Chapter 7: Socioeconomic Status and Inequality

7.1 Connecting Sociology to Socioeconomic Status and Inequality:

The question is whether Canada is a meritocracy, where talent and hard work determine success, or if social mobility depends more on factors like family background.
Education is crucial for social mobility, but the higher your parents' education, the more likely you are to pursue post-secondary education.
Family income also plays a role, as those born into high-income families have advantages in terms of future opportunities and connections.
Despite these disparities, Canada exhibits a high level of social mobility, with up to 70% of lifetime earnings attributed to education, work experience, skills, talents, and networks.
Low-income individuals and new Canadians experience significant upward social mobility, primarily due to education and social services.
Canada is both a meritocracy and not, as individual and structural factors, as well as historical and institutional factors, collectively determine social mobility in the country.

7.2 Stratification and Inequality:

The distribution of wealth, resources, and opportunity in Canada is unequal, leading to social inequality.
Social inequality involves the unequal distribution of goods, services, resources, and power, creating a hierarchical social system.
Inequality can manifest in various forms, such as legal, racial, linguistic, gendered, economic, political, and social hierarchies.
The focus of this chapter is on income and wealth inequality in Canada.
Inequality can be studied at micro or macro levels, examining its impact on individuals or broader population segments.
Social stratification is a result of ingrained inequality in the social system, ranking individuals or groups hierarchically based on shared characteristics.
Social classes, including "upper class," "middle class," "working class," and "lower class," are based on socioeconomic status (SES) and significantly affect people's lives.
The COVID-19 outbreak highlighted how those in the lower class faced greater impacts due to factors like crowded living conditions, service jobs, inability to afford deliveries, health issues, income loss, and structural limitations.

Income Inequality:

Approximately 50% of Canadians consider themselves middle class, despite variations in income.
Income is the money earned over time, which can come from employment, investments, retirement funds, government assistance, or third-party sources.
Household income refers to the total income of all household members.
In Canada, the median household income in 2015 was over $70,000, and median individual employment income in 2016 was just over $33,000.
Local economies significantly impact income levels, leading to regional income disparities.
Income inequality in Canada has increased over the past two decades, as measured by the Gini index.
The Gini index rates income inequality on a scale from 0 (perfect equality) to 1 (perfect inequality).
Canada's Gini scores have risen since the 1980s and stabilized around 0.30 since 2010.
Income distribution is not even; the top earners increased their share of income over time, while other quintiles' income decreased.
Income inequality disproportionately affects visible minorities, especially Indigenous people.
While education can help reduce income inequality, Indigenous individuals with a bachelor's degree still face economic disparities compared to non-Indigenous counterparts.
Some communities, like the Algonquins of Barriere Lake, derive non-monetary income from traditional economies, which is often not considered.
Members of the Black community have lower income levels despite similar educational backgrounds.
Immigrants with university education face a wage gap of about 20% compared to Canadian-born citizens with the same educational level.

Wealth Inequality:

Wealth is the total value of assets minus debts, contributing to upward social mobility and providing financial resources.
Wealth inequality is the unequal distribution of wealth among individuals.
In Canada, wealth inequality is more concentrated than income inequality, with the top 20% of households controlling 67% of total wealth and the top 1% holding 16% of wealth.
The wealth gap has persisted for several decades, with the top quintile's net worth remaining around 70% from 2005 to 2019.
Racial minorities, immigrants, and Indigenous people are more likely to have less wealth due to factors like homeownership, education, and employment opportunities.
Immigrant groups, particularly those newly immigrated or with limited access to financial systems, tend to accumulate the lowest levels of wealth.
Individuals with university degrees tend to accumulate more wealth over time, while people with disabilities and Indigenous individuals are more likely to experience lower levels of wealth.
The inability to access resources acts as a barrier to upward social mobility for disadvantaged groups.

