode - Census Data Finder

Here is a snapshot of Loyola and the surrounding neighborhoods.

North of Sheridan/Devon

South of Sheridan/Devon

What percentile would the income from these neighborhoods be nationally?

Income inequality has been growing

Here is Income Inequality from inequality.org.  One graph showing that income inequality has grown to levels of the gilded age:

The Center on Budget and Policy Priorities published this report with this graph detailing the rising inequality.

This 2017 NY Times editorial explains the rising inequality in one chart, from David Leonhardt Seen below.
The grey line is how much that percentile group's income grew from 1945-1980.

The red line is how much that percentile group's income grew from 1979 - 2014.

Note that more recently, the highest income earners experienced the greatest gains in income.  But it used to be the opposite - the lowest earners were making the highest gains.

This post from Slate details how there was much income inequality during the beginning of the 20th century, then the inequality lessened known as the great compression (1940-1980) followed by a growth in income inequality known as the great divergence (1980 - present).

Another resource for income is from the Federal Reserve Economic Data (FRED)  You can search for real income (adjusted for inflation) in multiple years for comparison.  Here is a graph showing the real income from 1984 to the most recent data.

Despite the growing inequality in income, Americans are working more than ever.  The graph below from PEW shows the share of households who have two income earners from 1960 to 2012.   Families are busier and working more, but earning less and less of a share of the income in the U.S.

Policies affecting growing income inequality

So, income has been becoming more unequal, but government policies can affect this inequality.  For example, some of the highest income earners actually pay less in taxes than middle income earners!  From the Tax Policy Center, this chart (below) shows that higher income earners pay more of their taxes as capital gains taxes which are taxed at a lower rate than the majority of Americans who pay income taxes at a higher rate.

This chart (below) from Visualizing Economics shows the rate that capital gains have been taxed compared to other taxes.  Note capital gains have always  been taxed at less than income tax.  And what this chart does not show is that if you can earn all of your money by capital gains and declare no income, then you can reduce your capital gains tax to zero! If you find the chart or all of the tax talk confusing, simply know this: Some of the highest income earners in the U.S. can pay the less income tax than the average American.  And, as tax rates have fallen since the 1950s, inequality has gone up.  The higher tax rates allowed the government to provide loans for college, small businesses and buying homes, and the taxes fueled projects that created jobs like building infrastructure such as highways, airports and the power grid, and even Red Rocks Amphitheater.

And this 2023 NPR story explains that many millionaires realize that the tax system is not fair and they would like to see that change.

Social Class Component 3: Education 

What percentage of U.S. adults do you think have a college degree?

Here is a link to the Census data regarding education where you can search by municipality or zip code to see what the median educational level is.

Did you realize that so few people have a bachelor's degree or higher?  Does any of this surprise you?

Where does your family fall in terms of educational level? The median American educational level is some college, but no degree.  Is the educational level in your family higher or lower and by how much?

Parent Education = Children's Future Education 

Parents' educational levels correlate with children's educational attainment.  The graph below shows that the less education that parents have, the less education their children obtain.  In other words, if parents don't have a college degree, the child is not likely to attain a college degree and visa-versa; parents with an advanced degree are more likely to have children who attain an advanced degree themselves.

Below is another way of showing the educational level of parents (on the left) influences the level of college education their children get (center) and what social class the children end up in (right) from Daniel Laurison on Twitter:

4.  What are some conclusions or questions you have about how parent educational level affects children's educational probability?

Education = Income

Not only is education level stratified, but the family's educational level determines, on average what the family's income will be (on average).   In other words, the higher your education is, the more money one is likely to earn.  Link to College Board 2016 research report here.  The graph below shows how median income goes up for each level of education, even if you factor in income taxes (which also go up):

Here is a 2011 post from sociological images that has a lot of info showing the connection between your degree and your income, especially that more than any other factor, educational level contributes to lifetime income earnings and the earnings gap gets wider over time.

Income = test scores

So, not only does more education mean more income, the more income means higher scores on standardized tests (which could mean a better education).  See the data below.  This link shows that on average, the higher a family's income, the higher the ACT score.

5.  What are some of the reasons that higher-income might lead to higher test scores?

 

Kohn and Lareau

Family shapes people differently based on the social class of the family.  Melvin Kohn and Annette Lareau are two of the more noted researchers who studied families and social class.  Their research found that parents from working-class households emphasize following rules and discipline while upper-middle-class parents teach their kids to take risks, negotiate, and think creatively.  Sociologist Annette Lareau explains these differences in her research.  Her book, Unequal Childhoods is explained in the Atlantic here.  And there is an excerpt available here.

