Effects of Economic Trends on Social Classes - Research Paper Example

Effects of Economic Trends on Social es of Supervisor Effects of Economic Trends on Social Classes Introduction Economic trends refer to the general direction in which the economy of a nation is moving. The American society is socially stratified in to three major social classes; the lower, middle, and upper classes. The social strata are basically based on the standard of living that is characterized by factors such as level of education, income, wealth, and occupation. These factors have an effect on the level of prestige and power that a person has. Social stratification tends to show a distribution of resources that is unequal (Ryscavage, 2004). The United States has experienced a steady rise in the standard of living in the recent years. This is majorly based on factors such as employment, income, poverty rates, class, and affordability of housing as well as an economy that has also experienced a severe downturn. Such economic crisis has a ripple effect across all the social classes (DPAD, 2007). The trends in the American economy have produced momentous shifts that have seen the rich becoming richer, while causing stagnation in the wages of the working-class. According to economists, 80% of the gains of net income since 1980 went to those in the top 1% of the distribution of income, thus, causing a boost in their share of the total income to levels that have not be seen before the Great Depression. It is worth-noting that the income of 90% of Americans has been stuck in neutral, stagnating for at least a generation, while the wealthiest rank has been surging ahead at a fast pace, widening the existing gap between the rich and the poor (DPAD, 2007). Literature Review The trend in the American economy has led to a continued state of economic inequality in the United States. The middle and the lower income class have been the most negatively affected by the republican policies, which have accelerated income divisions. Economic inequality, though a common trend in the world history, has been a major concern, with regard to the poor protection that the working class receives against exploitation by the elite class, which is numerically small. This is the current situation in most countries that are non-industrialized (Ryscavage, 2004). It is quite paradoxical that during times of fiscal retrenchment and decline in the economy, there is an increase in the demand for public services. A gradual decline in the middle class would normally be characterized by increasing inequality in incomes, declining mobility, and economic segregation (Ryscavage, 2004). Among the trends of economy affecting the social classes include government deficit spending. This is a looming disaster that enormously affects the taxpayers. The government deficit is at trillions of dollars; approximately at 85% of the American GDP. This is a huge amount of debt costing billions of dollars per annum in interest. This is a burden that the taxpayers in the various class strata are forced to bear (United States Congress House Committee on Oversight and Government Reform, 2010). The other economic trend is the gradual but steady disappearance of the middle class. The middle class comprises the working masses that can support their families and live relatively comfortable lives with a single income. The disappearance of the middle class is attributed to the shift of labor jobs overseas due to globalization and the high manufacturing cost in the United States. This leads to a system almost similar to what is experienced in economies such as that of Argentina which is a two-class system; the rich becoming richer and the workers become poorer. The stagnation of real wages in the United States for a long time, despite the steady increase in the cost of living, has made it hard for young workers to afford utilities and rent. The economic trends that are unfavorable to the middle and the lower classes seem to be having an opposing effect on the upper class. As the average American loses ground in the economy, the wealthy appear to be capitalizing on the same factors and driving a larger wedge between themselves and the rest of the citizens. For instance, globalization has been an evident drag on labor yet it has been a win for some corporations who have used novel global channels to boost profits and cut down costs. New global markets have also opened a bigger platform for a greater demand for their goods and services (Perrewe et al., 2012). In a global economy, individuals with top-notch skills and expertise in sectors such as finance, media, technology and entertainment appear to be having a bigger opportunity to make their contribution, and be rewarded accordingly. This widens the disparity between wages, in relation to education levels, a factor that determines the various social classes in the American society (Hoffman & Preble, 2004). Acts such as the Commodity Futures Modernization Act and tax cuts have played a major role in the economy, and have brought about economic trends that have affected the richest in the country and the middle class citizens. The Commodity Futures Modernization Act of 2000 weakened the oversight of the government on complex securities (United States Congress House Committee on Oversight and Government Reform, 2010). This allowed innovations in the financial sector to take off, leading to wealth creation in exceptional amounts, both for the economy at large and for those that are