[xmca] article on social class

From: Steve Gabosch (sgabosch@comcast.net)
Date: Fri May 05 2006 - 18:42:23 PDT

I thought this review of books on class might be
of interest to some. The first book reviewed is
a compilation of articles on social class
published in the New York Times last year.

I don't happen to agree with the reviewers
conclusions about class, but I find some of his
observations and criticisms stimulating for further thought and research.

- Steve

Final paragraph of the review:
"Does it enhance our understanding to look for
classes in America? As has been seen, any group
we choose to call the "middle class" is so large
as to be of little analytical help. Nor do the
huge majority who are not rich qualify as a
class. Moreover, there remains a very well-paid
tier of corporate executives between them and the
truly rich. Yet, along with the increased
concentration of wealth, we are seeing millions
of Americans being laid off, settling for lower
paying jobs, losing health coverage, and watching
pensions evaporate. Economic inequality is
increasing, just as the millions who are born and
stay poor are not getting anything like a fair
chance to improve their situation. Victims of
outsourcing don't fit into a single class, nor do
the people who suffer most from living in a
society that is increasingly unequal and unjust.
To see these trends as matters of class does not
explain them. What is clear is that we have yet
to see any convincing ways of reversing them."

The New York Review of Books
Volume 53, Number 9 · May 25, 2006


The Rich and Everyone Else

By Andrew Hacker

Class Matters
by correspondents of The New York Times, with an introduction by Bill Keller
Times Books, 268 pp., $14.00 (paper)

Inequality Matters: The Growing Economic Divide
in America and Its Poisonous Consequences
edited by James Lardner and David A. Smith
Demos/New Press, 328 pp., $25.95

The Chosen: The Hidden History of Admission and
Exclusion at Harvard, Yale, and Princeton
by Jerome Karabel
Houghton Mifflin, 711 pp., $28.00

Forbes 400: The Richest People in America
2005 Edition, 344 pp., $5.99

Individual Income Tax Returns
Internal Revenue Service, Publication 1304; available at www.irs.gov/taxstats

In their own ways, three of the books under
review­Class Matters, Inequality Matters, and The
Chosen­warn that social barriers in the US are
higher and economic inequality is more pronounced
than at any time in recent memory. All three
books also frame this issue by asserting or
implying that lines between classes are
hardening. While the term is widely used, class
has always resisted clear definition. We may talk
of the rich and poor, of people in the middle, of
blue- and white-collar workers, of haves and
have-nots, yet attempts to place most people in
an appropriate class have never been successful.
There is no clear agreement on the number of
classes, and how they should be defined. Indeed,
attempts at precision inevitably create problems.
For example, a 2004 study by the Annenberg Center
at the University of Pennsylvania defined the
middle class as everyone with incomes between
$25,000 and $75,000.[1] They make up half of all
households, and include all families on both
sides of the median family income of
approximately $50,000. But has a family making,
say, $28,000 really reached the middle class? One
with $95,000 might be called upper middle class;
but that would still seem to locate it in the
middle. Any attempt to set a floor or ceiling is
bound to raise questions like these.

In Inequality Matters, James Lardner speaks of
America's "growing class divide." Yet he never
identifies the classes that are being divided. If
he means, as I think he does, those who are
well-to-do and those who are not, then who and
how many are in each group? The IRS reports, for
example, that 356,140 taxpayers declared incomes
of between $500,000 and $999,999 on their 2003
returns. Where should someone receiving, say, a
$650,000 salary be assigned? Earning $12,500 a
week before taxes should provide a lawyer a
comfortable living, but does it place her with
the rich? Then what about her nonworking cousin,
who happens to have exactly the same income, but
in his case it consists of the proceeds from a $12 million inheritance?

Problems like these are evident very early in
Class Matters, which republishes a series of
fourteen articles that appeared in The New York
Times last year. They report on a broad range of
men and women who were willing to talk candidly
about themselves. We meet old and new
millionaires on Nantucket, a laid-off manager and
another who fears he may be fired, and a Chicago
mother of five pulling herself out of poverty. No
claims are made that they are a cross-section or
random sample of Americans. Still, we are
introduced to people most Times readers would
probably never meet. Apart from the few at the
top and the bottom, the reporters do not try to
identify their subjects by class. Even so, the
book shows how the lives they lead are shaped by where they stand in society.