Lareau identifies these two styles:

Concerted Cultivation: The parenting style, favored by middle-class families, in which parents encourage negotiation and discussion and the questioning of authority, and enroll their children in extensive organized activity participation. This style helps children in middle-class careers, teaches them to question people in authority, develops a large vocabulary, and makes them comfortable in discussions with people of authority. However, it gives the children a sense of entitlement.

Accomplishment of Natural Growth: The parenting style, favored by working-class and lower-class families, in which parents issue directives to their children rather than negotiations, encourage the following and trusting of people in authority positions, and do not structure their children's daily activities, but rather let the children play on their own. This method has benefits that prepare the children for a job in "working" class jobs, teaches the children to respect and take the advice of people in authority, and allows the children to become independent at a younger age.

Student discussion:

Why do you think each social class shapes kids these ways?  Brainstorm your own hypothesis here.

Analyze either your family or a family you know - which style do you think they are and why?  Can you give a specific example?

Conclusions or questions about the reciprocal connection between education and income?

Higher Income = More Elite College (from no college all the way to the Ivies)

People from different social classes are more likely to interact together at college.  From The Upshot of  NY Times, this interactive site allows you to see what percent of students from the top 1% and bottom 60% attend each school of higher education.  You can click on the link above to search your own schools and see more data, but below are two images from the link.

First, this image shows in general that the more income a family has (left side y-axis), the more elite the school that their kids attend:

And the list below shows how schools rank in terms of students from the top 1% of income compared to the number of students from the bottom 60%:

Not only is educational level shaped by parents' social class, but even the major that a student chooses is too.  This research from Natasha Quadlin shows that the major a student chooses at college is influenced by social class,

"...income gaps between fields are often larger than gaps between those with college degrees and those without them. Natasha Quadlin finds that this gap is in many ways due to differences in funding at the start of college that determine which majors students choose....She finds that students who pay for college with loans are more likely to major in applied non-STEM fields, such as business and nursing, and they are less likely to be undeclared. However, students whose funding comes primarily from grants or family members are more likely to choose academic majors like sociology or English and STEM majors like biology or computer science."

Matchmaking and Education

Besides the likelihood of meeting friends and potential spouses at college, there are specific apps and websites to help matchmake couples from Ivy League+ schools.  This 2019 Harvard Gazette article reviews three of them including:  

• BluesMatch, a company based in London that matches Oxford, Cambridge, and Ivy League graduates, said it makes sense that as people experience search fatigue from broad, impersonal online dating pools, they’re drawn to sites that narrow the field by matching users’ interests or backgrounds. “People get tired of using Tinder or Match because there are too many people,” said Law during a Skype chat from London. “And they often don’t have the level of conversation that someone from Oxford or the Ivy League gets excited by.”
• Elegant Introductions out of Miami, are matchmakers for a clientele based in Miami and Boston. Most of their clients, said Gold, are highly educated and professionally successful, are involved in their community, appreciate the arts, and have been screened to make sure they are who they say they are. Applicants have to show proof of an Ivy League degree.

Additionally, if you are interested:

Elite Colleges Constantly Tell Low-Income Students That They Do Not Belong from Clint Smith in the Atlantic.


How Admissions Really Work: If The College Admissions Scandal Shocked You, Read this from NPR.

There are lots of ways that wealthy families get a boost in the college admissions process. Most are quite legal.

Paul Tough's book, The Years That Matter Most is a deep-dive sociological look into college and social class.  From the NY Times book review, 

"... today, whether you graduate from college is largely determined by your parents’ income. In the United States, 77 percent of children born into the top income quartile will earn a degree by age 24, but for the bottom quartile that number is a mere 9 percent. The implications are clear: The education system isn’t transforming the lives of those who need it most; it is dispensing ever more opportunity to those who need it least."

Social Class Component 4: Prestige and Power

People view different occupations with different levels of prestige.  This prestige can translate to real power such as being appointed to boards or committees.  It can also simply give you credibility or respect in social situations.  

What is the median prestige job in this data?  

Where does your family's prestige rating fall compared to this?

