Outline

1. Outline • Globalization Video • “Winners and Losers” • Social Stratification • Thinking Systematically about “Winners and Losers” • Distribution of Income & Wealth… • Krugman on “Winners and Losers”

2. Now Video on Globalization and PA • PASTOR FRED CRAWFORD:“Everybody can't own the company. So some people have to get very rich for other people to make a decent living. And we just don't... we're not those folks.” • He’s a Pastor…but he sounds like a sociologist

3. Class in America • HARTFORD, Conn. — A 36-year-old Swedish countess divorcing a former CEO says she cannot live on $43 million. • Marie Douglas-David, a former investment banker, says she has no income and needs her 67-year-old husband, George David, to pay her more than $53,000 a week _ more than most U.S. households make in a year _ to cover her expenses. • David stepped down last year as chief executive at Hartford-based United Technologies Corp. but is still chairman of the board and has an estimated net worth of $329 million... • Douglas-David has filed court papers showing she has more than $53,800 in weekly expenses, including for maintaining a Park Avenue apartment and three residences in Sweden. Her weekly expenses also include $700 for limousine service, $4,500 for clothes, $1,000 for hair and skin treatments, $1,500 for restaurants and entertainment, and $8,000 for travel. • At that rate, Douglas-David would burn through $43 million in less than 16 years. The Census Bureau estimates that the median U.S. household income in 2007 was just over $50,000. (HP March 19 2009)

4. Class in America • THE tale of Lisa Bonder Kerkorian, the 36-year-old former tennis pro who is demanding $320,000 a month in child support from her former husband, the 84-year-old billionaire Kirk Kerkorian, has caused a stir among hard-working Americans. Mrs. Kerkorian, who was married to Mr. Kerkorian for one month in 1998, filed court papers on Jan. 7 seeking support for their daughter, Kira, 3. Among other things, she wants $14,000 a month for parties and play dates; $5,900 for eating out; $4,300 for eating in; $2,500 for movies and other outings; $7,000 for charitable donations; $1,400 for laundry and cleaning; $1,000 for toys, books and videos; $436 for the care of Kira's bunny rabbit and other pets; and $144,000 for travel on private jets. Sure, that sounds like a lot of Taco Bell for a 3-year-old, but Mrs. Kerkorian will need every penny. (NTY 2002)

5. Class in America • Katie and Todd Clarke of Parkersburg know the feeling. The paycheck Katie earns on $10.90 an hour as a secretaryisn't enough to cover all of the family's expenses. Food takes priority; money left over goes to whichever bill collectors threaten to cut off services first."There's no way to pay it all," said Katie Clarke. A mental illness keeps Todd from working.The Clarkes and Bergers are like thousands of Iowans who work hard without getting ahead. Many of these families will cover their basic monthly expenses and have little, often nothing, left over. Most are white, between 19 and 64 years old. Many have a high level of education, and they're often single women. http://www.wcfcourier.com/articles/2005/04/04/news/top_story/bd7b5d0be02b283386256fd9004ea9b2.txt

6. Why/How Does This Happen? • Social Stratification- study of systematic inequalities between groups of people that arise in a society. (D) • Inequalities not simply due to differences in talent or effort • Stratification is universal, but variable • Age, Race, Class, Gender…For example: • Native Americans, no income inequality, but elders had more power… • South up until the1960s, inequality based on race • Saudi Arabia today, inequality based on gender • America today…inequality between the classes • People who study social stratification address the basic question: Who, gets what, and why? • What? = Prestige, respect, income, wealth, education, land, etc. • Why?= Requires analysis of social structure…norms & institutions

7. Social Stratification • Consider stratification and the Titanic…1,600 people died • Was it random? Or were certain people more likely to be saved?

8. Social Stratification and Death • Consider the Titanic…1,600 people died • 60% of first class passengers were saved • 36% of second class passengers were saved • 24% of third class passengers were saved • Did 1st Class passengers survive at higher rates because of talent, skill or effort?