7.3 Perspectives in Inequality:

examines conflict, structural-functionalist, and symbolic interactionist perspectives on inequality
explores concepts of human, social, and cultural capital
the application of theory will demonstrate that all theoretical perspectives, informed by their unique worldview, offer explanations for why and how inequality occurs and persists

Conflict Perspective:

Wealth is the total value of assets minus debts, contributing to upward social mobility and providing financial resources.
Wealth inequality is the unequal distribution of wealth among individuals.
In Canada, wealth inequality is more concentrated than income inequality, with the top 20% of households controlling 67% of total wealth and the top 1% holding 16% of wealth.
The wealth gap has persisted for several decades, with the top quintile's net worth remaining around 70% from 2005 to 2019.
Racial minorities, immigrants, and Indigenous people are more likely to have less wealth due to factors like homeownership, education, and employment opportunities.
Immigrant groups, particularly those newly immigrated or with limited access to financial systems, tend to accumulate the lowest levels of wealth.
Individuals with university degrees tend to accumulate more wealth over time, while people with disabilities and Indigenous individuals are more likely to experience lower levels of wealth.
The inability to access resources acts as a barrier to upward social mobility for disadvantaged groups.

Structural Functionalism:

Wealth is the total value of assets minus debts, contributing to upward social mobility and providing financial resources.
Wealth inequality is the unequal distribution of wealth among individuals.
In Canada, wealth inequality is more concentrated than income inequality, with the top 20% of households controlling 67% of total wealth and the top 1% holding 16% of wealth.
The wealth gap has persisted for several decades, with the top quintile's net worth remaining around 70% from 2005 to 2019.
Racial minorities, immigrants, and Indigenous people are more likely to have less wealth due to factors like homeownership, education, and employment opportunities.
Immigrant groups, particularly those newly immigrated or with limited access to financial systems, tend to accumulate the lowest levels of wealth.
Individuals with university degrees tend to accumulate more wealth over time, while people with disabilities and Indigenous individuals are more likely to experience lower levels of wealth.
The inability to access resources acts as a barrier to upward social mobility for disadvantaged groups.

Symbolic Interaction:

Symbolic interactionists focus on how inequality and status are maintained and reinforced through everyday interactions.
Conspicuous consumption, as described by Veblen, involves spending money on luxury goods to display wealth and economic power, which signifies high social status.
Symbolic interactionists highlight how luxury items and leisure activities are given symbolic significance, connecting individuals with marks of status, luxury, and wealth.
The wine and spirit industry exemplifies the concept of luxury consumption, with certain beverages, like single malt scotch whisky, tied to elite status and used as status symbols.
Inequality, from the symbolic interactionist perspective, is a label that people ascribe to certain circumstances, and it is shaped by interpretation and context.
Symbolic interactionists argue that people learn to define inequality based on their socialization and interpretation of circumstances, which can vary over time.
A study on child care workers illustrates how status and identity are constructed by individuals, impacting their ability to demand higher compensation and perpetuating the low status of certain jobs.

Human, Social, and Cultural Capital:

Social class inequality is influenced by factors like human capital, social capital, and cultural capital.
Human capital refers to an individual's investments in training, skills, and education, such as obtaining a college diploma or university degree, which can lead to better employment outcomes.
Despite similar levels of human capital, earnings disparities may exist, such as the gender wage gap for lawyers, and refugees may struggle to establish themselves in the labor market.
Social capital represents resources acquired through social networks, facilitating employment opportunities, income, and various advantages.
High social capital can improve access to resources and is often connected to an individual's socioeconomic status, as seen in examples like fraternities and refugees.
Cultural capital involves the transfer of cultural knowledge, traits, preferences, and behaviors from middle- and upper-class parents to their children.
Cultural capital is a way of maintaining social class boundaries and provides certain individuals with an advantage in education, the labor market, and other social settings.

7.4 Explaining Inequality:

points out that factors like level of education or ethnic background can contribute to stratification and inequality
concludes topics such as intersectional, individual and institutional

Intersectional: Class, Gender, Race, and their intersections:

Intersectionality emphasizes that the overlap of social categories like race, class, and gender can create complex layers of inequality.
The combination of factors like being Indigenous, low socioeconomic status, and a woman results in significant barriers to social mobility.
Social class inequality involves differences in social and economic resources, and wealth concentration among a small minority.
Marx's analysis of how social systems create inequality remains relevant, including the concentration of wealth among the top quintile in Canada.
Conflict theory highlights that those with higher status have more prestige, access to power, educational opportunities, networks, and face less social exclusion.
Habitus, or the habits, skills, and dispositions developed based on life experiences, reinforces social inequality.
Cultural capital represents traits and preferences linked to social class, influencing habits and tastes, and reinforcing class differences.
Feminist sociologists emphasize how patriarchal systems have perpetuated social inequality for women, leading to gender disparities in the labor market, devaluation of women's work, and unequal family dynamics.
Gender relationships and dynamics have evolved, challenging historical gender orders.
Race and ethnicity are important aspects of social stratification, with discrimination, racism, and institutionalized racism affecting socioeconomic outcomes for minority groups.
Intersectionality highlights that the combination of various social categories like class, race, and gender can compound and amplify the experiences of inequality. Understanding these intersections is crucial in comprehending social inequality and stratification.