Power, according to Max Weber, is the ability to impose one's will on others.  Weber focused on three ways that power shows up in everyday life:

• Traditional authority - power because of social or cultural tradition like royalty or religious leaders
• Rational-Legal authority - power from law and legitimacy of the state such as judges and police 
• Charismatic authority - power that comes from personal qualities that create influence over people such as Kim Kardashian or Michael Strehan

One example of power is how the world's most powerful leaders gather in secret meetings annually to discuss how they can shape policy, economics and laws among other things. One such meeting is the American Enterprise Institute is one example of an annual meeting which is a private, off-the-record meeting held every year.  Another meeting is the Bilderberg meeting.

Some examples of power are the abilities to keep yourself out of jail, influence politicians and enact laws that you favor:

Here is one example from The Daily Show comparing teachers and Wall Street Investors.  Can you guess who has the power?  Video is available at Youtube here.

Here is a link to a Washington Post article explaining that wealthy Americans use their power to create favorable government policies.

This 2019 ProPublica report found that the IRS is LESS likely to audit wealthier Americans because it is more costly and difficult.

And this article from the NY Times shows that an executive at United Airlines accused of corruption charges was forced to resign. Imagine if a teacher was accused of corruption and was forced to resign. That would be it - out of a job and no compensation. But,

United filed a report with the Securities and Exchange Commission on Tuesday indicating that Mr. Smisek would receive nearly $4.9 million in a separation payment, and 60,000 shares of stock, valued at over $3 million.

Some more local examples of a contrast in power among wealthy and powerful compared to low income and powerless:

Compare this story to the cheating scandal in the video above.

Check this post for an explanation of drug busts at different schools including here.

Choose one of the examples above.  Which did you choose and what is the power being exerted?  

Social Class Component 5: Location

The next component of social class is location.  

The Median Metro Area
Examining the largest 384 metro areas in the United States,  our area, Chicago is the 3rd most populous at 9 million people.  The median metro area is #192 - it is the 2nd largest city in Arkansas; Can you name it? Can you guess how many people are in the city? The total metropolitan area?

4.  What is the size of the median metro area in the United States?

5.  How does our metro area compare to the median?

Location and where College Grads Move

WSJ data shows where college grads are likely to move after they graduate.  Here is one example of where LUC grads move:

 Open this post to see the rest of the data.

Try to make your own conclusions about the data:

6.  Where do college grads tend to move?

7.  How do you think where college grads move affects social class in the U.S.?

Educational Attainment in America Map

Another source of evidence regarding social class, education and location is an interactive version of the map below.   The map was created by a geographer using existing data are from the 2011-2015 American Community Survey Table B15003, distributed by NHGIS. 

Here is a picture of northern Illinois:

Here is a picture of Chicago's northside:

(Data preparation was completed in the R and Python programming languages, with heavy reliance on the arcpy site package via ArcGIS Pro and the sf R package. The map itself is hosted by Mapbox and designed with Mapbox GL JS and dimple.js.  Major features of the map are described here.)

Where do you see segregation by educational attainment? 

 This article by Business Insider highlights some conclusions about educational segregation based on the interactive version of the map above.

Home Price, Location and Social Class

The price of a home depends on a lot more than the physical structure of the home.  

From Business Insider the average home price varies considerably from state to state.  For example, West VA was the lowest with an average home price of $108K and California was one of the highest at $554K.  The average for Illinois was $202K.  

From FRED, (Federal Reserve Economic Data) click here for the median home price.

Here is the median home price from Statista.

Location and home price:

City-data has census data by census track including the average home price (as well as income and other data).

How do you think your home's value compares to the average home price?  (Remember from the wealth section above, the average American owns a home.)


Location and health

This post explains the connection of location to college education.

This research from Harvard shows that zipcode is a better predictor for health than genetic code.

And Clint Smith, a Washington DC teacher explains in his slam poem the ways that location affects his students.  As you watch, make a list of the ways that location affects them:

Location is also related to mobility:

An online data tool called Opportunity Atlas finds a strong correlation between where people are raised and their chances of achieving the American dream.
Here is an NPR piece explaining it.
Here is the NY Times Upshot explaining it.
Opportunity Insights provides data about how neighborhoods shape residents' life chances.

Here are maps showing the wide variation of opportunity from the national to the local levels:

This report from NPR's Planet Money details how where you grow up can affect your income later in life.

And here is a video and stats from CNN Money that show how where you grow up limits or benefits you.