The opening chapter skirts the issue by saying
"class is rank, it is tribe, it is culture and
taste." Class is said to be expressed in varying
"attitudes and assumptions," and there are
"dozens of microclasses, defined by occupations
or lifestyles." America's class system, insofar
as it has one, is a "ladder with lots and lots of
rungs." Here alone, I count nine words that
supposedly define class, and we haven't even got
to income, wealth, or power. Elsewhere, we hear
that class produces "different views of gift
giving, vacations, food, child rearing." Yet
another chapter observes that we can no longer
use dress to tell where people stand, since nearly everyone wears jeans.

While I find that assigning Americans to classes
occasionally makes sense, other classifications
often are more informative. For example, the gap
between the rich and everyone else isn't
necessarily a class divide. And while we may talk
about a middle class, or a working class, these
strike me more as phrases people use casually in
conversation then as rigorous categories. Thus we
may hear debates over whether a truckdriver and a
college librarian who both earn $65,000 should be put in the same class.


In Inequality Matters, a collection of excellent
papers from a conference held at New York
University in 2004, a recurring thesis is that
the welfare state has been turned on its head.
Indeed, the meaning of the term "redistribution"
has changed. It used to mean taxing the
better-off to assist society's less fortunate.
Today the flow is in the reverse direction. David
Williams and James Lardner, writing on health,
show how Medicare beneficiaries get better
treatment than those on Medicaid, for example.
Tamara Draut reveals that more subsidized
financial aid now goes to suburban students who
can afford expensive SAT courses. And David Cay
Johnston shows how tax rates have been lowered
even for families with incomes of $200 million.
For Bill Moyers, the central fact of our time is
"a gap between rich and poor that is greater than
it has been in half a century."

There is no question that the rich have been
getting richer, especially in recent years. Yet
what wasn't generally predicted is that the
numbers of such people have been growing, with
more of them better-off than in the recent past.
Table A draws on several sources that highlight
these changes. The most recent figures are from
2003 through 2005, and can be compared with similar data from the early 1980s.

More Billionaires. Each year, Forbes magazine
lists the men and women it identifies as the 400
richest Americans. While no one can say for sure
who has how much, Forbes has reliable informants
and its estimates have a plausible ring. To get
on its first list, which came out in 1982, one
needed the equivalent of $200 million in current
dollars. By 2005, it took $900 million to be
listed, more than a fourfold increase. Thanks to
this higher standard, only forty-five on the
original list would have made its latest version.
The late Daniel Ludwig, a shipping magnate, led
in 1982 with $4 billion, again in today's
dollars. Last year, Bill Gates was first, with
$51 billion. Following him, there are another
forty-nine men and women who surpass the wealth
once amassed by Mr. Ludwig. It is easier to
become a billionaire in an era of hedge funds and
leveraged buyouts, while the founders of
electronics industries like Oracle, Google, and
Dell have become as rich as a Carnegie or a
Rockefeller in a fraction of the time.

More Millionaires. The Internal Revenue Service
issues reports showing how much taxpayers declare
as their annual income. These sums are
undoubtedly on the modest side, since they show
only what people choose to disclose, while much
of high-bracket income may be sheltered. Even so,
between 1981 and 2003, and adjusting for
inflation, the annual returns exceeding $1
million rose more than sevenfold as a proportion
of all 1040s. In 2003, the latest IRS figures,
fully 181,282 households admitted to making more
than $1 million a year, averaging $2,951,369.
Their share of all taxpayers' income has also
increased seven times since 1981, which must mean
the share going to the rest has declined. While
most millionaires list some kind of business or
professional income, these earnings amount to
only a third of their total. Much of their money
comes from inheritance and sales of property,
including stocks and bonds. Almost all are safely
rich, whether by their own efforts or
inheritance, in that they have enough to continue
to live well even without working.

