American Sociological Review, vol. 42, núm. 1, 1977, pp. 32-55.

Marxist Class Categories and Income Inequality.

Wright, Erik Olin y Perrone, Lucas.

Cita: Wright, Erik Olin y Perrone, Lucas (1977). Marxist Class Categories and Income Inequality. American Sociological Review, 42 (1) 32-55.

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Acta Académica es un proyecto académico sin fines de lucro enmarcado en la iniciativa de acceso abierto. Acta Académica fue creado para facilitar a investigadores de todo el mundo el compartir su producción académica. Para crear un perfil gratuitamente o acceder a otros trabajos visite: http://www.aacademica.org. 32 AMERICAN SOCIOLOGICAL REVIEW Sutherland,Edwin H. and Donald Cressey Westley, William A. 1974 Criminology. Philadelphia: Lippincott. 1953 "Violence and the police." American Swigert, Victoria Lynn and Ronald A. Farrell Journal of Sociology 59:34-41. 1976 Murder, Inequality and the Law: Dif- Wolf, Edwin D. ferential Treatment in the Legal Pro- 1964 Abstract of "Analysis of jury sentencing cess. Lexington, Ma.: Heath. in capital cases: New Jersey: 1937- 1961." Rutgers Law Review 19:56-64. Treiman, Donald Wolfgang, Marvin E. Forth- Occupational Prestige in Comparative 1961 "A sociological analysis of criminal coming Perspective. New York: Seminar. homicide." Federal Probation 23:48- Vines, Kenneth and Herbert Jacob 55. 1963 "Studies in judicial politics." in VIII Wolfgang, Marvin E. and Franco Ferracuti Tulane Studies in Political Science: 77- 1967 The Subculture of Violence. London: 98. Methaen.

MARXIST CLASS CATEGORIES AND INCOME INEQUALITY *

ERIK OLIN WRIGHT University of Wisconsin,Madison

LUCA PERRONE Universitydegli Studi delta Calabria,Italy UniversityStatale di Milano, Italy American Sociological Review 1977, Vol. 42 (February):32-55

Marxian class categories have been almost totally ignored in systematic quantitative studies of social stratification and income inequality. Occupational status or a similar variable is almost always used as the core criterion defining the individual's position in the system of stratification. This study provides a preliminary operationalization of the Marxian class categories for use in quantitative research. The three most important of these classes-workers, managers and employers-then are analyzed to see what inter- actions occur between class position and the usual variables used in predicting income (education, occupational status, age and job tenure) and between class and race-sex cate- gories. It was found that there is a substanial interaction between class position and the income returns to education; within class categories, however, there are no differences between race and sex groups in the returns to education.

In the study of social stratification, there causes and consequences of inequality is a major disjuncture between theoretical have almost totally ignored Marxian cate- traditions and quantitative empirical work. gories. Marxists have been suspicious of Of all the theoretical traditions in sociol- quantitative, multivariate approaches to the ogy, social inequality probably plays the study of social reality, and the practitioners most central role in the Marxist perspec- of multivariate statistics generally have tive. Yet, quantitative investigations of the viewed the Marxist perspective as offering little of interest for empirical research. The present research is an attempt to * We would like to express our gratitude to bridge this gap between the Marxist theo- Robert Quinn, Graham Staines, Linda Shepherd retical perspective and the rapidly growing and others at the University of Michigan Survey body of quantitative studies of social in- Research Center for their assistance throughout this study. We would also like to thank Tom equality. The first part of the paper will Rothenberg,Arthur Stinchcombe, BarbaraHeyns, discuss briefly the logic of the Marxist con- Robert Kahn and Marcia Wright for their many cept of class and present a preliminary op- helpful suggestions on various portions of the perationalization of the Marxist criteria for work, and Sam Bowles, Christopher Jencks and Otis Dudley Duncan for their written comments class position for use in quantitative re- on an earlier version of the paper. search. We then will examine an empirical MARXIST CLASS CATEGORIES AND INCOME INEQUALITY 33 applicationof this operationalizationin the can be ordered in a hierarchical fashion. In study of income inequality. the Marxist perspective, classes are not, as Barber (1957:73) would have it, "divi- THEORETICAL BACKGROUND sional units within systems of social stratifi- cation." Classes constitute common posi- 1 The Marxist Concept of "Class" tions within social relations of production, Few conceptsin social sciencehave been and this means that classes must always be used in more diverse ways than "class." understood in terms of their relationship to To some sociologists, class refers to cate- other classes. Thus, the theoretical starting gories of people occupying common posi- point of a class analysis is to decode the tions within status hierarchies (Warner, social relations of production within a par- 1960; Parsons, 1970:24; Williams, 1960: ticular society in order to uncover the class 98). Others define classes as conflict positions which they determine. groups determinedby their position within The traditional Marxist analysis of the authorityor power structures(Dahrendorf, class structure of capitalist society has cen- 1959:138; Lenski, 1966:95). Sociologists tered on three criteria underlying social within the Weberiantradition see class as relations of production: (1) ownership of identifyinggroups of people with common the means of production; (2) purchase of economic"life chances"determined largely the labor power of others; (3) sale of one's by market relations (Weber, 1968:927; own labor power.2 These three criteria Giddens, 1973; Parkin, 1971:18-23). In generate the three basic class categories of contrastto these usages, Marxistshave de- capitalist society: capitalists own their own fined class primarilyin terms of common means of production, purchase the labor structuralpositions within the social or- power of others and do not sell their own ganizationof production(Bukharin, 1969: labor power; workers do not own their 276; Lenin, 1969:486). In contemporary own means of production and therefore Americansociety, this means definingclass cannot purchase the labor power of others, in termsof positionswithin capitalist social but do sell their own labor power to capi- relationsof production. talists; and the petty bourgeoisie do not sell There are three importantelements of their own labor power, nor (except per- this conception of class: classes constitute haps in a very limited way) purchase the common positions, those positions are re- labor power of others, but do own their lational and those relations are rooted in own means of production. For many pur- the social organizationof production. To poses, especially for the analysis of mid- say that classes constitutepositions implies, nineteenth century capitalism, these were to use Przeworski's(1976:3) apt expres- probably adequate criteria, at least as a sion, that there are "emptyplaces" in the first approximation; for the analysis of social structurewhich are filled by individ- contemporary capitalism, they need some uals. The analysis of class must be under- important extensions. stood primarily as the analysis of such The present analysis will focus on only empty places, and only secondarilyof the one of the possible extensions of this basic actual individualswho fill the slots. While typology, the emergence of an authority questions of social mobility are important structure within the capitalist enterprise in a class analysis,there is a logical priority which is partially differentiated from own- to understandingthe empty places into which individualsare sorted (see Poulan- tzas, 1973:49-50; Marx, 1967: 10). 2 It might appear that sale of one's own labor power is equivalent to not owning the means of Classes are not, however, just any production and thus is a redundant criterion. ''empty places" in social structurewhich However, in all class societies there are people who neither own the means of production nor sell their labor power-in precapitalist society, 1 For a much more elaborate discussion of the slaves; in capitalist society, students, many house- Marxist concept of class, see Wright (1976a:20- wives and others who do not participate directly 90; 1976b). in production. 34 AMERICAN SOCIOLOGICAL REVIEW Table 1. Expanded Marxist Criteria for Class Criteriafor Class Position Purchaseof Control of Ownershipof the Labor the Labor Sale of One's the Means of Power of Power of Own Labor Production Others Others Power Capitalists Yes Yes Yes No Managers No No Yes Yes Workers No No No Yes Petty Bourgeoisie Yes No No No

