17.3: Class

Learning Objectives

Upon completing this section, you should be able to:

1. Define socioeconomic status.
2. Differential industrial capitalism from financial capitalism.
3. Compare the cultural aspects of the major classes in America.

 

Class and Socioeconomic Status

In American society, class or socioeconomic status (SES) is defined by an individual's position within a hierarchy based on income, education, and occupational prestige. While the United States often prides itself on being the land of equal opportunity, the American class system is a structural reality that links individuals’ access to various opportunities with their socioeconomic status. Classes are not static byproducts of nature, but social constructions that evolved historically alongside the nation's economic modes of production.

The American class structure was founded upon a deliberate rejection of the authority of the aristocratic nobility in medieval Europe’s feudalist economy. The American colonists, influenced by Enlightenment thinkers like John Locke and Adam Smith, had great distaste for the idea of a hereditary caste system, where one’s social status as an elite noble, or a poor peasant serf, was determined by the circumstances of one’s birth and unchangeable - even by great effort.  The architects of the United States of America sought to experiment with a new economic system instead, one in which anyone could compete to raise their status on a level playing field, in a free market that didn’t reward fancy titles, but instead rewarded hard work and shrewd decisions.  This was the idea of capitalism that we’ll examine further in another chapter, and it established the American ideology of meritocracy: the belief that power and status in society should go to those demonstrating the most effort and talent.

The Industrial Crucible

The nineteenth-century transition to industrial capitalism meant that the economy shifted from mostly agrarian work, to mostly manufacturing.  Many Americans moved from small rural towns (where most people in their communities had done similar farm work and had similar incomes) into larger urban cities, where economic and social diversity began to solidify into what would eventually become the modern “class” system we know today. Capitalists who invested in factories early on made huge profits during this Gilded Age, by mass producing a variety of goods with little regulation or competition.  The urban class structure was split into a small upper class of industrialists who owned factories, and a large working class who sold their labor for a set wage, and took on a distinct social identity defined by the living conditions in crowded urban environments, and the shared experience of relying on repetitive and grueling industrial labor to earn a living.  This reliance came into sharp focus with the Great Depression of the 1930s.  Capitalist markets naturally have boom and bust cycles, which are exaggerated under industrial capitalism, and were even more amplified due to efforts of certain industrialists known as “robber barons” (e.g. John D. Rockefeller, Andrew Carnegie) who used their vast wealth to dismantle government regulations and illegally crush competitors in order to gain monopoly control of their industries. Without legal guardrails or competition to regulate their excesses, the stock market crashed. The economy was... busted, and many workers were laid off, with no safety net such as unemployment compensation or severance payouts. Many lost their homes and the ability to feed their families.  

The Rise of the Middle Class

President Franklin D. Roosevelt’s “New Deal” government jobs program helped many of the unemployed urban working class to get back on their feet, and began to reshape American ideological beliefs about the proper role of government (as discussed in Chapter 3).  The boost to industrial production brought on by America’s entrance into World War II helped even more. The decades following World War II saw America’s economy out-producing the rest of the world, since the manufacturing infrastructures in most other industrialized countries had been heavily damaged by war.  This new economic dominance, bolstered by high union membership and government investment (such as the G.I. Bill) spurred the growth of a large American middle class that could afford home ownership, advanced education, and luxury consumer goods. During this period, the "American Dream" became a tangible reality for most Americans - although as we have seen, institutional discrimination such as redlining excluded many people of color from this kind of upward mobility.  But the meaning of being middle class in this era took on clear identifiers: it meant holding a stable job, usually in the manufacturing sector, with benefits like health insurance and a pension plan, and a salary that could afford buying a house and a car. This established the baseline for future generations' expectations of economic success, even as the structural foundations of that economy began to shift.

De-Industrialization

By the 1980s, America’s former military ally turned economic rival, the communist Soviet Union, was clearly losing the Cold War.  American-style capitalism was emerging as the world champion economy, raising living standards and creating wealth in the nations that adopted it. This geopolitical success triggered a bipartisan ideological shift in American culture to neoliberalism, which highly values the notion of free markets, and includes the belief that capitalism could be more efficient - and therefore more profitable - if national borders no longer artificially constrained free trade.  So American foreign policy began to shift, reducing regulatory barriers to corporations that wanted to do business internationally, and also pressuring the governments of other countries to do the same.  In other words, America initiated globalization of the economy. Many formerly American corporations became multinational businesses, and realized they could find efficiencies by relocating production facilities in parts of the world with cheaper labor.  Middle-class Americans, after all, had developed expensive consumer tastes and commanded higher wages than the working classes in other countries.  So the American economy began to undergo a process of de-industrialization, as companies “out-sourced” manufacturing work to cheaper labor markets.  

As this process sped up, many middle-class factory workers couldn’t find replacement jobs that paid the same salary, and had little choice but to take lower-paying jobs in the service sector of the economy, usually without unions or the benefits they brought (such as healthcare and pensions).  This segment of middle class workers dropped down into the working class, experiencing negative social mobility.  In a meritocracy, we might assume that people moving down the class ladder did something wrong, perhaps they were too lazy or made foolish choices, and got fired for cause.  But most of these workers dropped down a class level through no fault of their own - they experienced what economists call negative structural social mobility, meaning they would have stayed where they were if it were up to their personal merits… but the whole structure of the economy lurched around them!  They wound up in a worse location in the hierarchy, even though they didn’t do anything to move down.  