Six-Figure Families. Each March, the Census
releases a report on the distribution of personal
income. In its 1982 survey, only 3 percent of all
families had incomes over $150,000, computed in
today's dollars. By 2004, its latest report, 8
percent of households had reached that level, and
most of those households have one earner making
at least $100,000. This group now absorbs 27
percent of aggregate personal income, against 11
percent in 1982. So as matters stand, the other
92 percent of Americans receive 73 percent of the
pie. This upward flow of money is only partly the
result of tax cuts bestowed on the better-off.
More important is the fact that executives and
professionals are being given salaries, bonuses,
and other forms of compensation that are much more lavish than in the past.

To return to the 400 richest Americans, perhaps
the most salient feature of the Forbes list is
its changing membership. At death, fortunes tend
to be divided, and most descendants don't inherit
enough to stay on the list. While the current 400
includes members of the Pritzker, Hearst, and
Walton families, they already have fifty-nine
children, most of whom will end up rich but much
less so than their parents. Back in 1982, the
list had thirteen Rockefellers and no fewer than
thirty-three du Ponts. By 2005, only two
Rockefellers remained, and all the du Ponts were
gone. Indeed, 1982 and 2005 come across as very
different eras. The earlier year was strong on
family scions; most of the places they once held
are now occupied by self-made men and women,
among them Oprah Winfrey, Margaret Whitman, and Martha Stewart.

To call the rich an "upper class" only tells us
that they have the most money, not about the
power they have, or their social influence. But
when it comes to the particulars, there are not
many signs that they share any traits other than
their money. "Rich individuals have no feelings
or purposes in common, no mutual traditions or
hopes," Alexis de Tocqueville observed of
Jacksonian America. "Though there are rich men,
the class of rich men does not exist." At this
point, we lack firm information on how much the
very rich are giving back to society. In overall
terms, the IRS reports that the 5,955 richest
taxpayers, whose annual incomes average $26.2
million, gave away a deductible 6.7 percent of
what they declared. Just how much more comes from
the thousands of family foundations is hard to
determine, since no one collates their annual
reports. At the same time, such high-tech
entrepreneurs as David Packard, William Hewlett,
and Michael Dell have become important supporters
of museums, orchestras, and a host of other
causes. The fund created by Bill and Melinda
Gates now gives away twice as much as Rockefeller, Carnegie, and Ford combined.


Even as the relatively small group of rich people
is getting richer, Class Matters asserts that
social mobility in America has "flattened out,"
"stagnated," or even "declined" in recent years.
A chapter called "Fifteen Years on the Bottom
Rung," describes an immigrant mired in a mundane
job. Another, "No Degree, and No Way Back to the
Middle," tells of a laid-off manager whose
résumés are returned because he doesn't have a
college degree. Reports like these are by no
means rare. Still, we should ask if they reflect a growing trend.

How many people are moving upward, compared with
some periods in the past? In the decades
following World War II, millions of families
bought suburban homes and embarked on new lives.
Between 1953 and 1973, median income in constant
dollars grew by a remarkable 75 percent. For most
who gained, this was not the result of intense
personal struggle. It was more as if the growing
economy was a giant escalator lifting everyone
upward. A parallel trend in higher education came
with the GI Bill after World War II and continues
apace as more Americans graduate from college
each year. Among men and women in their early
thirties, 32 percent now have a bachelor's degree
or better, compared with 25 percent in 1980 and
14 percent in 1970. These changes mean that
millions of young people are moving past their
par-ents, at least as measured by higher education.

But other indices suggest that the postwar
escalator has not been moving for quite a while.
Between 1982 and 2004, median earnings of fully
employed men grew by only 2.7 percent, which is
about as close to stagnation as one can get for a
twenty-two-year period. At the same time, women's
earnings rose by 25 percent, from 63 percent to
77 percent of what men made. So if men as a group
weren't moving up, a lot of women were. This had
an impact on family income. Between 1982 and
2004, family median incomes increased from
$43,913 to $54,061, a 23 percent increase in real
dollars, and at first glance a heartening sign.
But this growth was almost entirely the result of
the presence of additional earners, with more
wives turning to full-time work and contributing
more to the family total. In contrast, the median
income in families with a single breadwinner rose
only 6 percent in this period. So the rise in
family income of 23 percent came mainly from more
work by more members, the equivalent of running faster to keep in place.