Individual: Education and Occupation:

Income and wealth inequality result from various intersecting factors, including individual-level factors like education and occupation, which are shaped by social structures.
Education significantly influences social mobility, and higher education often leads to better-paying jobs. On average, Canadian university graduates earn $18,000 more annually than high school graduates.
Educational attainment has a pronounced impact on earnings, with individuals holding bachelor's degrees having the highest incomes, while those with only high school diplomas have the lowest incomes.
Most new jobs created in recent years require some form of post-secondary education, while jobs requiring only a high school education or less have decreased.
Canadian workers without a university degree are more likely to be unemployed and face unemployment during recessions.
Higher education also results in more wealth over a person's lifetime.
Occupation plays a crucial role in income and wealth inequality. High-paying occupations often require high levels of education, such as specialist physicians, judges, dentists, lawyers, and professors.
Some groups are more likely to hold lower-ranking jobs, including young people, individuals residing in certain provinces, those with lower education, and Indigenous, Latin American, or South East Asian individuals.
In contrast, occupational scores are higher for non-visible minorities, Japanese, Arab, and Chinese minority groups, people aged 25-64, those with higher degrees, and those living in major urban centers or wealthier provinces.
Barriers to accessing prestigious jobs for some groups in Canada deepen overall inequality.

Institutional: Tax systems and the minimum wage:

Institutional inequality results from government systems like taxation and minimum wage rates, which can reinforce racial, economic, and class-based inequalities.
Higher-income individuals and families benefit from greater tax deductions, while lower-income individuals pay a higher proportion of taxes.
Taxation policies often favor top income earners, and the use of hidden foreign accounts contributes to tax revenue losses.
Canada employs progressive taxation, where taxes increase with income, which helps address economic inequality by placing a greater burden on higher-income earners and providing tax credits to lower-income earners.
Redistribution, which involves transferring funds to programs that reduce income inequality, has been effective in Canada, reducing inequality by almost 30% between 1976 and 2009.
However, the highest earners in Canada now pay a lower tax rate than in the 1990s, while the lowest earners face increased tax rates.
Regressive taxation in provinces and territories and the preferential treatment of income generated through capital gains benefit higher earners and disadvantage lower earners.
Redistribution, particularly in the form of social assistance or welfare, can face political opposition and be transformed into "workfare" programs that prioritize quick employment over assistance, leading to precarious employment and low wages for participants.
Minimum wage increases are a means to help low-paid workers, with some arguing that they may not alleviate poverty, while others contend that they can lead to lower job turnover, more stable employment, and poverty reduction.
Larger minimum wage increases, like Ontario's increase from $11.60 in 2017 to $14.25 in 2020, have the potential to lift people out of poverty.

7.5 Poverty:

What is Poverty?

Poverty in a society stratified by socioeconomic status affects individuals in the bottom strata.
Sociologists distinguish between absolute poverty and relative poverty.
Absolute poverty involves the deprivation of basic human needs like food, water, health, and shelter.
Relative poverty is determined by comparing one's standard of living to the average standard in a society. People in relative poverty may have shelter and access to food but face difficulties in purchasing other necessities or paying rent.
In wealthy countries like Canada, poverty is often viewed in terms of relative poverty.
Poverty has significant consequences for individuals, including adverse effects on their health, mental well-being, education, social connections, and sense of belonging.
High concentrations of poverty can contribute to increased crime rates.
Poverty can negatively impact parenting, leading to issues such as depression and self-doubt, which can have long-term effects on children.
Poverty also has adverse economic effects on a country, resulting in lost productivity and tax revenue.
The human and societal costs of poverty make it a crucial social and government issue.

