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Socioeconomic status is just a way of describing the stratification system of the United States. The class system, also imperfect in classifying all Americans, nonetheless offers a general understanding of American social stratification. The United States has roughly six social classes:
- Upper class
- New money
- Middle class
- Working class
- Working poor
- Poverty level
The Upper Class or Old Money
The upper class, which makes up about one percent of the U.S. population, generally consists of those with vast inherited wealth (sometimes called “old money”). Members of the upper class may also have a recognizable family name, such as Rockefeller, DuPont, or Koch. Some members of the upper class work, but their salaries are not their primary sources of income. Most members of this strata have attended college, most likely at some of the most prestigious educational institutions in the country.
Example: The Kennedy family is a prime example of an upper-class family. Joseph P. Kennedy made his fortune during the 1920s and passed it down to succeeding generations.
New Money
The category called new money is a relatively new rung on the social ladder. New money includes people whose wealth has been around only for a generation or two. Also referred to as the nouveau riche (French for “new rich”), they have earned their money rather than inheriting it. Unlike the members of the upper class, they do not have a family associated with old money.
Example: Oprah Winfrey, Tiger Woods, Mark Zuckerberg, Bill Gates, and other celebrities, athletes, and business people fit into this category.
The nouveau riche merit their own category because they make so much money that they lead very different lives from those in subsequent SES groupings. The newly rich simply do not have the day-to-day financial concerns that often plague the rest of society.
The Middle Class
The next rung on the ladder is the middle class, which includes about 50 percent of the population. The members of the middle class earn their money by working at what could be called professional jobs. They probably have college educations, or at least have attended college. These people are managers, doctors, lawyers, professors, and teachers. They rarely wear uniforms, although some might wear distinctive clothing, such as a physician’s white coat. These professionals are often associated with white-collar roles, referring to positions that typically involve office-based work.
The Working Class
The working class makes up about 30 to 35 percent of the population. Members of the working class may have gone to college, but more have had vocational or technical training. The members of the working class have a variety of jobs, including the following:
- Electrician
- Carpenter
- Factory worker
- Truck driver
- Police officer
This group is traditionally referred to as the blue-collar class in recognition of the likelihood that many of these individuals wear uniforms to work rather than suits. People in the working class are more likely to be members of unions than are people in the middle class. However, union membership has declined over the years. As of 2022, union membership has fallen to just 10.1% overall. While there are differences between the working class and the middle class in terms of their values, behaviors, and even their voting records, their standards of living are often similar, but not identical.
The Working Poor
Another new rung on the socioeconomic ladder is the working poor. The term working poor refers to individuals who have spent at least 27 weeks in the labor force (working or seeking employment) within a year but whose incomes remain below the official poverty threshold. Estimating how many Americans are in this category is difficult because the line separating them from those who are at or below the poverty level is not solid. According to the U.S. Bureau of Labor Statistics (BLS), in 2022, approximately 6.4 million individuals met this criterion for being classified as working poor, representing about 4% of all people who were in the labor force for at least 27 weeks. In the same year, the U.S. Census Bureau reported that 11.5% of the nation’s population lived below the official poverty level.
People in the working-poor category have a low educational level, are not highly skilled, and work at minimum-wage jobs. They often work two or more part-time jobs and receive no health insurance or other benefits. These individuals are vulnerable to falling below the poverty line. They have very little or no job security, and their jobs are easily outsourced to countries where labor is cheaper.
Every economy needs a group of workers that it can hire during an economic upswing and lay off when the economy weakens. The members of the working poor are such people; they are the “last hired, first fired.”
The Poverty Level
Poverty refers to a condition in which individuals or families lack the financial resources to meet basic needs for a decent standard of living. The standard of living refers to the level of wealth, comfort, and material goods available to individuals or groups in society. It includes access to necessities like food, housing, healthcare, and education, as well as the ability to participate in cultural and social activities. A higher standard of living generally reflects a better quality of life, whereas people at the poverty level lack the means to meet their basic needs for food, clothing, and shelter. The poverty level, set by the federal government in the mid 1960s, is an estimate of the minimum income a family of four needs to survive. As of 2025, the poverty guideline for a family of four is $32,150 per year – a number that has been criticized for being inadequate, particularly for those in urban areas with high costs of living who need more money to survive.
Sociologists differentiate between different types of poverty, including:
Absolute Poverty: Absolute poverty is defined as the inability to meet basic survival needs, such as food, clean water, and shelter. It is measured by a fixed standard, often consistent across countries and time periods. Individuals living in absolute poverty face life-threatening conditions due to the lack of essential resources.