9. Social Stratification and Death • Consider the Titanic…1,600 people died • 60% of first class passengers were saved • 36% of second class passengers were saved • 24% of third class passengers were saved • Did 1st Class passengers survive at higher rates because of talent, skill or effort? • System of stratification existed on ship • “Class was a matter of life and death.” (Macionis) • 1st Class warned first…cabins closer to life boats…put on boats first • It had nothing to do with talent, skills, effort & merit

10. Stratification as a Trait of Society • Think of society as a parking lot at the supermarket with 100 spots and 100 people looking for spots… • No matter what, some won’t get spots near the door; it’s just not possible • No matter how talented, how hard they try, how much personal responsibility is taken…some will not be near the door • Sociologists who study stratification examine this process

11. Stratification as a Trait of Society • Stratification is about more than personal responsibility, talent, merit and effort…it is systemic. • Imagine an Ambition pill that all Americans took every morning…the pill made provided unlimited effort and talent • Could everyone have a high status, high skill job? Doctor, Manager, Business Owner, Judge, etc.

12. Stratification as a Trait of Society • Stratification is about more than personal responsibility, talent, merit and effort… • Could everyone have a high status, high skill job? Doctor, Business Owner, Principal Judge, etc. • Stratification would still exist… society will always need someone to nurse the patients, bake the bread, teach the children, clean the offices, police the streets, etc.

13. Who gets what and why… • PASTOR FRED CRAWFORD: “Everybody can't own the company. So some people have to get very rich for other people to make a decent living. And we just don't... we're not those folks.” • In this new globalized world of ours, “Who gets what” • “The arguments are fiercest where the facts are fewest.” • William James…famous dead psychologist and philosopher

14. Income & Wealth • Income-money, wages, and payments that are periodically received from investments (D) • For most people a paycheck • Income is primary source of survival for most • 80% of us are production and non-supervisory workers who depend primarily on a paycheck to make ends meet • Factory workers, cops, construction workers, teachers, cashiers, nurses, secretaries, cooks, janitors, computer technicians, social workers, engineers etc.

15. Income & Wealth • Wealth-assets, particularly those that are income producing. (D) • For most people their home… • But for some people a second home in the Hamptons or Virgin Islands, an apartment in London, a Van Gogh, race horses, shopping malls, hotels, ships, sports teams, bonds, stocks, cash reserves, etc.

16. Income and Wealth • So how are income and wealth distributed among a society’s population… • How do we divide the pie?

17. This American life… • Income… • 10 Volunteers Up Front…

18. Ten people…one person gets 50% of the pay on payday…

19. The “Middle Class Squeeze” • Trends like this…along with the data on mobility have given rise to a concept • Middle class squeeze • tendency of those of the middle or intermediate classes to be pushed either upward, or more commonly, downward in terms of wages, salaries and family income (D)(p.119,384) • Let’s explore…

20. Winners and Losers • Income Inequality Today

21. Outline • Distribution of Income & Wealth… • Paul Krugman, “The Great Divergence” • Median income • Explaining the trends • Norms and Institutions • A note on statistics… • Videos should be on line next week…will keep you posted • Always posting new readings so be sure to hit refresh when you visit the reading page

22. Quiz • The chapter written by Paul Krugman titled “The Great Divergence”described research showing that the economic gap between: • the rich and all other classes in America has increased dramatically over the past several decades • the middle class and rich in the US is shrinking as middle class families grow richer • America and Latin America has increased dramatically due to globalization • America and Latin America has decreased dramatically due to globalization

23. Bonus • In the reading by Paul Krugman he discussed the “Great Compression” that America experienced. This concept refers to: • A. the substantial reduction in inequality during the New Deal • B. the substantial reduction in inequality during the presidency of Ronald Reagan • C. the pressure being put on middle class families by changes in the economy • D. the increased concentration of wealth in the hands of the upper class

24. The “Middle Class Squeeze” • Trends like this…along with the data on mobility have given rise to a concept • Middle class squeeze • tendency of those of the middle or intermediate classes to be pushed either upward, or more commonly, downward in terms of wages, salaries and family income (D)(p.119,384) • Let’s explore…

25. US Government Occupational Outlook Projections: Top 10 Largest Job Growth • How many require a college education?

26. An Hourglass Economy: 2010 • Four of the ten do not pay enough to lift a family of four out of poverty • One just barely pays enough… • Winners and Losers: you can only work the jobs that a society provides