 

4.1 Hello, class, I'll bet you...wealth

Today we are gambling in class!

Before Starting
What are the chances of winning a coin flip?

Everyone starts with three coins, what do you think will happen as the contest goes on?

Rules:

• Everyone will get 3 pennies.
• You must find someone to wager against and continue wagering.
• Take turns flipping and wagering (one person picks the wager and one calls heads/tails).
• When I pause the action, be sure to count your coins and be counted!

    Charting the distribution of coins

 

round        1        2        3        4        5

#coins

    0

    1-3

    4-6

    7-9

    10-12

    13+

BEGIN WAGERING!

Debriefing
The exercise was a metaphor for social class.

The exercise resembles real life in a number of ways:

Americans Believe that the Economic System is Fair and Equal
1. Like life in the U.S., the  exercise had the appearance of being fair and equal - everyone had a 50% chance of winning.  The U.S. is an open system - not a caste system or closed system like a monarchy or apartheid.  Our system gives the impression that everyone has an equal chance and that the system is fair.  The coin flip metaphor seems like everyone has a 50-50 chance to succeed.  This is true for U.S. society too.  From Jen Hochschild's book, Facing Up to the American Dream,  Americans believe in the "American dream;" success is attainable for anyone.  However, just like real life, the coin game takes a little luck.  If you are lucky enough to be born in wealth, it is an advantage just like being lucky to win early in the game.

Social Class "Rules" Create a Similar Distribution of Wealth
2. However, our system, although open, is a social class which is made up of unwritten rules.  The way the rules are written, the money will flow to the top with just a few having most coins and most people having very little.  (See the graph at the right from here)

More Money, More Problems? Not for Social class
3. The more money you have the more opportunities you have.  Donald Trump's corporation filed for bankruptcy at least 4 times, but he had enough wealth and power and prestige to recover from the bankruptcies. (note: I have been using this example long before Trump's foray into politics)

Defining Middle Class
4.  The difficulty of middle class.  Most Americans claim to be in the middle class.  People making $30K per year to people making $200K per year claim to be in the middle class.  However, defining the middle is difficult because there is so much money skewed to the top and there are so many people at the bottom.  Even though the game has the appearance of being an equal 50-50 chance, the rules favor a channeling of wealth to the top.  Everytime we play this, the outcome is similar: most money at the top and most people at the bottom with very little money.  This is true in real life as well as the metaphor.  Here is a graph showing wealth distribution in the U.S.:

Compare this graph to a graph of the coin distribution at the end of the game.
Some of the specific similarities include:
How difficult it is to define the middle class.
The huge disparity between those at the top and those at the bottom.
The large number of Americans who have no wealth/no coins.

Because Americans hate the idea of a class system, most Americans prefer to think of themselves as middle class.  This 2015 article from Smithsonian Magazine details a number of sources that show Americans like to believe that they are middle class.  However, rather than being a society of equality or a society of people in the middle, America has the highest rate of poverty among the 17 leading industrial nations.  Most wealth is at the top in the hands of very few people and most people are at the bottom with very little.  

In Summary
To summarize, most U.S. citizens do not like the idea of social class. They do not like to acknowledge the rules that create the distribution of wealth that we see in the exercise. But the reality is that our wealth and even our income in the U.S. resembles that of the coin flip metaphor; a few individuals at the top with enormous wealth and income and most people at the bottom making very little (comparatively).

And the "rules" of our society help to create that dynamic. By "rules" I mean the opportunities and obstacles that we face based on our social class.

Examining Data About Social Class

From the PEW Research Center, this 2015 publication shows American attitudes about income and social class.

So why bother studying social class in the U.S.?

Mindfulness

If Americans don't like social class and don't believe that it exists here in the United States, then why study it?  First, social class does, in fact, exist in the U.S. and, understanding it will help you to understand the opportunities and obstacles that Americans face.  Additionally, this will help to explain why the idea of "middle class" is so appealing to Americans.  Social classes are difficult to define because the U.S. is so stratified.  Social class shapes us so strongly that by understanding it, we will understand ourselves better as well as our fellow Americans better.  And this understanding is not just an understanding of how we think and what we value, but it also is an understanding of our life chances - both the opportunities and obstacles we may face.