in direct involvement in the financial sector. The tax cuts that were enacted during the administration of President Bush and extended during President Obama’s administration were a major boon for the US. This, however, did not last long as it all came crushing down leading to the worst economic hunch since the Great Depression (United States Congress House Committee on Oversight and Government Reform, 2010). With the trend of excessively high rates of unemployment and little signs of rebound of the real estate market, the middle class American is still lurching from the Great Recession effects. Meanwhile, as the corporate profits roar back and as the stock market continues to charge ahead, the wealthy continue to obscure their counterparts in the middle class (Perrewe et al., 2012). A declining state of the economy seems to cause a big impact of burden on the middle class, worse than their counterparts in the upper class. Reports show that much of the middle class have a pessimistic feeling towards the current state of the economy, and their own financial growth. The middle class appear to be bearing, to a high extent, the effects of the current economic trends and challenges. This is attributed to the high tendencies of more heavy borrowing as compared to the upper class so as to be able to sustain their lifestyles (United States Congress House Committee on Oversight and Government Reform, 2010). Most of the challenges facing the middle class such as minimal or lack of financial growth, could be attributed to the current weakening economy. The slowing down of job markets and consistent decrease in wages make it hard for the individuals in the middle class to have enough resources to meet their daily needs, and make payments such as mortgages and credit cards. Layoffs are also affecting the middle class and causing a lot of families to fall into default. The current sliding-back of the economy could be a major cause for the highlighted misfortunes of the middle class, although the middle class have also contributed to the state by probable wishes of maintaining appearance rather than prudent spending. Each group of the American population is facing effects of the challenging financial times, with each group at a different level (United States Congress House Committee on Oversight and Government Reform, 2010). The economic downturn which is currently experienced in America has pushed many families to the point of breaking up, with millions of Americans in 2009 filed for personal bankruptcy. There is a skyrocketing number of Americans living in poverty as a result of the prevailing hard economic situation. One out of every six Americans is enrolled in anti-poverty programs which are run by the federal government. It is unfortunate that those that have been hit hardest are children. In 2010, an approximate 21% of all the children in America were living below the poverty line; this is the highest rate in twenty years (Starr, 2011). Aging demographics also show that the aging of the American population could cause some problems. One such problem is that the number of productive workers will decline. This translates to inadequate number of productive workers to support the large population (Harris, 2007). This will bring about a ripple effect on social programs; for instance, Social Security and Medicare, which are currently under the danger of insolvency. The stock market will likely be affected too since more individuals will be draining their 401Ks as opposed to making contributions. In such a state, there is foreseeable continuous growth in a negative dimension (Russell, 2002). An aging population will also cause a change in the demand trends for goods and services. There will be a higher demand for health services, a lower demand for housing since there will be less new families than there are currently, and less demand for education than there currently is. All these will be the economic results of a negative population growth (Noguchi & Wise, 2008). The trend of prices for commodities has shown an increasing drift. The soaring of prices may not have a great effect on the upper class due to their high purchasing power. The middle and the lower class are likely to feel the impact of the soaring commodity prices due to their minimal or limited power to make purchase. This will ultimately result in the latter classes not being able to afford most of the commodities, forcing them to either find alternative substitutes, or completely cut out on various commodities. This will in turn lead to a change in lifestyle by the middle and lower class while the upper class continue to live their lives as usual (Starr, 2011). Continued enhancement in technology and telecommunication and market place globalization has worked to economically benefit and challenge the general population. The evident widening gap between the rich and the poor is a factor of the economic trends (DPAD, 2007). Economic declines have also been found to hit hard on the American man. The employment of males has witnessed a significant drop since the industries that disproportionately represented male employees, for example the manufacturing and construction industries, have been hit hard in the recent years (Starr, 2011). Conclusion The gap that continues to widen between the rich and the poor has contributed to economic segregation in the society. This perpetuates the problem of inequality in systems of education and criminal justice. Neighborhoods tend to be as a result of