Socioeconomic Status and Income Inequality in the United States

In the United States, people fall roughly into four broad categories: upper class, middle class, working class, and lower class. The class system in the United States allows for social mobility—an individual has the potential to move up or down in the class structure. Class in the United States is closely linked to socioeconomic status (SES), a combined measure of income, education, and occupation. Socioeconomic status describes where an individual or family sits within the social hierarchy. Because it involves the closely related but independent factors of income level, educational attainment, and occupation, it is a somewhat fluid category. An individual may have high marks in one of these measures with low marks in another. For example, while professors have very high levels of education they mostly belong to the middle class because of the income associated with their jobs, as well as their occupational prestige. People who work in finance often hold only a bachelor's degree but may belong to the upper class because of the income associated with their jobs. However, in many cases educational attainment is closely linked to income levels. Average earnings are higher for most Americans holding advanced degrees and are lowest for Americans with only a high school diploma or with no diploma.

In the United States the class that people belong to is very often the class that they were born into. For example, individuals who are members of the upper class often hold this position because of family wealth inherited through generations. However, there are other pathways to the upper class in the United States, including investing in the stock market or real estate and entering a high-income profession. Becoming a doctor, a lawyer, or an engineer is often a pathway to the upper class. Some outliers, such as celebrities, artists, and athletes, also earn enough to enter the upper class. Working-class and lower-class Americans generally have less education than people in the middle and upper classes, although there are many exceptions to this pattern. Members of these classes frequently work in lower-income occupations, including jobs in factories, restaurants, and clerical and administrative support jobs. These are often considered blue-collar jobs. These professions generally carry less occupational prestige (the level of respect given to a profession in a society). Many lower-class Americans struggle to cover their basic expenses, as do some working-class Americans. However, people in some occupations that are typically viewed as working class, such as master plumbers and electricians, have middle-income earnings. Plumbers and electricians may think of themselves of members of the middle class or of the working class. Social class and socioeconomic status are complex and are to some degree open to interpretation. Class is linked to income, but income level and social class are not exact matches.

Most Americans identify as members of the middle class. This may be due in part to a widely accepted and valued cultural narrative that the United States is a classless society. It can be difficult to define precisely what constitutes the middle class in the United States because such a wide range of people consider themselves to be middle class. Broadly speaking, the American middle class includes people with fairly stable incomes whose occupations provide enough income to live fairly well. For example, these jobs allow people to consistently pay monthly living expenses—such as rent or mortgage payments and electricity, gas, and grocery bills—leaving money left for nonessential purchases. However, credit card debt is also a hallmark of the American middle class. Many individuals who identify as members of the middle class do not in fact have enough money to live a middle-class lifestyle. (An American middle-class lifestyle might include a fairly large home, a relatively new vehicle, owning expensive electronic devices, and regular spending on entertainment.) Their incomes allow them to qualify for credit, making it possible for them to purchase more goods and services than they can pay for with their earnings. Therefore, many middle-class Americans accrue high levels of debt. This is an example of how class identity and income level do not always intersect neatly. Middle-class occupations include teachers, small business owners, midlevel managers, many government jobs, and other white-collar professions—jobs that are typically performed indoors and do not entail manual labor. Middle-class income levels vary widely, in part because of regional differences in cost of living. For some analyses of class in the United States, it is useful to further break down the middle class into lower-middle class, middle class, and upper-middle class. There is no uniform definition of these groups. Rather, these terms reflect the fact that the American middle class is very diverse in terms of income, wealth, occupation, education, and lifestyle. In the United States the income ranges used to define which households qualify as middle income are quite large. In a 2016 report the Pew Research Center, a U.S. research and data analysis organization, analyzed data from the U.S. Census Bureau about income levels of American households. This analysis defined middle-income households as those with an annual household income that ranges from two-thirds to double the national median income. A single person earning between $26,093 and $78,280 per year thus qualifies as middle income. For a family of four, the range is from $52,187 to $156,560 per year. Individuals and families at the bottom and top of these ranges can afford fairly different lifestyles. Those earning near the top of the range can afford bigger and more expensive housing and have more disposable income (income to spend or save in addition to basic living expenses). Thus having middle-income earnings can place individuals and families in a range of social classes.

Income inequality refers to the unequal distribution of income and wealth among members of a society. Although income is not the only factor of social stratification, it is a significant factor. Researchers point to several measures that indicate a long-term trend of growing income inequality in the United States. One way to understand income inequality is to divide a population into thirds, or tiers, according to income. In 1970, 61 percent of Americans fell into the middle-income tier. This number has steadily decreased, down to about 52 percent in 2016. In the same time period, the upper-income tier has grown from 14 percent to 19 percent. The lower-income tier has grown from 25 percent to about 29 percent. The middle-income group is steadily growing smaller, while more people are entering either the low-income or high-income group. In 2013, researchers found that the level of income inequality was similar to the level that occurred during the Great Depression, when extreme income inequality characterized American society. Data from 2016 show a trend over several decades of a widening gap between middle-income levels and high-income levels. High-income earners steadily see increases to their incomes each year, while middle-income earners see little to no annual income increases. These factors contribute to overall increasing levels of inequality throughout American society. Sociologists seek to understand the consequences of income inequality in a society. In addition to wide gaps in living standards, income inequality contributes to issues that affect society as a whole. For example, some researchers argue that severe inequality weakens the social bonds of a society. A sense of connectedness is an important factor in the overall functioning of a society. When people and groups feel less connected to one another and have little sense of belonging to a whole society, social order can decrease. Greater inequality can also lead to greater conflict between different social groups. Income inequality both creates social stratification and can increase existing stratification. Wage inequality, a disparity in earnings received from work, is a key factor in overall inequality. In the United States the wealthiest 1 percent of individuals has steadily acquired a greater share of the country's wealth since the mid-20th century. CEOs, leaders of corporations, have seen steady and significant growth in their earnings, while average workers have seen little growth. This has resulted in a vast discrepancy between the income and wealth of CEOs as compared to workers. Critics argue that social and political reforms are needed to address this gap. Others counter that this is evidence of the strength of a free-market system, which allows individuals to acquire high levels of income and wealth through work.