Poverty In Canada:

Canada assesses poverty based on income rather than a specific numerical cut-off.
The most common method to measure poverty is the Low-Income Cut-off (LICO), which considers families spending a greater share of their income on necessities than the average family to be below the poverty line.
LICO varies by location to account for differences in the cost of living in various communities.
In 2018, the LICO for a family of four in large cities like Toronto was $39,092 after taxes.
Approximately three million people in Canada lived below the LICO in 2018.
Poverty in Canada has been decreasing since the late 1990s, but the COVID-19 pandemic is expected to reverse this trend.
Most people below the LICO are only in poverty for a short period and typically exit poverty within a year as their income improves.
The proportion of Canadians experiencing persistent poverty has been declining over the past two decades.
Some Canadians are considered "working poor," meaning they have very low income despite being employed. They are more likely to be self-employed or work non-standard hours and often lack employer-sponsored benefits.
The number of working poor individuals decreased from just over 5% in 2003 to 3% by 2014, partly due to tax benefits for low-income Canadians.

Who is poor in Canada?

Poverty is not evenly distributed and is more prominent in certain areas of Canada.
Low-income rates vary by province, with British Columbia and Manitoba having higher rates compared to Saskatchewan and Newfoundland.
Certain groups are more likely to experience poverty, including women, lone mothers, immigrants, and individuals with disabilities.
This section examines how these groups are more likely to face poverty in Canada.

Gender:

Historically, the feminization of poverty has been observed, where more women than men live in poverty, and women make up a growing proportion of the poor.
Women tend to have lower employment rates, earn less, work in lower-paying jobs, work part-time, and miss work due to caregiving obligations.
Lone-parent households headed by women have significantly lower incomes compared to two-parent households or lone-parent households headed by men.
While the gender gap in poverty has narrowed recently, factors such as reduced family size, increased education and employment among women, and government financial benefits have contributed to this change.
Despite improvements, lone mothers and senior women remain particularly at risk for low income.

Race and Immigrant Status:

Visible minority Canadians face a higher poverty rate, with a rate of 22%, compared to 9% for non-visible minorities.
Black Canadians and those of Latin American descent earn the lowest income among visible minorities, while the highest-earning visible minorities are from South Asia.
University-educated visible minorities earn 87% of what university-educated white Canadians earn, with the largest pay gaps experienced by Latin American, Filipino, and Black Canadians.
About 63% of visible minorities are immigrants, and two-thirds of visible minority people living in poverty are immigrants.
Language barriers, lack of social capital, labor market discrimination, and obstacles in having educational credentials recognized contribute to lower earnings, higher unemployment, and higher levels of poverty among immigrants.
Recent immigrants (in Canada for five years or less) have a high low-income rate, with over one-third experiencing chronic low income during their first five years in Canada.
Indigenous people in Canada, making up about 4.3% of the population, face challenges including higher unemployment rates, lower earnings, discrimination, social exclusion, and unequal access to education and social services, putting them at a significantly higher risk of poverty.

Age:

The share of older adults living in poverty has significantly declined over the last 30 years, with about 4% of older adults living in low income in 2014.
Lone, female older adults are among those most likely to experience low income, with an 11% low-income rate among unmarried older adults.
Women aged 65 and over are more likely to live in low income compared to men, with a rate of approximately 16% versus 12% for men.
In contrast, children are more likely to experience poverty. In 2015, nearly 1.2 million Canadian children lived in a low-income household, representing nearly 25% of all Canadians in low income.
Child poverty has been declining for most groups of children over time, partly due to family-related government transfer programs like the Child Tax Benefit.
However, child poverty remains very high for lone-parent families, with a low-income rate over three times higher than two-parent families.
Many children in lone-parent families live with their mothers, and the low-income rate for these children is much higher (42%) than those living with their fathers (26%).

Disability:

The share of older adults living in poverty has significantly declined over the last 30 years, with about 4% of older adults living in low income in 2014.
Lone, female older adults are among those most likely to experience low income, with an 11% low-income rate among unmarried older adults.
Women aged 65 and over are more likely to live in low income compared to men, with a rate of approximately 16% versus 12% for men.
In contrast, children are more likely to experience poverty. In 2015, nearly 1.2 million Canadian children lived in a low-income household, representing nearly 25% of all Canadians in low income.
Child poverty has been declining for most groups of children over time, partly due to family-related government transfer programs like the Child Tax Benefit.
However, child poverty remains very high for lone-parent families, with a low-income rate over three times higher than two-parent families.
Many children in lone-parent families live with their mothers, and the low-income rate for these children is much higher (42%) than those living with their fathers (26%).