True, median incomes only tell us about the
persons or families who happen to fall in the
exact middle. Even so, they remind us that when
the median barely improves, it means that for
most people who move ahead­and some plainly
have­there will be someone else who is falling
behind. As was noted earlier, from 1982 to 2004,
the fraction of families that rose to the
$150,000 tier grew almost threefold. Their
progress had to be paid for. And it was, by
households whose earnings declined. Among them
are the growing number of single mothers, who
tend to cluster at the bottom of the income
pyramid (median income: $23,428), whereas earlier
many of them would still be in two-spouse households (median: $50,867).

Mobility may also be analyzed by examining what
happens to specific men and women in the course
of their lives. One method draws on a sample of
parents and then keeps in touch with them until
their children have become adults. The best such
study I have seen was published last year by Tom
Hertz, an economist at American University, who
draws on a database that has tracked 6,273
families over thirty-two years.[2] As can be seen
in Table B, he compares the parents' economic
standing when the children were growing up with
how those offspring have fared on their own.

Hertz found, as might be expected, that many of
the children raised in the top fifth­some 38
percent­are still up there as adults, and the
same holds for many raised at the bottom. Yet of
those who began at the bottom, 58 percent climbed
up at least one tier and 34 percent moved up two
or more tiers. Since we know that few from the
bottom fifth get college degrees, it is striking
that as many as 18 percent of them end up in the
top two fifths. As for the children of the
best-off households: fully 62 percent of them
moved down, despite the advantages they had in their formative years.

A story in Class Matters hints at a downward
future. In a socially mixed marriage, the mother
has a sizable trust fund and her new husband was
selling cars when they met. One of her own sons,
who has dropped in and out of college,
"fantasizes about opening a
brewery-cum-performance-space, traveling through
South America, or operating a sunset massage
cruise." However, he won't have an independent
income until his mother dies, and then there's a
brother to split the bequests in the will. Unless
he has talents that aren't now apparent, it seems
likely he will have a lower living standard as an adult than he did as a child.

Using quintiles to track mobility also means, as
we have seen, that if someone new moves into the
top fifth, another person has to go down.
Therefore, Hertz is not only telling us how many
offspring have surpassed or fallen behind their
parents. In his overall analysis, for every
winner there is another loser. This also holds
for the Forbes list, since no more than 400 can
make the grade. Last year, there were forty-one
newcomers, displacing thirty-three whose net
worth didn't keep up, plus another eight who
died. By other measures, the increasing income of
one family doesn't mean the decline of another.
Still, as was seen, the $1 million tier is
getting rather crowded. In some circles now,
you're not really up there if you can't declare
$10 million a year (as 6,126 households did in 2003).


"In today's United States," Tamara Draut writes
in Inequality Matters, "a four-year degree has
become the all-but-official ticket to
middle-class security." As the four medians in
Table C show, each academic rung brings higher
pay. But medians (and averages) often mix
together people with varied characteristics. For
this reason, the table, by focusing on a more
homogeneous group­in this case white men who are
currently between the ages of forty-five and
fifty-four­ avoids disparities resulting from sex
and race and age. This group was also chosen
because most of them have been employed for
twenty to thirty years, so that we can compare
their current status with the educational level
they attained a generation earlier.

If college graduates are more apt to get better
first jobs, it is because established businesses
and professions have grown accustomed to asking
for degrees, which is also a convenient culling
device. (The dot-com world has shown that such
rules can profitably be broken, especially for
first-rate programmers.) But a first job, while
often important, is only a step in a career.
According to all the evidence I have seen,
promotions will soon be tied to performance, not
on whether the candidate once took Anthropology
101. Still, the table confirms that many men who
are only high school graduates end up in the
bottom income third, which is probably where they started.