Social Class Inequality is getting worse
From the Economic Policy Institute,
Most Americans believe that a rising tide should lift all boats—that as the economy expands, everybody should reap the rewards. And for two-and-a-half decades beginning in the late 1940s, this was how our economy worked. Over this period, the pay (wages and benefits) of typical workers rose in tandem with productivity (how much workers produce per hour). In other words, as the economy became more efficient and expanded, everyday Americans benefited correspondingly through better pay. But in the 1970s, this started to change.

Social class inequality in the U.S. is growing and has been for decades.  This growth is profoundly shaping the United States even though few seem to recognize it.  Economic inequality is influenced by many factors, including the economy, public policy and social changes.  The last several decades, income inequality has been growing.  The highest earning Americans have continued to earn more and more over the last 50 years, while the lower earners have earned closer to about the same.

Inequality is related to many social outcomes

This 2012 post from Socimages of the Society Pages points to The Equality Trust, a British trust that displays data related to income inequality 

Lastly, the final reason why social class is relevant is social class and inequality correlate with a number of measures of society that show inequality makes countries less healthy, less productive and less desirable.  Understanding this can help make our society a healthier and happier place to live.

All of these components both exemplify social class inequality and they exacerbate it.  Please read about each element below.  Remember to think about what an average American looks like and how your family compares.  I want you to have a better understanding of where your family fits compared to the average American when the lesson is finished.

Wealth; The First Component of Social Class

Wealth is tricky to understand.  It is everything that a household owns, such as the home, vacation home, cars, 401K, savings, stocks, jewelry, etc...But, you must subtract what the household owes.  So, if my house is $200,000 but I owe $160,000 then my wealth is only $40,000 on the house. 

One way to examine wealth is through quintiles (20% increments);  If you lined all the households up in the U.S. by wealth, what percentage would the top 20% own? And then the next 20% and so on...Another way to think about this is if you have 5 people who are sharing a pie, what percent of the pie does the first person get, and the second person and third, etc...  CBS explains wealth with a pie here.

Try the following exercise on your own:

First, hypothesize, how much of the wealth (the pie) in the U.S. do you think each quintile (person) has:
Bottom 20%:______   2nd 20%_______  3rd 20%________  4th 20%_______ 5th 20%_______Top
(least)                                                                                                                                             (most)

Second, write how much you think each quintile should have?
Bottom 20%:______   2nd 20%________ 3rd 20%________  4th 20%_______ 5th 20%_______Top


After you have finished answering the questions above, watch this video:


What is the reality?  How is the wealth actually divided?





1.  How does your guess about wealth compare to how it is actually distributed?   (Here is the Google form for this lesson - I recommend opening this in a new window and then answer each question after you read the info.)

This video from the ST. Louis Fed also explains the disparity in wealth in the US (2019).


The overall conclusion about wealth is that the disparity of wealth is greater than that of income (see the pie graph below).  The top 1% of America owns 34% of everything.  The top 10% owns 70%.  And half of America owns 96% of everything.  In other words, the bottom half, 50% of America, owns almost nothing.  They have no money saved - for retirement or otherwise.  Once you deduct their debts, they have almost no equity - from their homes, or possessions, or bank accounts.  

The average wealth of Americans
From DQYDJ (Don't Quit Your Day Job)

... is a finance and investing website founded in 2009 that posts about investing and adds interactive features, tools, and calculators to their posts.

The DQYDJ 2020 analysis of wealth in America calculates the median net wealth for Americans at $121,000:

The median is up from this 2010 Huffington Post report which analyzed a Congressional Research Bulletin about wealth, "The median household net worth -- the level at which half the households have more and half have less -- was $77,300"  For a much more detailed analysis of wealth, see this post from business insider.

Proxies for wealth

It might be difficult to know how much wealth your family has, so here is a different way to think about it:

How does your family or community compare to the "average" American?

Average American:   

• 90% own 1 car, 50% own 2 cars (actual average is 1.8 cars per household),   
• 50% have a 401K, 
• 66% own 1 home, (only 6% own a second home like a condo or lake house).

How does your family's wealth compare to the average American?  Feel free to comment on any of the above stats, or a combination of them:

• how much the total household net worth is
• cars
• 401K
• owning a house or second home

Here is the wealth distribution in the US from 1990 to 2021 from Statista:

Here are six facts from the Brookings Institute about wealth in the USA (2019)

Here are PEW trends in wealth and income from 2020:

Inequality.org explains the rising wealth inequality, even during the pandemic.

Wealth creates opportunity for passive income, the next component of social class.

Click here to continue to income and other components of class.