Canada’s response to Poverty:

In 2018, Canada launched Opportunity for All: Canada's First Poverty Reduction Strategy, aiming to reduce poverty by 20% in 2020 and by 50% in 2030.
The Poverty Reduction Act, passed in 2019, set concrete poverty reduction targets, established the National Advisory Council on Poverty, and created an official measure of poverty that considers basic needs and a modest standard of living.
The strategy targets the correlates of poverty, including housing, education, employment, integration, and inequality.
Groups at risk for poverty, such as Indigenous people and newcomers to Canada, are a focus of the strategy.
The government allocated $2.1 billion over 10 years for a National Housing Strategy to reduce chronic homelessness, protect community housing, and provide housing for vulnerable groups.
Various programs and funding initiatives support Indigenous people, including the Indigenous Skills and Employment Training Program and the Indigenous Early Learning and Child Care Framework.
Enhancements to Canada Student Grants and the Skills Boost pilot program assist adults returning to full-time schooling.
Increased funding for the Post-Secondary Student Support Program supports post-secondary education for Indigenous students.
The Targeted Employment Strategy for Newcomers helps newcomers find jobs that match their skills and experience, including the Foreign Credential Recognition Loans Program.
A three-year Visible Minority Newcomer Women Pilot was launched in 2018–2019 to support programming for newcomer women.
These strategies and initiatives aim to reduce poverty in Canada by addressing housing, education, employment, integration, and inequality while maintaining public accountability.

7.6 Social Mobility:

Social mobility refers to the movement of individuals or families between different social strata.
It can be upward or downward, indicating a change in social class.
Many Canadians believe in upward social mobility, where individuals can move from modest means to wealth through their achievements.
This belief reflects the assumption that social class in Canada is determined by personal accomplishments.
An achievement-based system is one where talents and merits determine social class position.
In an open, achievement-based system, upward mobility is possible through talent, education, hard work, and luck.
However, some societies have a closed, ascription-based system, where social position is determined by birth.
In ascription-based systems, social mobility opportunities are limited or nonexistent.

Achievement in Canada:

Intragenerational mobility involves changes in a person's social position during their lifetime, while intergenerational mobility tracks changes between generations.
Intergenerational income elasticity (IGE) measures the influence of parents' income on their children's income. Canada's IGE is 0.32, indicating that 32% of a child's income depends on their parents' income.
Mobility is not evenly distributed, with some individuals experiencing greater upward mobility. For those born to very low-earning fathers, there is high upward mobility, while sons born to high-earning fathers have less mobility.
Institutional factors like education and welfare systems contribute to the upward mobility of children from low-earning families.
Absolute income mobility has increased in the last twenty years, especially for middle-aged individuals and lower-income groups. However, relative mobility, or moving up or down the social strata compared to peers, has been on a downward trend.
Fewer people have moved up the income ladder compared to others, while there has been little downward mobility for the highest earners, leading to increased overall income inequality.
Relative mobility declined from the late 1980s to the mid-1990s, and in recent years, it was due more to fewer people dropping in their social standing.
Immobility, or being locked into a particular social class, has increased, while downward mobility has been consistently lower in recent years.

Ascription and the Caste System:

A caste system is a social system in which individuals are born into their social position and remain in that position throughout their life.
The Hindu caste system in India is a quintessential example, dividing Hindus into four strata or varnas based on their ascribed status from birth.
Each varna consists of sub-castes or jatis, which correspond to specific occupational groups, creating a hierarchy within each varna.
The caste system is legitimated through religious ideology, particularly the concept of reincarnation and fulfilling one's dharmic duty within their caste for a better next life.
Karma and actions in the current life are believed to affect one's reincarnation.
The Dalit or Untouchables, one of the most disadvantaged castes, faced severe discrimination and poverty before government efforts to reduce caste system influence.
While untouchability was officially abolished after India's independence, the caste system still has a significant impact on people's lives.
Inter-caste marriages remain rare, and untouchability is still practiced by some Indians.
Secular education and urbanization have lessened the influence of the caste system, but historical norms of division persist.
Politicians sometimes exploit caste divisions for their political agendas, reinforcing caste identities and interests, despite the official abolishment of the caste system.