ership. This expanded typology is pre- implies the emergence of a new social cate- sented in Table 1. The traditional Marxist gory, generally referred to as managers. criterion of "employing labor power" Managers in this typology are wage-labor- really contains two distinct dimensions. ers who do not own their own means of First, being an employer gives the capitalist production, do not formally employ work- legal rights to the product of labor. Sec- ers, but who do control or supervise labor ond, being an employer gives the capitalist power. Thus they share some of the cri- control over the activities of labor, over teria of both workers and capitalists, which the labor process. In nineteenth century reflects the structural position of managers capitalism, these two dimensions tended to as a buffer between the capitalist class and be united in the entrepreneurial capitalist; working class. This enlarged typology will today, especially in the large corporation, they tend to be partly differentiated.3 This De Vroey, 1975). It is a sociological question, not a formal legal one, whether the appearance 3Opponents of the Marxist view of class have of a separation of ownership and control, in fact, argued that with the institutional separation of may hide a new integration of the two. Under- ownership and control in the modern corpora- stood in this way, the main significance of the tion, property ownership has progressively de- rise of managerialism is not the abolition of clined as an important element in the structure property relations, nor the demise of the capital- of inequality and, thus, an analysis of capitalist ist class but, rather, the reorganizationof owner- social relations of production per se is unneces- ship structuresfrom individual forms of capitalist sary (see especially Bell, 1973; Berle and Means, ownership to more collective forms of ownership. 1932; Galbraith, 1967). Of course, no one can The dominance of the capitalist class is no longer deny the considerablegrowth of managerial hier- primarily mediated through personally manipu- archies in the modern corporation and the gen- lated individual businesses, but through collec- eral decline of the family-owned firm in favor tively run and coordinated corporate empires of the joint stock company (although, as Zeitlin (see Menshikov, 1969). Capitalist social relations (1974) argues, there are considerable data to of production have not been transcended; they indicate that proponentsof the "managerialrevo- have merely been transformed.The Marxist class lution" thesis have grossly exaggerated these structureperspective thus argues that relations of changes). The issue is not whether or not pro- production-understood substantively, not form- fessional managers play a bigger role in running ally-remain the core criteria for understanding corporations today than 100 years ago, but how class structure and class antagonism. such managerial positions should be structurally 4 It is very important not to confuse this typol- interpreted. Obviously, if property ownership is ogy with Dahrendorf's (1959) conception of class taken to be simply a juridical category defining as common position within authority hierarchies. formal legal title to the apparatus of production, Two points of contrast are especially important: then the emergence of managers at the top of in Table 1, "authority" represents only one di- large corporations signals the demise of property mension of class relations; whereas in Dahren- relations. But proponents of the class structure dorf's analysis, authority becomes the sole cri- perspective increasingly have stressed that own- terion for class position. Second, in the present ership must not be understood primarily in legal- discussion, authority is defined specifically in istic terms. Rather, ownership of the means of terms of the social relations of production, not production constitutes a complex system of social the social relations of any organization whatso- relationships, of enforceable rights and claims to ever. For Dahrendorf, authority relations within the apparatusof production (see especially, Bali- churches are as much the basis of class position bar, 1970; Poulantzas, 1975; Bettelheim, 1973; as authority relations within industry. For a MARXIST CLASS CATEGORIES AND INCOME INEQUALITY 35 provide the basic conceptual framework we will ignore both of these ambiguities. within which the present research will be The typology in Table 1 therefore should conducted. be regardedas a firstapproximation clearly Severalbrief commentsabout the typol- in need of refinementrather than as a fully ogy in Table 1 are necessary.First, to say elaboratedclass typology.5 that this is a structuraltypology in which Third, to say that these are structural a person is placed in a class category on categories does not imply that they are the basis of the four criteriadoes not imply completelyhomogeneous, without any sig- that there are no ambiguouscases. For ex- nificant internal differentiation.There are ample, should a worker who in his or her large, wealthy capitalists and small, local spare time is a small-scale, self-employed capitalists;top managersand foremen (the artisan be considered a petty bourgeois lowest level in the managerialhierarchy); producer?It is partiallyan empiricalques- highly educated, well-paid workers and tion rather than a purely theoretical one marginal, poverty-stricken workers. It how neatly and unambiguouslyindividuals would be absurd to argue that class and can be placed into the slots. The critical class alone is the only importantelement point is that such ambiguity takes shape definingan individual'splace in the system and has theoretical meaning only in its of inequality.But again, the point is that relationshipto the structuralcategories. these various forms of internaldifferentia- Second, and perhaps more seriously, tion-of intra-class stratification-are to there is a certain ambiguityin the criteria be understood theoretically in terms of themselves quite apart from the possible their relationshipto the more generalstruc- ambiguitiesof placingindividuals into par- tural class categories. ticular slots. Two such ambiguities are Finally, it is very importantnot to think particularlyimportant. (1) There is an am- of these class categories as occupational biguity in the boundarybetween the capi- groupings.Class, as defined in Table 1, is talist and petty bourgeois classes. As de- a way of looking at social structure en- fined in Table 1, petty bourgeois employ tirely differentfrom occupation.The term no labor power. This is surely an overly "occupation" designates positions within stringent criterion; a small shopkeeper the technical division of labor, i.e., an oc- who employs one helper is not in a differ- cupation representsa set of activities ful- ent class position from a small shopkeeper filling certaintechnically defined functions. who employs no one. The criterion "em- Class, on the other hand, designatesposi- ploys labor power" thus does not provide tions within the social relationsof produc- a complete definitionof the differencebe- tion, i.e., it designates the social relation- tween capitalistsand the petty bourgeoisie. ship between actors. Knowing that an (2) In a complementaryway, there is a individualis a carpenter,for example,tells certainambiguity in the boundarybetween you that within the technical division of the capitalistclass and the managerialcate- gory. As defined in Table 1, the president 5 Many critics of the Marxist framework have of GeneralMotors would be called a "man- argued that the fact of such ambiguities negates ager"rather than a capitalist,in spite of the the value of a structural class model altogether. fact that most of his income comesfrom the This is equivalent to saying that because the platypus has webbed feet and a bill, the concept directappropriation of profits.Clearly, for- of "mammal" is useless. The point is that am- mal legal ownershipof the means of pro- biguities are ambiguities precisely because of duction and formal legal status as the em- their relationship to structurally defined cate- ployer of labor power are not sufficient gories. It is, of course, important for a structural theory to provide an understanding of the am- criteria to differentiate capitalists from biguities rather than to ignore them, but there is managers.For present purposes, however, no intrinsic incompatability between a structural theory and structural ambiguities. For a more thorough discussion of ambiguities in the class fuller discussion of the relationship of Dahren- structure, see the analysis of "contradictoryloca- dorf's concept of class to a Marxist perspective, tions within class relations" in Wright (1976b). see Wright (1976a:ch. 1). See also Carchedi (1975a; 1975b). 36 AMERICAN SOCIOLOGICAL REVIEW Table 2. Occupational Distribution within Class Categories (Full-Time Participants in the Labor Force Only, 1969 Survey of Working Conditions)