27. Reading this Week • “Recession's toll: Most recent college grads working…” • What was this article about?

28. Sociological Imagination • “When coupled with heavy student loan obligations, it's no wonder that 40 percent of seniors surveyed by NACE said they expect to need financial help from their parents after college” (Pugh 2009: 2) • Sociological Imagination • ability grasp the way the social structure shapes individual lives(D) • 1 college graduate mal-employed and moving back home…maybe something is up with them • Most college grads are mal-employed and moving back home… maybe we need to examine the social structure • http://www.mcclatchydc.com/2009/06/25/70788/recessions-toll-most-recent-college.html

29. Sociological Imagination • Lower wage jobs have a lingering effect: “The Curse of the Class of 2009” • details how college graduates who enter the job market during the current recession will likely suffer lower wages for years to come. For each percentage point increase in the unemployment rate, those who graduated during the recession earned 6 to 8% less in their first year of employment compared to their more fortunate counterparts. The effect decreased in magnitude by approximately a quarter of a percentage point each year after graduation. • However, even 15 years out of school, the recession graduates earned 2.5% less. • http://mba.yale.edu/news_events/CMS/Articles/6841.shtml

30. Winners and Losers

31. Video Clip • Video addresses who gets what and why in the US • “Why is the middle class shrinking?” • From Now, a weekly show on PBS hosted by Bill Moyers • Based on research in the chapter you were assigned this week… • Note…the clip takes place in the early 2000s…prior to the current economic collapse

32. Pastors and Painters and Sociologists • PASTOR FRED CRAWFORD: “Everybody can't own the company. So some people have to get very rich for other people to make a decent living. And we just don't... we're not those folks.” • Ron Caputo: “You know, their argument will be, well, nobody told you to be a painter and have so many kids. You know, you could have went to college, you could get grants, you could do this, you could do that. They're right, to an extent, okay? They are. But you know, look at the other aspect of it. Well, then who's going to do the painting?”

33. Somebody has to do the painting: 1)Who has gained the most…?

34. Wages Since 2000

35. Increasing Inequality in America…The “Super Rich” have gained the most… • Last 30 years have witnessed an “astonishing concentration of income and wealth in just a few hands.” (Krugman, NYT p.2) • Top 1% of families have seen after tax income rise 157%… • Most income gains since the 1970s were to the top 1%… those people making more than $230,000 • And 60% of those gains went to the top .1%, those who make more than $790,000 • And almost half of those gains went to the top .01%, those with income of at least $3.6 million

36. Growing Inequality • “…Top 10%, top 1% and fractions of the top 1 percent enjoyed their greatest share of income since 1928 and 1929” (Johnston 2007:1)

37. Income Distribution Over Time: The Great Compression When Income inequality declined dramatically • Why?

38. From The Great Compression to “The growing economy is mostly going to benefit those who are not middle class.”

39. The hope of some…the fear of others…Doubtful either way…

40. Now and Krugman 2. Relationship of top gains to other’s position?

41. America’s Middle Class… • What does the data show about the distribution of income in America?

42. Winners and Losers • Simple Math tells us… “if the rich get more, that leaves less for everyone else.” (Krugman p. 9) • The richest 13,000 families have almost as much income as the 20 million poorest…

43. CEO Pay • What has the trend for CEO pay in the US been?

44. Winners and Losers

45. Business Week, Fall 2004

46. It hasn’t always been like this… It’s not like this elsewhere… This is a big issue right now… Stakeholders in conflict CEO Pay Compared….

47. Now and Krugman 3. Home prices vs. income…

48. New Home Prices Up, Income Flat • New Home Prices Up 120% • Income for Middle up 10%

49. Shifting Pension Risks • What happened to the teacher’s retirement nest egg?

50. “The Great Risk Shift” • When you’re too old to work but too young to die… • Half of America's private sector workforce are not covered by any retirement savings plan; their retirement will be anchored only by Social Security and whatever they have managed to save on their own. • The other 50 percent have one of the two main employer-sponsored retirement savings strategies: a traditional lifetime pension or a 401(k)-style investment plan. http://www.pbs.org/wgbh/pages/frontline/retirement/need/#1 • What happened to the teacher’s retirement nest egg?