Neoliberal policies also ended many legal regulations on businesses, privatized many government services, and dismantled many New Deal programs aimed at benefiting the general welfare of the population.  Productivity increased though, as planned, and profits climbed nicely during the 1990s and early 2000s, but those benefits only accrued to stockholders.  Wages for the working class stagnated, even though they were the ones doing all the increased production.  This trend increased the size of the wealth gap between the rich and the poor, creating an hour-glass economy where the middle class dwindled.  Middle class Americans now faced pressure to compete for highly-skilled upper middle class professional careers in the information sector, or else be stuck with low-wage “McJobs” in the precarious service sector with the working poor class.

Financialization

In recent decades, the post-industrial United States has entered a new economic era once again.  Economists label our current system financial capitalism, which means that the primary drivers of profit are now information, technology, and financial products.  Unlike industrial capitalism, where wealth is generated through the mass production of material goods, financial capitalism generates profit through the manipulation of capital itself (stocks, real estate, futures, and digital assets).  Instead of firms that produce things, the primary engines of economic activity are now financial actors like banks, hedge funds, and insurance companies.  While firms that produce things still exist of course, even they begin to act like financial actors, often prioritizing shareholder value over long-term expansion.  For example, under industrial capitalism a successful firm might reinvest profits into new machinery or research into new product lines, but under financial capitalism it may instead engage in stock buy-backs, using cash to purchase their own shares back in order to artificially inflate the stock price, thereby rewarding principle stockholders and executives at the expenses of long term industrial capacity.

Technological innovations are highly valued not for their insturmental utility, but for their capacity to disrupt standard business models and extract new sources of profit.  Systems that convert traditional "jobs" (with employees that expect benefits) into the “gig economy” (where workers use apps to find gigs) are especially sought after.  Think of someone who may have driven passengers around in cabs, as an employee of a taxi company.  Today, they might still drive passengers around, for a ridesharing service like Uber, but in this case they’re self-employed - they don’t work for Uber, and so there are no benefits, no chance for promotion, and they might have to use their own car and take care of the maintenance and insurance costs out of pocket.  In recent years, no sector has received more investment dollars than the burgeoning artificial intelligence industry, so highly prized because investors envision disrupting many other industries, potentially saving vast amounts on the cost of labor through automation.  The consequences for the American class system could be unprecedented.     

 

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The Sociology of Class

Class is not only a matter of economics.  To understand class from a sociological perspective, we must look beyond the dollar signs to the meanings attached to these positions. Symbolic interactionists like Max Weber argue that class is not really about money; it is a performance of a social role that shapes how individuals perceive themselves, and interact with others.

Class Category	Symbolic Meaning and Social Behavior
The Elite Upper Class (The 1%)	Values: Exclusivity and autonomy. Norms: Members of this class often inhabit private institutions—living in gated communities, frequenting exclusive clubs, sending children to elite private schools—that insulate them from the broader social structure. Their cultural activity is defined by "conspicuous consumption" and the management of high-status social networks.  Their income comes mostly from investments rather than labor.
The Professional Middle Class	Values: Competence and credentialism. Norms: This group derives identity from educational attainment and specialized expertise. Their behavior often centers on professional development, and investing in their children's future through good schooling and creative extra- curricular pursuits. They tend to view the social world as a ladder of merit. They own their homes. Their income mostly comes from well-paying jobs, but they often have some investments too.
The Working Class	Values: Resilience and community. Norms: Facing more precarious employment, working-class social behavior often emphasizes strong kin networks and mutual aid. There is often a symbolic opposition to elite culture, and they emphasize practical skills over abstract knowledge. They mostly rent rather than buying housing. Their income comes from working, and may afford them a fairly comfortable living standard, but after paying bills they don't have much left to save.
The Lower Class   (the precariat)	Values: Survival and invisibility. Norms: For those in or near poverty, life is shaped by the stress of navigating inadequate social systems. Cultural patterns are often a response to structural constraints and economic instability, where decisions are dictated by immediate needs more than long-term planning. Their meager income comes from working part-time jobs in the service sector or gig economy (with no benefits or job secuirty), from social safety net programs, or from friends and family. Their housing situation is also precarious and they often live paycheck to paycheck, struggling to pay bills.

The sociological perspective reveals that class is a daily fact of existence. For a person in the upper or middle class, their status may feel "normal" and unremarkable, something they don’t often think about, much like the concept of race to many white Americans. Conversely, for those at the bottom of the hierarchy, the oppressive consequences of the class system are visible in every interaction—from a denied rent application to a condescending remark at a retail counter.

 

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References

• Barkan, S. E. (2026). Sociology: Understanding and Changing the Social World.

• Federal Reserve. (2025). "Survey of Consumer Finances: The State of American Wealth."

• Hochschild, A. R. (2012). The Managed Heart: Commercialization of Human Feeling. University of California Press.

• Kendi, I. X. (2024). The DEI Retreat: Why Corporate America is Moving Backward. The Atlantic.

• Pew Research Center. (2025). "The Widening Gap: Perceptions of Race and Class in the Mid-2020s."

• Rothstein, R. (2024). The Color of Law: A Forgotten History of How Our Government Segregated America. Liveright Press.

• Sharkey, P. (2009). "Neighborhoods and the Black-White Mobility Gap." Pew Charitable Trusts.

• Standing, G. (2011). The Precariat: The New Dangerous Class. Bloomsbury Academic Press.

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