Class Categories a Petty Occupation Employers Managers Workers Bourgeoisie Total Professionalsand Technicians 2.9% 20.2% 12.5% 11.8% 11.1% Managers,Proprietors and Officials 72.1 17.1 1.7 41.2 14.5 Sales 2.9 4.5 5.6 2.0 4.9 Clerks 0.0 14.1 20.0 0.0 15.2 Craftsmen 6.7 21.8 14.5 9.8 16.0 Operatives 1.0 13.8 29.4 3.9 20.3 Laborers 1.0 0.8 4.5 2.0 2.8 Service Workers 1.9 6.1 10.4 2.0 7.7 Farmers 11.5 0.4 0.0 27.5 2.8 Farm Laborers 0.0 1.2 1.2 0.0 1.0 Total 100.0% 100.0% 100.0% 100.0% 100.0% N 104 491 664 51 1310 a See Table 3 for operationalizatiohsof class position in the 1969 Survey of Working Conditions. labor he/she physically transforms lumber These three questions generate a total of into buildings; but it tells you nothing five categoriesas illustratedin Table 3.7 about that individual's class position. A carpenter could easily be a worker, a petty 7 Several comments about these categories are bourgeois producer, a manager or even a necessary: small capitalist. The occupational distribu- Employers: We are calling this category "em- tion for the various class categories is given ployers" rather than capitalists since most of the in Table 2. individuals in the sample who fall into this cate- gory are extremely small businessmen. Seventy- eight percent reported that they employed nine or Operationalization of the Class Categories fewer workers, and only eight percent said that they employed 50 or more. The data for the present study come Managers and Workers: In response to the ques- from the 1969 "Survey of Working Condi- tion about having subordinates, a majority of tions" and the 1973 "Quality of Employ- elementary and secondary school teachers re- sponded that they did supervise people on their ment Survey" conducted by the University jobs. This would formally place them in our man- of Michigan Survey Research Center.6 A ager category. However, with very few exceptions number of questions from the 1969 survey (such as teachers who hold administrative jobs enabled us to construct a class typology as well as teach), teachers should be classified as workers, not managers, since they do not super- that was reasonably close to the Marxian vise labor power. Therefore, we have reclassified typology. all teachers as workers regardless of their re- sponses to the question about having subordi- 1. "Most of the time on this job do you nates. work for yourself or someone else?" Petty Bourgeoisie: A pure rentier capitalist-i.e., 2. "If you are self-employed, are there an owner of stocks and other assets who did not any people who work for you and are employ anyone directly-would fall into the petty bourgeoisie on the basis of the criteria in paid by you?" Table 3. In reality, such an individual should be 3. "Do you supervise anybody as part classified within the capitalist class, since the of your job?" role of managing the flow of capital represents part of the capitalist position within social rela- tions of production. Since it is unlikely that many 6 The 1969 survey consisted of a national ran- such individuals are included in the present sam- dom sample of 1,533 adults 16 years and older; ple, this misclassification makes little practical the 1973 sample consisted of a national random difference. sample of 1,496 adults. In both surveys, only Ambiguous: This category does not have a clear individuals active in the labor force were in- meaning in the present study. Except for the spe- cluded. cial case of a self-employed consultant who su- MARXIST CLASS CATEGORIES AND INCOME INEQUALITY 37 Table 3. Operationalizationof the Marxist Class Typology (1969 Survey) OperationalizedCriteria for Class Position Have Have Subordinates Self-Employed Employees on the Job Employed N % 1. Employers Yes Yes Yesa No 110 7.4% 2. Managers No No Yes Yes 561 37.4% 3. Workers No No No Yes 739 49.2% 4. Petty Bourgeoisie Yes No No No 65 4.3% 5. Ambiguous Yes No Yes No 27 1.8% a Three individuals reported that they were employers but had no subordinates.These individuals were included in the employer category.

