POVERTY AND INEQUALITY CHAPTER OUTLINE Aging and social

POVERTY AND INEQUALITY

CHAPTER OUTLINE • Aging and social stratification • Gender inequality in old age • Race, ethnicity, and inequality

AGING AND SOCIAL STRATIFICATION All human societies use sex, age, and kinship to assign people to social roles and to rank individuals in a hierarchy. These rankings create the most basic forms of inequality and simplify social stratification As societies evolve, more complex types of social stratification emerge: Class Stratification appears with growing economies including economic, and political power / wealth and prestige. With full systems of stratification in place “social positions are ranked in terms of importance, rewarded differently, acquired by individuals / families, and then transmitted over generations. The central question is how social inequality is produced, maintained, and then transmitted from one generation to another.

AGING AND SOCIAL STRATIFICATION Theory of Cumulative Disadvantage The theory of cumulative disadvantage provides a life course framework for analyzing stratification among the aged. The central premise of theory is that although people may move up or down the social ladder, generally those who begin life with greater resources have more opportunities to acquire additional resources, and those who begin life with little fall further and further behind. Inequality is not random among the aged but patterned, Thus the causes of the patterned differences in opportunities over the life course can only be understood in a historical context.

AGING AND SOCIAL STRATIFICATION Income and Poverty The economic circumstances of people over the age of 65 have improved since the 1960’s. Among the older population as a whole, poverty rates are lower than they are for people of other age groups. However, not all older persons have shared equally in these gains. Certain subgroups (single, minority, and female) of the elderly have very high poverty rates (see Figure 15. 1, next slide) Income disparities by race and ethnic origin are due in part to differences in sources of income. Social Security makes up a larger share of the total income for of minorities than it does of whites, who are more likely to have other sources of income. The largest source of income disparity is from assets—stocks, bonds, and rental property. Women are less likely than men to receive income from private pensions. (see Figure 15. 2) Regardless of race or ethnicity, women are less likely than men to receive pensions, and the amount of pension income they receive is lower.

Aging and Social Stratification • Married couples have lowest levels • Non married women have highest levels • Minorities have higher rates • Many black and Hispanic women have limited work histories, low lifetime earnings, and no personal pensions

Aging and Social Stratification • The largest source of income disparity is from assets—stocks, bonds, and rental property. • Women are less likely than men to receive income from private pensions

GENDER INEQUALITY IN OLD AGE Patterns of Gender Inequality Paid labor performed by women has increased dramatically since the 1950’s and, since 1965, men’s housework time has almost doubled Today, most women who are 65 or older have moved in and out of the labor force to care for children and aging parents. Income among the aged remains lowest in households of women living alone (see Figure 15 -3, next slide) Many Black and Hispanic women have limited work histories, low lifetime earnings, and no personal pensions. They are more likely to be married to men with low earnings and little pension coverage. The costs of a disorderly work history can be high, for women who move in and out of the labor force to care for their families are penalized by rules that determine levels of Social Security benefits and access to private pensions. Thus, women’s familial responsibilities over the life course are reflected in the distribution of economic resources in old age.

GENDER INEQUALITY IN OLD AGE

GENDER INEQUALITY IN OLD AGE Inequality in Social Security Income - Paid work and eligibility for Social Security rewards people who have stable work histories. A person who worked continuously with no break receives higher benefits than someone who had periods out of the labor force. Historically women have lower benefits than men, however, the decline in earnings will continue to improve the economic security for younger women, but they still earn less than men. Because younger women today work more continuously than did women of older generations, the gender disparity in Social Security benefits may decline in the future. Yet even by 2030 it is estimated that only 40% of women will have contributed to Social Security for the full 35 years. There have been numerous options proposed for calculating Social Security benefits to take women’s work histories into account. The main approach is based on a strategy of gender recognition (takes into account the disadvantaged sex). One proposal based on the gender recognition approach would eliminate the penalty mothers pay for taking time out of the labor force to care for their children by removing periods of child care from the computation of Social Security benefit levels.

GENDER INEQUALITY IN OLD AGE Inequality in Social Security Income - Unpaid work and eligibility for Social Security Women also obtain access to Social Security benefits through their unpaid labor as dependents of male breadwinners. With the passage of the Social Security Act in 1935, no provision for wives and widows were included. Congress amended the Social Security Act in 1939, adding a spouse benefit and a widow’s benefit. Today a surviving spouse of a deceased worker is eligible for a reduced benefit at age 60, and full benefit at age 66. Originally, only wives were eligible for a spouse or widow’s benefit, but recent reforms in the Social Security system have emphasized gender neutrality. Thus either a husband or wife could receive benefits of the deceased; however 99% of recipients are women Under the law today, a woman (or man) who has been married for at least a year to a worker who retires at 65 can receive a spouse benefit at age 62. The spouse benefit is equal to 50 percent of the worker’s benefit.

