Households in Australia get their income from three main sources:
(1) Wages and salary;
(2) Investments, including superannuation; and
(3) Social Security payments.
Wages
Wages make up the largest portion of these three sources, representing 77% of household income. This means that wages are a large contributor to income inequality. The highest 20% income group receives almost three times the average wages of the middle 20% income group, averaging $4,363 a week before tax, compared with $1,645. The middle income group receives six times more wages as the lowest 20% income group, at $1,645 a week compared with $256.
Employment status is a key driver of inequality. Within the lowest 20% income group, only 24% of adults have paid employment, and less than half of these jobs are fulltime. In the middle 20% income group, the rate of paid employment is higher, with 68% of adult household members employed, and 42% of these workers in full-time jobs. The highest 20% income group is relatively ‘work rich’, with 87% of adults in these households in paid work, with 67% of them in full-time jobs.
Investment income
Income from investments, such as interest, rent, dividends, royalties and superannuation represents a small part of total income, but is highly concentrated in high-income households. The middle 20% income group have an average $150 a week from investments and other private sources, while the highest 20% income group had five times as much investment income, at $705 a week; and the highest 5% income group had eight times as much investment income, at $1,125 a week. The greater disparity in investment incomes (compared with earnings) is a by-product of the highly unequal distribution of wealth in Australia.
Social Security payments
Social Security payments account for the majority of income at the lower end of the income distribution. Recipients of the maximum rate of JobSeeker Allowance are over-represented (compared with other social security payments) in the lowest 5% income group, while those receiving the maximum rate of pensions are over-represented in the second 5% income group.
Wealth in Australia is made up of:
– main home;
– superannuation;
– shares and other financial assets;
– investment real estate; and
– other non-financial assets, such as cars.
The average wealth per household is made up of 39% main home; 20% superannuation; 19% shares and other financial assets; 12% investment real estate; and 10% other non-financial assets.
Ownership of some types of wealth is very concentrated. The highest 20% wealth group owns over 80% of all wealth in investment properties and shares, over 70% of all superannuation assets; and 54% of all wealth in main homes.
However, wealth holdings across income groups is more evenly distributed, due in large part to high levels of home ownership among retired people on relatively low incomes. The highest 20% income group had an average wealth of $1,952,000, almost three times the middle 20%, at $711,000, and almost four times that of the lowest 20% income group.
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Social inequality results from a society organized by hierarchies of class, race, and gender that unequally distributes access to resources and rights.
It can manifest in a variety of ways, like income and wealth inequality, unequal access to education and cultural resources, and differential treatment by the police and judicial system, among others. Social inequality goes hand in hand with social stratification.
Social inequality is characterized by the existence of unequal opportunities and rewards for different social positions or statuses within a group or society. It contains structured and recurrent patterns of unequal distributions of goods, wealth, opportunities, rewards, and punishments.
Racism, for example, is understood to be a phenomenon whereby access to rights and resources is unfairly distributed across racial lines. In the context of the United States, people of color typically experience racism, which benefits white people by conferring on them white privilege, which allows them greater access to rights and resources than other Americans.
There are two main ways to measure social inequality:
- Inequality of conditions
- Inequality of opportunities
Inequality of conditions refers to the unequal distribution of income, wealth, and material goods. Housing, for example, is inequality of conditions with the homeless and those living in housing projects sitting at the bottom of the hierarchy while those living in multi-million dollar mansions sit at the top.
Another example is at the level of whole communities, where some are poor, unstable, and plagued by violence, while others are invested in by businesses and government so that they thrive and provide safe, secure, and happy conditions for their inhabitants.
Inequality of opportunities refers to the unequal distribution of life chances across individuals. This is reflected in measures such as level of education, health status, and treatment by the criminal justice system.
For example, studies have shown that college and university professors are more likely to ignore emails from women and people of color than they are to ignore those from white men, which privileges the educational outcomes of white men by channeling a biased amount of mentoring and educational resources to them.
Discrimination of an individual, community, and institutional levels is a major part of the process of reproducing social inequalities of race, class, gender, and sexuality. For example, women are systematically paid less than men for doing the same work.
There are two main views of social inequality within sociology. One view aligns with the functionalist theory, and the other aligns with conflict theory.
- Functionalist theorists believe that inequality is inevitable and desirable and plays an important function in society. Important positions in society require more training and thus should receive more rewards. Social inequality and social stratification, according to this view, lead to a meritocracy based on ability.
- Conflict theorists, on the other hand, view inequality as resulting from groups with power dominating less powerful groups. They believe that social inequality prevents and hinders societal progress as those in power repress the powerless people to maintain the status quo. In today's world, this work of domination is achieved primarily through the power of ideology, our thoughts, values, beliefs, worldviews, norms, and expectations, through a process known as cultural hegemony.
Sociologically, social inequality can be studied as a social problem that encompasses three dimensions: structural conditions, ideological supports, and social reforms.
Structural conditions include things that can be objectively measured and that contribute to social inequality. Sociologists study how things like educational attainment, wealth, poverty, occupations, and power lead to social inequality between individuals and groups of people.
Ideological supports include ideas and assumptions that support the social inequality present in a society. Sociologists examine how things such as formal laws, public policies, and dominant values both lead to social inequality, and help sustain it. For example, consider this discussion of the role that words and the ideas attached to them play in this process.
Social reforms are things such as organized resistance, protest groups, and social movements. Sociologists study how these social reforms help shape or change social inequality that exists in a society, as well as their origins, impact, and long-term effects.
Today, social media plays a large role in social reform campaigns and was harnessed in 2014 by British actress Emma Watson, on behalf of the United Nations, to launch a campaign for gender equality called #HeForShe.