EMPIRICAL APPLICATION OF THE income determination between classes. If CLASS TYPOLOGY class position is a critical mediating vari- able between social background and in- General Hypotheses come, then it would be expected that class The class categories discussed above position would affect the ways in which will be used in an empirical study of in- background characteristics get transformed come inequality. There will be three fo- into income. That is, we hypothesize not cuses to this investigation. only that class position has an independent Comparison of the explanatory power of impact on income from occupational posi- class and occupational status. Virtually all tion, but also that it affects the extent to of the recent sociological work on income which background characteristics them- inequality has used occupational status, oc- selves can be "cashed in" for income. In cupational prestige or some closely related particular, the expectation is that class metric of occupations as the key mediating position will have a strong influence on the variable between the individual's social extent to which education influences in- background and education and the indi- come. vidual's income. We have posed the con- More concretely, we predict: (a) that cept of class, defined in terms of capitalist the returns to education will be much social relations of production, as an alter- greater for managers than for workers and native paradigm for understanding inequal- (b) that the income of employers will be ity. One way (by no means the only way) higher than that of managers and workers of comparing these paradigms is to esti- at every level of education, but that the mate a series of income regression equa- returns to education for employers will be tions and then to examine the relative less than for managers. changes in explained variance when class The reasoning behind the first hypothe- and other variables are included and ex- sis is as follows. For both workers and cluded in various combinations. The ex- managers there should be some posi- pectation is that class position will have at tive returns to education for a variety of least as much an effect on an individual's reasons: educated labor costs something income as will the individual's occupational to produce and, thus, the income going status, and that this effect will not disap- to educated workers and managers gener- pear when status is controlled for. ally will include an increment to cover Examination of the different patterns of those costs at least partially; educated la- bor tends generally to be in short supply relative to uneducated labor and, thus, pervises other people's employees, this category market forces will tend to push up the in- probably represents a response error. Since less comes of both skilled workers and man- than two percent of the sample falls into this category, we will exclude it from all subsequent agers. analyses. However, because of the specific posi- 38 AMERICAN SOCIOLOGICAL REVIEW tion of managers within the social relations touching directly on questions of social of production, there are forces which tend mobility, i.e., how people get sorted into to increase the returns to education among class positions. What we are asking is: managers above the returns for workers. once a person gets into a class position, by The argument has two steps. First, be- whatever sorting process, does the class cause of the problems of social control of position itself have an impact on how much managerial labor, managerial hierarchies difference an individual's education is will tend to be characterized by elaborate likely to make for the individual's income? incentive structures. In particular, the in- We are therefore, in a sense, using regres- come gradients associated with managerial sion equations to tap characteristics of the career ladders will tend to be quite steep. structure of class itself rather than to repre- This, in turn, will create steep income grad- sent the status-attainment process at the ients associated with position within the individual level.8 managerial hierarchy. Second, among Examination of the differences in pat- managers, there will tend to be a fairly terns of income determintion between close relationship between education and blacks and whites and between men and position within the managerial hierarchy. women within classes. One of the main This association is the result of several fac- preoccupations in the stratification litera- tors. (1) Higher levels of the hierarchy ture has been the analysis of differences in require certain skills that are produced (or the status-attainment process among blacks at least certified) within the educational and whites and, more recently, men and system. (2) The educational system social- women. One of the most robust findings of izes people to the work norms demanded this body of research is that blacks in gen- for different positions in the hierarchy. In eral receive less income per increment in particular, higher education develops hab- education than do whites (see Siegel, 1965; its appropriate for higher levels within the Duncan, 1969; Weiss, 1970).9 None of authority structure. (3) The educational system helps to legitimate the managerial hierarchy as a whole through the merito- 8This point may be somewhat clearer if we cratic ideology of rule by experts and, thus, consider a more concrete example. Suppose we there will be a wished to compare the relation of education to tendency for people with wages in two businesses. In one business, educa- lower credentials not to be promoted above tion is irrelevant for pay; in the second business, people with higher credentials. As a result pay scales are closely pegged to educational of this combination of steep income gradi- credentials. There are two empirical strategies ents and steep educational credential gradi- that could be adopted for revealing this pattern: formal pay scales and job requirements in the ents tied to managerial position, we expect business records of the two firms can be used to that managers will have particularly high estimate the returns to education; or a survey of income returns to education. This reason- the personnel of the businesses and use of indi- ing will be discussed in greater detail in the vidual-level data to estimate the returns. In either case, the resulting regression equations should be final section of this paper. seen as characterizing the firms rather than the The second hypothesis is based on the individuals.This becomes most obvious in a situ- view that the income of employers is fun- ation in which education itself becomes an im- a of the portant criterion for an individual entering one damentally consequence quantity or the other of the two businesses. In such a of property (capital) controlled by the em- case, the regressions of income on education ployer rather than the employer's educa- within each firm would tell very little about the tion. Therefore, education should matter total relationship of education to income for in- for the employer's income only if, among dividuals. In our analysis, class categories are analogous to the firms, and the regression equa- employers, there is a strong relationship tions should be interpretedas reflectingcharacter- between quantity of property and level of istics of the class positions as such. education. 9 The work of Stolzenberg (1975) represents It is very important to understand the a partial exception to this general finding that the returns to education are lower for black logic of these comparisons of returns to males than for white males. Stolzenbergfinds that education in different classes. We are not within detailed occupational categories the rate MARXIST CLASS CATEGORIES AND INCOME INEOUALITY 39 these studies, however, has controlled for slopes of the independent variables in the class position defined in terms of social re- equations and (b) if a significant "gap" in lations of production. If it is true that man- income exists between the compared agers receive much higher returns to edu- groups when the independent variables are cation than workers, as hypothesized controlled for. Figure 1 illustrates these above, and if it is true that blacks are more two kinds of comparisons for the simple concentrated than whites in the working regression of income on education for class, then it would be expected that much managers and workers. The test for the of the differential returns to education for significance of slope differences simply in- blacks and whites might be due to the dis- volves testing whether the slope of the tribution of races across class categories. manager minus worker regression is signifi- Therefore, we will compare the returns to cantly different from zero.10 It is somewhat education for blacks and whites within less obvious how to test the significance of class categories in order to control for this the gap in income. The difficulty is that class composition effect. We will do the the magnitude of this gap is strictly depen- same analysis for men and women. dent upon the level of education at which it is assessed. Thus, in Figure 1, if managers Statistical Method and workers were compared at zero educa- For the direct comparison of class and tion (the usual constant term in regression status the following standardized regres- equations), the gap would be slightly nega- sion equation will be estimated: tive; if they were compared at the workers' mean education (Ew), the gap would be Age+B3 Status Income=,81 Education+,82 positive, but relatively small; if they were Worker +,84Employer Dummy+,f5 Dummy compared at the managers' mean education We will then examine how much the R2 for (Em), the gap would be positive and large. the equation drops when the class dummy There is no standard convention as to variables are excluded, when status is ex- which of these possibilities is the most ap- cluded and when both are excluded. propriate. In the present analysis, we will The analysis of the interaction patterns assess the gap in income at the value of will involve a fairly straightforward appli- the independent variables halfway be- cation of the analysis of covariance. We tween the means for each of the two groups will compare the various class categories being compared. In Figure 1, this is indi- and sex and race categories within classes cated as . The gap at this point rep- in terms of a series of regression equations 2 to see (a) if they differ significantly in the resents the expected difference in income between a worker and a manager with identical education equal to the average of income returns are fairly similar for the two of the mean worker and mean manager races. However, Stolzenberg's results are not strictly comparable to those of the other studies education. We will refer to the comparison cited above or the present research since he mea- of expected incomes at this point as the sures the rate of income returns to education analysis of the "average gap" in income rather than income returns as such. Stolzenberg between the groups being compared. uses a log transformation of the income variable in order to measure approximately the propor- tional increase in income for a unit increase in education rather than the absolute increase in 10 This is accomplished by constructing a income for a unit increase in education. It is dummy variable for one of the nominal cate- quite consistent to find that blacks receive much gories in the comparison and then estimating a lower absolute increases in income than whites regression equation with education, the dummy per unit increase in education and yet that they variable, and the dummy variable times educa- receive equal (or even greater) proportional in- tion as independent variables. In such an equa- creases in income. Since at every level of educa- tion, the dummy variable interaction term repre- tion the income of blacks tends to be less than sents the difference in slopes for the two groups that of whites, a smaller absolute increase in in- being compared. A direct t-test of this coefficient come may produce an equivalent proportional thus tests the significance of slope differences be- increase. tween the two groups (see Kmenta, 1971:419-23, 40 AMERICAN SOCIOLOGICAL REVIEW Specification of Equations for the Analysis Annual Income of Interaction Patterns Every regression equation contains the answer to some question. The trick is for Workers the equation which is estimated in fact to answer the question which is asked. Too often in sociological research any variable which is thought to be interesting is thrown into a regression equation without regard to its substantive relevance to the questions at hand. I I There are two somewhat different ques- tions which we would like to answer in the analysis of interaction patterns: 1. Do individuals in different classes, and in different race and sex categories within classes, differ in the amount of Education income they can expect to receive for w w n n each additional increment of educa- 2 tion (comparison of slopes)? 2. Do individuals who are alike in all B = Mean worker education respects except that they differ in their class position, or who differ only in n = Mean education manager their race and sex while sharing a = Level of education at which the gap in income will be common class position, differ in the 2 evaluated absolute amount of income which they can expect to receive (analysis 1. Illustrationof the Method of Structural Figure of average income gap)? Comparisons