GENDER INEQUALITY IN OLD AGE Inequality in Social Security Income - Unpaid work and eligibility for Social Security Women (or men) who have worked outside the home for wages and who are also eligible for benefits as spouses are considered dually entitled. Under the rules for dual entitlement, an individual receives a benefit as a worker plus an additional amount if the worker benefit is less than the spouse benefit. If a retired worker dies, his or her survivor loses the spouse benefit but receives a survivor’s benefit. The survivor’s benefit is equal to 100 percent of the worker benefit. Table 15 -3 shows how Social Security benefits are calculated for spouses and widows of retired workers.

GENDER INEQUALITY IN OLD AGE Inequality in Social Security Income - Unpaid work and eligibility for Social Security The couple with two high earning spouses receive the highest benefits in absolute dollars but the lowest benefit in terms of replacement ( See Figure 15 -4 ). Replacement Rates actually favor the household that Social Security was designed to correspond to a particular family type—the traditional family in which the husband was the sole breadwinner, the wife was a family caretaker, and the marriage was permanent. (1935 Model)

GENDER INEQUALITY IN OLD AGE Inequality in Supplemental Security Income or SSI, provides income for the aged, blind, and disabled poor ( See also Chapter 5 slides). Nearly 74 percent of the aged who receive SSI benefits are women, and more than one-third are very old, over age 80. The problem with SSI is that the average monthly benefit is very low. In 2016, the Social Security Administration paid just $733 a month to SSI recipients. The benefit for a married couple was $1100. The United States is the only country where single elderly women have higher rates of poverty than do older couples The reasons for this situation lie in the way the safety net is constructed. In the United States, the safety net for the aged poor consists of SSI, Social Security, and food stamps. An elderly person eligible for all three benefits would have an income below the poverty level. Given the high proportion on older women on SSI, a simple way to eliminate poverty would be to raise the SSI benefit above the poverty line.

GENDER INEQUALITY IN OLD AGE Inequality in Employer Pension Coverage Most people are able to maintain their previous living standards in retirement only if they have employer pensions, personal savings, and some investments. The primary factor that determines access to a pension is the individual’s job, and historically, women have worked in jobs that lack pension coverage. Women’s interrupted work histories also reduce their pension eligibility. Survivor’s Benefits Unlike Social Security, which pays a spouse benefit while the retiree is still alive, private pension plans pay benefits only to the worker. The Retirement Equity Act of 1984 (REA) protected spouses in the event of a death or divorce. Pensions for married employees now must be joint and survivor annuities. A husband can no longer waive the wife’s right to survivors benefits without her knowledge. The Retirement Equity Act also allowed pension-splitting to become part of a divorce decree. Now, pension is considered part of the property settlement. A gap in protection for many widows and former wives remains in effect, however, for the Retirement Equity Act applies only to private sector workers. State plans are excluded from federal law, and not all state and local government workers are regulated by the REA.

DISCUSSION Why haven’t women’s organizations or retired people’s associations made the problem of poverty among elderly women a priority? Should they be doing more to solve it?

RACE, ETHNICITY, AND INEQUALITY Racial and Ethnic Differences in Poverty In the United States, social classes do not have a set strata, rathere are multiple dimensions of inequality. Life chances and opportunities are partially controlled by ethnic and racial backgrounds In 2012, 7. 7 % of the older white population had income below the poverty level compared to 18 % percent for blacks, 15 % for Asians, and 18% for Hispanics. In 2013, white households had about $142 K vs. $11 K for Blacks, and $13. 7 K for Hispanics The African-American Elderly African-Americans are the largest minority group in the US. The economic position of older African Americans can only be understood from a life course perspective of cumulative disadvantage. Because of racial discrimination, African Americans have always experienced higher rates of unemployment than whites, more sporadic employment, and lower wages. Lower earnings during the working years means lower social security benefits in retirement. Sporadic employment also means less opportunity to become vested in private pension systems and less opportunity to accumulate pension savings

RACE, ETHNICITY, AND INEQUALITY The African-American Elderly Racial discrimination has also impeded the accumulation of wealth. In 2013, white households had about $142 K vs. $11 K for African-Americans Part of the reason in racial disparity in wealth is home ownership. Table 15. 5 show the racial disparity in home ownership rates, and the value of homes owned by African-Americans and Hispanics is also lower The reason why housing wealth is so much lower for African Americans lies in a legacy of racial discrimination by real estate agents, white neighborhoods, and the federal government.