socioeconomic status and result in to economic segregation, which has the potential to facilitate segregations of racial and ethnic nature as long as a disproportionate number of minorities are poor as a result of the stiff economic t situations (DPAD, 2007). Economic trends as seen above, have rippling effects on all classes of the society, the rich and the poor alike. It could ultimately lead to economic segregation which affects revenue bases and the service levels that are provided by municipalities (DPAD, 2007). As one examines the long-term trends, a quick realization is made that the United States could be trapped in a never-ending spiral of debt. The huge government debts are alarming. The issue of the middle class being wiped out is also worth-noting. This has been brought about by globalization which has had good and bad effects (Hoffman & Preble, 2004). Prosperity depends on the services and goods that cannot be produced overseas or be outsourced. In the case that these products are produced within the American soil, it will translate to the resurgence of the middle class and creation of jobs that are much needed. This will indirectly contribute to a steady growth of industries such as medicine and accounting. The positive ripple effect in the education system will be reflected by having more value attached to the acquisition of College degrees in Engineering, Chemistry, and other sciences. As a result, entrepreneurs and employees will end up with a better pay (Starr, 2011). The way out of the effects of the economic trends on citizens across the various social strata in the society may not be spontaneous or easy. This is due to the various global factors affecting the internal economy. The probable ways of minimizing the effects resulting from the current economic crisis would be perhaps taking a national approach that may include replacing public officials who impose high fees, high taxes, and spending requirements on the public. The government officials who will be in place should, therefore, ensure that appropriate decisions that alleviate the prevailing economic challenges are propagated and adhered to (Starr, 2011). The unwelcomed economic trends in the American economy may not change instantly for the better. Any significant improvement will necessitate active and consistent participation of the citizens and the government. Since citizens are the owners of the country, each individual can choose to make wise financial decisions to cut on spending where possible, and to minimize debts at the national level as well. Every party in this case will literally be required to live up to their responsibility (Hunnicutt, 2008). Another source of minimizing these effects of economy on the American citizens would be to dismantle existing ineffective political parties and governmental organizations, which make the situation worse than it already is by making decisions that could be detrimental to the overall economy. This will lead to an overall socioeconomic change. The political forces that have in one way or another facilitated the exportation of jobs and have ultimately stolen the livelihood means of many citizens ought to be dealt away with, and those that will contribute to the revival of the job market in the country brought on board. Trying to persuade them to behave in socially responsible ways is quite difficult and almost impossible (Starr, 2011). At an individual level, the middle class should take an initiative of planning and budgeting for their own retirement, and not necessarily count on pensions and government programs for survival. Such decisions would normally call for discipline and commitment from the individual citizen. In addition to generating income from investments, the most affected middle class could also look out for opportunities to create an alternative income source. The result of cutting on expenditure at individual and national levels is likely to reflect better on the economic trends that will have less economic impacts on the citizens. Collective responsibility is key to better economic times in the future (Hunnicutt, 2008). References Development Policy and Analysis Division (DPAD). (2007). World economic situation and prospects 2007. New York: DPAD. Harris, D. K. (2007). The sociology of aging. Lanham: Rowman & Littlefield. Hunnicutt, S. (2008). What is the future of the U.S. economy? Detroit: Greenhaven Press. Hoffman, C. & Preble, F. (2004). Global franchising: current status and future challenges. Journal of Services Marketing, 18 (2): 101-113. Noguchi, Y., & Wise, D. A. (2008). Aging in the United States and Japan: Economic Trends. Chicago: The University of Chicago Press. Perrewe, P. L., Halbesleben, J. R. B., & Rosen, C. C. (2012). The Role of the Economic Crisis on Occupational Stress and Well Being. Bradford: Emerald Group Pub. Russell, L. B. (2002). The baby boom generation and the economy. Washington, D.C: Brookings Institution. Ryscavage, P. (2004). Income inequality in America: An analysis of trends. Armonk, N.Y: M.E. Sharpe. Starr, M. A. (2011). Consequences of economic downturn: Beyond the usual economics. New York: Palgrave Macmillan. United States Congress House Committee on Oversight and Government Reform. (2010). The silent depression: How are minorities faring in the economic downturn? : hearing before the Committee on Oversight and Government Reform, House of Representatives, One Hundred Eleventh Congress, first session, September 23, 2009. Washington: U.S. G.P.O. Read More