But I find it even more significant that more
than half of them have moved into the top two
thirds, with 17 percent now in the tier where
college graduates are expected to end up. On the
other hand, of these men in their forties and
fifties, 46 percent with bachelors' degrees and
31 percent with graduate degrees haven't made it
to the top third. Table B, which traced how
children ended up, showed considerable downward
mobility. Table C tells a similar story, since it
says that while education generally correlates
with earnings, these benefits accrue far less
evenly than is generally believed.

One result is that many college graduates now
hold jobs that once required only a high school
diploma. The Bureau of Labor Statistics reports
that 37 percent of flight attendants have
completed college, as have 35 percent of tour
escorts, 21 percent of embalmers, and 13 percent
of both security guards and casino dealers.[3]
All signs suggest that the number of graduates
will continue to grow, and many will end in
well-paying professions. There still seems to be
a strong demand for MBAs, of which 120,277 were
awarded last year, as well as 105,668 degrees in
engineering, and 151,690 in health-related
fields. But we cannot expect the economy will
automatically create better-paid positions to
match the cohort acquiring higher education. And
of course employers do not perceive all degrees
as equal. When résumés are read, it's thought
important not just whether the candidate attended college, but which one.


Jerome Karabel, a University of California
sociologist, has written an intriguing study of
how Harvard, Yale, and Princeton decided whom
they would admit throughout the twentieth
century. He describes the change from an emphasis
on family background and "manly character" to
academic excellence as shown by high grades and
test scores. Undoubtedly the biggest break with
the past is that The Three (as I will call them)
now have fewer white and male students than they
once did, as well as fewer Protestants and
products of boarding schools. Of Groton's
seventy-six graduating seniors last year, only
eleven made it to The Three. There was a time,
Karabel notes, when almost all would walk in. The
Three have also embraced affirmative action, and
now reserve about 15 percent of their places for
black and Hispanic undergraduates, even if their
academic records are somewhat below the norm.
Instead, credit is given for traits like
perseverance and commitment. Karabel doesn't say
if he feels this is akin to the way "manly
character" was used to favor earlier groups.

In recent years, The Three have admitted fewer
than 12 percent of their applicants, odds below
those at even honest casinos. This popularity is
readily explained. As Karabel puts it, a degree
from one of them is seen as a "ticket to
success." It's certainly true, as he says, that
their graduates "have always been heavily
overrepresented in the American elite," providing
seven of the last century's seventeen presidents.

Karabel's use of the phrase "American elite" is
telling, since he uses that term rather than,
say, "ruling class." Nor is this merely a
semantic matter. One can sensibly say that
America has rulers, whether political, economic,
or cultural, with power concentrated in large
organizations and institutions. But it need not
follow that those who hold this power constitute
a class. An important feature of an "elite" is
that it consists of individuals who hold
specified positions. The CEO of ExxonMobil
belongs, as do the secretary of state and the
president of Yale. How they perform may make a
difference, but they still owe their power to the chairs they occupy.

It's worth asking to what extent The Three are
supplying candidates for the positions that
count. A place where their degrees carry weight
is the legal profession. Among last year's
entering class at Harvard Law School, 395 were
from The Three, while their 1,267 classmates came
from 235 other colleges. Moreover, their
undergraduate degrees continue to make a
difference. In powerful firms, like New York's
Cravath, Swaine & Moore and Washington's
Covington & Burling, more than a third of those
picked as partners began at one of The Three.

But in other branches of work, The Three have
less cachet. Their graduates account for only
thirty-three CEOs of the top five hundred
corporations on Standard & Poor's list. So it may
be that four sheltered years are not the best
preparation for a corporate climb. Wall Street
now also draws from a broader pool, as do leading
medical and research centers. Most of The Three's
graduates on Forbes's richest list inherited
their wealth. By way of contrast, many who
amassed their own fortunes never attended or
didn't finish college, among them Steven Jobs,
Michael Dell, and Lawrence Ellison.