RACE, ETHNICITY, AND INEQUALITY The African-American Elderly Racial discrimination has also impeded the accumulation of wealth. In 2013, white households had about $142 K vs. $11 K for African-Americans Part of the reason in racial disparity in wealth is home ownership. Table 15. 5 show the racial disparity in home ownership rates, and the value of homes owned by African-Americans and Hispanics is also lower The reason why housing wealth is so much lower for African Americans lies in a legacy of racial discrimination by real estate agents, white neighborhoods, and the federal government.

RACE, ETHNICITY, AND INEQUALITY The African-American Elderly The reason why housing wealth is so much lower for African Americans lies in a legacy of racial discrimination by real estate agents, white neighborhoods, and the federal government. For most of the 20 th century, African-Americans were regulated to racially segregated neighborhoods. Racial segregation became part of official federal housing policy in 1934, when Congress established the Federal Housing Authority (FHA) to enable people to buy homes by insuring banks against defaults on mortgage loans. FHA policy encouraged redlining: Red lines were literally drawn on maps around areas of cities where loans were considered risky for economic or racial reasons. Redlining meant that most black families were ineligible for federally insured loans. Until 1949, the FHA also encouraged the use of restrictive covenants banning African Americans, Asians, Hispanics, and in some cases, Jews and Catholics from white Protestant neighborhoods; the FHA also refused to insure mortgages in integrated neighborhoods. Many African-Americans and other minorities are now old were victims of these practices. The unequal distribution of wealth has been perpetuated from past housing practices via cumulative disadvantage.

RACE, ETHNICITY, AND INEQUALITY The Hispanic Elderly The term Hispanic refers to individuals who identify themselves as Spanish in origin. Of the more than 55 million people of Hispanic origin in the United States, the three largest groups are from Mexico, Puerto Rico, and Cuba. Of all groups of Hispanic origin, Puerto Rican families are the most disadvantaged. In 2005 poverty was highest among Puerto Ricans at 32 percent, in the middle for Mexicans at 22 percent, and lowest for Cubans at just 10. 9 percent. Because many older Hispanics worked in occupations not covered by Social Security, they are ineligible for Medicare. Older Hispanics and African Americans have had irregular patterns of work because they typically worked in sectors of the labor force where layoffs are common or work is seasonal. A lifetime of work in low-status jobs characterized by sporadic work patterns, high turnover, and low earnings has cost older minorities pension income. The lack of pension benefits often forces minority group members to continue to work after age 65.

RACE, ETHNICITY, AND INEQUALITY The Asian Elderly Asians are the fastest growing minority group in the United States. They have the highest incomes are the best educated. Among elderly Asians there a small number of surviving Chinese men who immigrated to the West Coast early in the twentieth century to build the railroads. Because there were so few women, many of these men never married, and faced old age with no support system. Many from Vietnam and Cambodia came to the United States in the 1970 s as political refugees. Due to many factors Asians as a whole have the lowest rates of poverty in old age of any minority group (emphasize education). Indeed, older Asian women have lower poverty rates than older white women.

RACE, ETHNICITY, AND INEQUALITY The Native American Elderly American Indians have the highest unemployment rates and the highest mortality rates of any minority. The legal foundation of the Indian Health Service (IHS) is defined in federal treaty obligations, stipulating that health care be provided American Indians at no cost as reparation for tribal lands stolen from them. Since health care became the responsibility of the federal government, the general health of the majority of American Indians has improved, life expectancy has increased, and mortality rates have dropped.

DISCUSSION Can you think of a way to increase the wellbeing of minority groups in their old age that does not involve the government?

ADDITIONAL INTERNET RESOURCES 1. Administration on Aging (http: //www. aoa. gov/) 2. AARP (http: //www. aarp. org) 3. National Caucus and Center for the Black Aged (http: //www. ncba-aged. org) 4. National Hispanic Council on Aging (http: //www. nhcoa. org) 5. Older Women’s League (OWL) (http: //www. owl-national. org) 6. Social Security Administration (http: //www. ssa. gov) 7. U. S. Census Bureau (https: //www. census. gov/): See latest reports on poverty and income.