Since the averageincome gap is assessed These two questions pose somewhat differ- at a differentlevel of the independentvari- ent issues for the correct specification of ables in each comparison,it is not possible the regression equations. For the first equa- directly to compare average income gaps tion, ideally we would like to hold all fac- for different comparisons. In order to do tors constant which can be considered this, it is necessary to assess the gap at the causes of education, but not those which same point on all comparisons. We will are consequences of education. In particu- therefore also calculate a "standardized in- lar, we would like to include a number of come gap" by assessing the gap at the variables which describe the individual's level of the independentvariables of the social background and "intelligence." Un- most privilegedcategory in our analysis fortunately, no such data are available in employers.(This is equivalentto the com- the present survey. The result is that the mon technique of substitutingthe means estimated education coefficients in our from a privilegedgroup into the equations analysis inevitably will be somewhat biased for a disadvantagedgroup as discussedby upwards.'2 Duncan, 1969.) In Tables 6A and 7A, wherewe reportthe basic regressionequa- simply is necessary to shift the constant term in tions for our analysis, this standardized the dummy-variable interaction regressions to income constitutes the difference in the desired value of the independentvariables. A gap t-test on the constant term in such a regression "adjusted constants" for the various then becomes a t-test of the income gap between groups." the two groups being compared. 12 The reason why it would be desirable to Ii To conduct a t-test on these various gaps, it have such background variables in the equation MARXIST CLASS CATEGORIES AND INCOME INEQUALITY 41 There is certainly no unanimity on the education which have any significant im- potential biases in education coefficients pact on income. The list of such factors is, created by improperly measuring or by of course, very large and includes occupa- omitting social background variables. tional status, on-the-job training, seniority, Bowles (1972), for one, argues that such work experience, industrial sector, geo- biases are likely to be substantial. There is, graphical location, migration, and so forth. however, considerable research on the ef- For the present purposes, we will limit our- fects of social background and education selves to three of these: job tenure, age on income (Duncan, 1969; Blau and Dun- (as a proxy for work experience) and oc- can, 1967; Jencks et al., 1972) and of cupational status. measured IQ on income (Jencks et al., We are including these additional equa- 1972) which suggests that the bias in the tions not to provide more precise estimates education coefficient caused by the omis- of the education coefficient as such, but to sion of the relevant background variables see if the average gaps in income disap- should not be terribly large. More impor- pear as controls are added.'3 Again, the tantly, even if these biases are not trivial, income gap, as we are measuring it, repre- since our main interest centers on the dif- sents the expected difference in incomes ferences between various groups rather between two individuals, one from each than the absolute values of the regression group, that would occur if the two individ- coefficients, the problem of bias should uals had the same levels on all the inde- become less critical. If we are willing to pendent variables equal to the averages of assume that the bias due to the omission their respective group means. If this gap of background variables is in the same di- were entirely due to differences in the lev- rection for both groups, then the bias in els of education, occupational status, tenure the estimate of the difference in coefficients and experience, then the gap should be- will necessarily be less than the most bi- come negligible when these factors are all ased of the two individual coefficients and, included in the equation. generally, less than both. In the limiting While the actual value of the education case where two groups have identical bi- coefficient in these expanded equations has ases, the estimate of the difference in coeffi- little intrinsic interest, the magnitude of cients actually will be unbiased. the difference between groups in the edu- Because of this absence of background variables, therefore, the core of the analy- 13 In certain respects, these expanded regres- sis of slopes will rest on comparisons of sion equations provide less meaningful estimates the simple regression of income on educa- of the effects of changes in education per se on tion for the various categories. income than does the simple regression. In par- ticular, the inclusion of occupational status intro- For the second question, we would like duces a substantialdownward bias in the estimate to hold constant all factors in addition to of the education coefficient since it holds constant one of the basic mechanisms by which education influences income. The regression which contains is not because they necessarily would tell us any- occupational status as well as education provides thing about how people get sorted into class an answer to a rather strange question: how positions, but because the class interactions much additional income could an individual ex- could conceivably be artifacts of various unmea- pect to receive for an increase in education pro- sured background characteristics of the individ- viding that this increased education did not lead uals occupying given class positions. Thus, if to a change in occupation? The constraint of not managers have greater returns to education than changing occupation (or at least not changing workers, it might be because they have different occupational status) certainly reduces the amount motivations due to higher status backgrounds. of extra income per increment of education, i.e., What appears as an education slope difference it biases the education coefficient downward. Un- between managers and workers.would, in fact, less this equation appears as part of a system of turn out to be a slope difference between high recursive equations (as in path analysis), the in- status and low status backgrounds. In effect, clusion of the occupational status variable in the therefore, when we compare education slopes we equation clearly gives a less meaningful estimate are comparing returns to education plus returns of the effects of education per se on income than to all the unspecified causes of education which does the simple regression of income on educa- also influence income. tion. 42 AMERICAN SOCIOLOGICAL REVIEW cation coefficient in these expanded equa- Since in the analysis of the interaction pat- tions may give some clue as to the possible terns we are less concerned with the co- mechanisms which produce the differences efficients of the status variable as such, we between classes observed in the compari- will use the 1969 data in order to have the sons of the simple regressions. In particu- most reliable measures of class position. lar, if the inclusion of the occupational In any event, the results for the direct com- status variable wipes out any differences parisons of class and status using the 1969 between classes in the slope of the educa- data and for the interactions using the tion variable, it would suggest that the dif- 1973 data are substantively the same as ferences in slope in the simple regression those reported below. might be subtstantially the result of the oc- Annual income. Respondents were asked cupational composition of the different to indicate their total personal annual in- class categories. Thus, while the basic pur- comes before taxes as well as the amount pose for constructing these expanded equa- and frequency of their paychecks. If they tions is to examine the average income gap failed to answer the annual income ques- between groups, we will also look at the tion, annual income was estimated from effect of including the additional variables the response to the paycheck question. on the differences in the education slopes. Annual income is being used rather than Therefore, for each interaction com- simply annual earnings since, for compari- parison, we will estimate two equations: sons between classes (especially between employers and other classes), the exclu- 1. the simple regression of income on sion of unearned property income obvi- education; ously would understate real class differ- 2. the regression of income on educa- ences. Total income therefore should be tion, tenure, age and occupational seen sociologically as an indicator of total status. economic rewards regardless of economic source. Variables Education. Education is measured by a Class. Class is measured by the criteria quasi-credential scale rather than by years in Table 3. Unfortunately, in the 1973 of education in the following manner: replication of the original 1969 survey of working conditions, the question about em- O=elementaryschool or less ploying others was dropped from the ques- 1 completed elementary school tionnaire. This means that the employer (grade 8) category and category 5 in Table 3 were 2=some high school merged, making the 1973 data somewhat 3=high school completed less reliable in comparisons between em- 4=some college ployers and other classes. We will there- fore rely on the 1969 survey for the analy- 14 The decile status scale used in the survey is sis of interaction patterns. related to the full two-digit scale as follows: Occupational status. Status was mea- Decile Full Scale sured using the standard Duncan SEI 0 01-06 scores. However, in the 1969 survey, only 1 07-13 decile values from the Duncan scale were 2 14 coded rather than the full two-digit scale.14 3 15-18* In of class and 4 19-21 our direct comparisons 5 22-31* status, we will rely on the 1973 data in 6 32-39* order to avoid any problems of attenuation 7 40-51* which might result from using decile 8 51-65* scores. By using the full status scale and 9 66 and over a slightly less well-measured class variable * The decile split in these cases occurred in the middle of a category. In these situations, cases in these comparisons, we are maximizing were randomly assigned above and below the 10 the relative explanatory power of status. percent cut-off point. MARXIST CLASS CATEGORIES AND INCOME INEQUALITY 43