The Chosen closes with a brief coda entitled "The
Dark Side of Meritocracy." Today, The Three admit
students largely on their academic records, with
their SAT scores among the highest in the nation.
But Karabel cites the work of Michael Young, who
a half-century ago in The Rise of the Meritocracy
worried that a stratum based on merit was already
"on the way to becoming hereditary." Karabel has
the same concern, adding that The Three and a few
other colleges are creating "a 'new class' of
privileged credential holders possessing the
means to reproduce itself." I'm not so sure this
is happening. Harvard still admits about 40
percent of alumni offspring who apply, compared
with 11 percent from the general applicant pool.
Statistics like these have been used to argue
that inherited privilege is still strong.
However, even at Harvard, half of the applicants
with legacies are turned down. The University of
Pennsylvania rejects 59 percent, while Swarthmore
rejects 64 percent, and Princeton 65 percent.[4]

We all know that the children of accomplished
parents often don't inherit their talents. They
can be sent to expensive schools and receive
extra tutoring, but these investments don't
always bring the wished-for results. Among
students whose parents make over $100,000 a year,
fully 59 percent scored less than 600 in the
mathematics section of the SAT and 65 percent
scored under that figure on the verbal part. Yet
Yale admits fewer than 4 percent who have scores
at this level. Since facts like these are widely
known, many offspring of successful families
don't even bother to apply, and students with
more modest social origins are admitted.

Would changed admissions policies alter the
makeup of America's elite? Karabel shows how The
Three during much of the last century curtailed
Jewish enrollment, and he explains why the
policies had to be changed, as Jews became more
established in American life, including the
academic world, and their exclusion was damaging
both to the quality of scholarship and to the
universities' economic future. Curiously, he says
relatively little about the upsurge in Asian
enrollments, which provide strong evidence that
high school grades and test scores are more decisive than ever.

And the advent of coeducation at Yale and
Princeton, as well as Harvard's admission of more
women, means that The Three admit 1,168 fewer men
now than they did in 1970. Thus 1,168 men will go
through life without a credential they might have
had in an earlier generation.[5] Indeed, The
Three now enroll 1,581 more women than in 1970.
If their degrees will also become Karabel's
"ticket to success," as he calls them, then the
topmost reaches of America's elite should show
more women and fewer men. (In fact, two leading
American CEOs who went to Princeton are Margaret
Whitman of eBay and Avon's Andrea Jung.) Still,
to reach the heights in practically any field
today calls for a round-the-clock commitment. So
we will have to see what women from The Three are
doing when they reach, say, their late thirties.
If more than a few decide to give up demanding
careers, the men they once displaced as
undergraduates, and who had to go to less
celebrated colleges, may find they have a second
chance to reach these top rungs.

Does it enhance our understanding to look for
classes in America? As has been seen, any group
we choose to call the "middle class" is so large
as to be of little analytical help. Nor do the
huge majority who are not rich qualify as a
class. Moreover, there remains a very well-paid
tier of corporate executives between them and the
truly rich. Yet, along with the increased
concentration of wealth, we are seeing millions
of Americans being laid off, settling for lower
paying jobs, losing health coverage, and watching
pensions evaporate. Economic inequality is
increasing, just as the millions who are born and
stay poor are not getting anything like a fair
chance to improve their situation. Victims of
outsourcing don't fit into a single class, nor do
the people who suffer most from living in a
society that is increasingly unequal and unjust.
To see these trends as matters of class does not
explain them. What is clear is that we have yet
to see any convincing ways of reversing them.


[1] See www.factcheck.org/article249.html.

[2] Tom Hertz, "Rags, Riches, and Race: The
Intergenerational Economic Mobility of Black and
White Families in the United States," in Unequal
Chances: Family Background and Economic Success,
edited by Samuel Bowles, Herbert Gintis, and
Melissa Osborne Groves(Russell Sage
Foundation/Princeton University Press, 2005).

[3] Bureau of Labor Statistics, Occupational
Outlook Quarterly (Winter 2004–2005), p. 4.

[4] "Entrenched Affirmative Action for Whites in
College Admissions," The Journal of Blacks in
Higher Education,No. 40 (Summer 2003), p. 27.

[5] True, these men can go to Dartmouth or
Williams. But taken together, the twelve most
selective schools have approximately 7,500 fewer
male students compared with 1970.

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