Relative Poverty: Relative poverty refers to economic disadvantage in comparison to the living standards of the surrounding society. Unlike absolute poverty, relative poverty emphasizes inequality rather than survival. For example, an individual may have food and shelter but still lack access to adequate healthcare, education, or social opportunities, leaving them marginalized within their community.
Situational Poverty: Situational poverty arises from specific circumstances, such as a sudden job loss, a natural disaster, or a serious illness. This type of poverty is usually temporary, but without adequate support, it can lead to longer-term financial instability.
Generational Poverty: Generational poverty occurs when poverty persists within a family across multiple generations. This cycle of poverty is often perpetuated by systemic barriers such as lack of access to quality education, healthcare, and well-paying jobs, which limit upward mobility and maintain economic inequality.
Poverty in America
A staggering number of Americans currently live below the poverty level. In order to solve the problem of the nation’s poor, we must first understand who and where they are.
Who Are Poor People?
Poverty in America affects various demographic groups differently. For example, children, single mothers, and minority communities often experience poverty at disproportionately high rates. About 7.7% of White individuals in the United States were living below the poverty line in 2023. In contrast, about 17.9% of Black individuals were living in poverty during the same time. The term feminization of poverty refers to the increasing prevalence of poverty among women, particularly female-headed households. In 2023, over 14 million women aged 18 or older lived in poverty, accounting for more than one in ten women. Poverty rates were notably higher among Black women (16.8%), Latinas (16.3%), and Indigenous women (20.4%). Nearly one in three (31.6%) families headed by single women with children were living in poverty in 2023. An increasing number of children are affected by this trend. In 2023, the child poverty rate rose to 13.7%, a significant increase from previous years.
Where Are Poor People?
Though all states have poverty, poor people are concentrated in the inner cities and in the rural South. Social economist William Julius Wilson believes that the relatively high level of poverty in inner cities is due to the lack of jobs. He says that many companies have relocated to suburban areas or have downsized their urban operations. Still others have moved their manufacturing facilities to other countries to take advantage of cheaper labor costs and laws favoring the development of new businesses.
The rural South has a high rate of poverty for several reasons:
- Manufacturing concerns have preferred to operate in suburban areas, which are closer to interstate highways, railroads, and airports that enable manufacturers to transport their products.
- Educational levels in the South tend to be lower. While the national high school dropout rate was 5.3% in 2022, some Southern states report lower high school completion rates, such as Louisiana (87.3%) and Mississippi (87.6%), compared to the national average.
- The increasing demands of technology require employees who are flexible, skilled, and able to learn rapidly. A workforce composed of people with relatively low levels of education and few job skills is simply not attractive to potential employers.
The Consequences of Poverty
More than any other social class, the poor suffer from short life expectancies and health problems, including heart disease, high blood pressure, and mental illness. Reasons include the following:
- Poor people are often not well educated about diet and exercise. They are more likely than people in higher social strata to be overweight and suffer from nutritional deficits.
- They are less likely to have health insurance, so they put off going to the doctor until a problem seems like a matter of life and death. At that time they must find a public health facility that accepts patients with little or no insurance.
- Living in poverty brings chronic stress. Poor people live every day with the uncertainty of whether they can afford to eat, pay the electric bill, or make the rent payment. Members of the middle class also have stress but have more options for addressing it.
- Poor people usually do not have jobs that offer them vacation time to let them relax.
- High levels of unresolved stress, financial problems, and poor health can wreak havoc within a relationship. Poor people report more relationship problems than do people in other classes and have higher rates of divorce and desertion. The children of such families are more likely than their middle-class counterparts to grow up in broken homes or in single-parent, female-headed households.
The Culture of Poverty
Anthropologist Oscar Lewis coined the term culture of poverty, which means that poor people do not learn the norms and values that can help them improve their circumstances; hence, they become trapped in a repeated pattern of poverty. Because many poor people live in a narrow world in which all they see is poverty and desperation, they never acquire the skills or the ambition that could help them rise above the poverty level. Since culture is passed down from one generation to the next, parents teach their children to accept their circumstances rather than to work to change them. The cycle of poverty then becomes self-perpetuating.
Though the stratification system of the United States is based on class rather than on caste, some people claim that a racial caste system exists in this country. Slavery was outlawed after the Civil War, but some believe it was replaced by another prejudicial system—a caste system based on race. Though whites could no longer own slaves, they still considered themselves to be superior to people of African descent. They insisted on separate recreational, educational, and other facilities for themselves and their families and even prevented intermarriage between people of different races. Before this time, one’s race was a strong indicator of destiny, and some would say that there is still a racial caste system in the United States today.