5=college degree RESULTS 6=post-college. Direct Comparison of Occupational Status and Class Position Each step on this scale represents a so- cially-recognized level of education. Al- Table 4 presents the regressions used to though in practice it is highly unlikely that assess the relative contributions of occupa- any of our results would have been differ- tional status and class to the explained ent if years of education had been used variance in income. Table 5 presents the instead of this scale, we felt that in an corresponding correlation matrix. In order analysis of income determination a "cre- to make these results as comparable as dential" is a more appropriate unit of possible to the existing research on income education than a year. determination and status attainment, we Job tenure and age. The job tenure vari- have restricted the sample to white males, able is a simple measure of the number of nonfarm full-time participants in the labor years worked on the current job. Unfortu- force. nately, no question was asked on the sur- Education and age account for just over vey about general work experience beyond 15% of the variance in income. The addi- tenure in current job. While realizing that tional increment in R2 resulting from add- there are some problems with age as a vari- ing occupational status to this equation is able in an analysis of income determina- only 4.1 %, whereas the increment from tion, age will be used as a loose proxy for the two class dummies is 9.4%. All of the general work experience. variables taken together explain just under 27% of the variance in income among The Sample Used in the A nalysis white males. Looked at in a slightly dif- ferent way, when class is added to the For the purposes of the present research, equation containing status, the R2 increases we have restricted the analysis to those by 7.6%, whereas when status is added to respondents who work full time, defined as the equation containing class, the increase 35 hours a week or more. While this re- is only 2.3%. Status and class alone each duced the sample size somewhat, especially explain just over 14% of the variance in for women, we felt that the analysis would income. These results are highly suggestive be more straightforward if we avoided the that an extremely simple version of the special problems of analyzing the market Marxian class typology is at least as potent for part-time labor. a variable in predicting income as the full In the analysis of interaction patterns, Duncan socioeconomic scale. the sample also will be limited to workers, managers and employers, the three most Class Comparisons important classes in advanced capitalist societies. In many respects, the petty bour- Figure 2 and Table 6 present the results geoisie represents a remnant from an earl- of the comparison of the various class cate- ier era of capitalist development and, as a gories for the simple regressions of income class, certainly is progressively becoming on education. Table 7 presents the results less important. While this class may be of for the expanded regressions. Table 8 pre- considerable interest for certain problems, sents the mean values and standard devia- we will simplify the present study by ex- tions of the variables for all the class-race- cluding it from the analysis. sex categories being compared. Finally, farmers and farm laborers (less The results shown in these tables and than 4% of the total sample) are being figures strongly support the view that class excluded because of the difficulties of as- has a substantial effect on the relationship sessing income in kind for agricultural oc- of education to income. The results can cupations. All of the results reported below be summarized as follows. remain virtually unchanged if farmers and Workers versus employers and man- farm laborers are included in the analysis. agers. The education slope for workers 44 AMERICAN SOCIOLOGICAL REVIEW Table 4. Comparison of the Explanatory Power of Occupational Status and Class (1973 Survey, White Male, Nonfarm, Full-Time Participants in the Labor Force Only) StandardizedRegression Coefficients [DependentVariable=Annual Income] VariablesIncluded Decile Employer Worker in the Occupational Class Class RegressionEquation Education Age Status Dummy Dummy 2 1. All Variables .16 .19 .21 .26 -.06 .269 2. Education Only .27 .071 3. Educationand Age .32 .28 .152 4. Education, Age and Status .15 .23 .26 .193 5. Education,Age and Class .28 .22 .27 -.11 .246 6. Status Only .38 .143 7. Class Only .29 -.17 .145 Comparison of Relative Changes in R2 Equations Compared Interpretation of the Comparison Increment in R2 4-3 Status Net of Education and Age .041 5-3 Class Net of Education and Age .094 1-5 Status Net of Education, Age and Class .023 1-4 Class Net of Education, Age and Status .076

was significantly flatter than for managers income gap between classes, they fail to or for employers, and the overall level of eliminate the differences in the slopes of the regression line was considerably lower the education variable. Even when the con- in the simple regression equations (Table trol variables are added, workers still re- 6A:2-3; Figure 2A). Workers received, ceive some $2,563 less income per incre- on the average, $1,119 less for each incre- ment of education than employers, and ment in education than managers and $870 less than managers. Furthermore, $3,413 less than employers. The average in- workers also receive much less additional come gap between workers and managers income for increments in decile occupa- was $2,529 and between workers and em- tional prestige than either employers or ployers, $6,865. All of these differences managers; workers receive over $2,000 less were significant at the .001 level. for each decile of prestige than employers The addition of job tenure, age and oc- and $400 less for each decile than man- cupational status into the equations did agers. These results further support the not eliminate the average gap in income notion that the differences between classes between workers and managers or em- cannot be considered simply artifacts of the ployers (Table 7B:2-3); i.e., most of the mix of occupations in the different classes gap between the regression lines in Figure for if that were the case, the classes would 2A cannot be attributed to the age-tenure- not be expected to differ in the slopes of occupational status composition of the the occupational status variable itself. class categories. Managers versus employers. The income Not only do the age, tenure and occu- gap between managers and employers was pational status variables fail to close the substantial in the simple regression equa-

Table 5. Correlation Matrix for Variables in Table 4 Variables 2 3 4 5 6 Mean 1. Income .27 .23 .38 .35 -.26 11,715 2. Education (Credentials) -. 17 .60 .05 -.09 3 . 3 3. Age .12 .15 -.21 38. 3 4. OccupationalStatus .15 -.31 43.3 5. Employer Class Dummy -. 30 .105 6. WorkerClass Dummy .440 MARXIST CLASS CATEGORIES AND INCOME INEQUALITY 45

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0 0 46 AMERICAN SOCIOLOGICAL REVIEW Table 6A. Unstandardized Coefficients for Simple Regression of Income on Education (Nonfarm, Full-Time Participants in the Labor Force Only, 1969 Survey) Adjusted Unstandardized Constant a Education Coefficient N Overall Class Categories Employers $14,273 $4,091 72 Managers 9,398 1,797 452 Workers 6,756 678 628 White Males Employers 15,062 3,927 64 Managers 10,784 1,937 319 Workers 8,218 764 318 White Females Managers 5,445 1,042 94 Workers 4,875 862 230 Black Males Managers 8,796 1,766 24 Workers 7,492 670 37 Black Females Workers 5,190 1,086 35 aThe constant term is evaluated at the employers' mean level of education (3.2).

Table 6B. t-Values and Significance Levels of Average Income Gaps and Differences in Education Slopes for Various Class, Race and Sex Comparisons t-Value for Average t-Value Differences Income for Income in Education Gap. Gap Coefficients Overall Class Comparisons 1. Employer versus Manager $5081 5.3t 3.0*** 2. Employer versus Worker 6865 10 4-t 6. 6t 3. Managerversus Worker 2529 9. 2 6.Ot White Males 4 Employer versus Manager 4471 4.012O3** 5. Employer versus Worker 6162 6.8t 4.7tL 6. Managerversus Worker 2436 6.3t 4.6t White Females 7. Managerversus Worker 574 2.4** K 1 Black Males 8. Managerversus Worker 653 <1 1 9* Managers 9. While Male versus Black Male 1986 1.5 <1 10. White Male versus White Female 5527 8. 6 1 .5 11. Black Male versus White Female 3351 4.2 1 .3 Workers 12. White Male versus Black Male 659 1.3 <1 13. White Female versus Black Female -230 <1 1 .2 14. White Male versus White Female 3373 16. 0 <1 15. Black Male versus Black Female 2620 5. 7ts 1 .6 a "Average Income Gap" represents the difference in expected incomes of the two groups being com- pared at an educational level equal to the average of each group's mean education. Significance levels (two-tailed test) * 10 level **O05 level ****01 level tO001 level. MARXIST CLASS CATEGORIES AND INCOME INEQUALITY 47

Table 7A. Unstandardized Regression Coefficients for Expanded Regression Equations (Nonfarm, Full-Time Participants in the Labor Force Only, 1969 Survey)

Unstandardized Coefficients [Dependent Variable=Annual Income] Decile Adjusted Occupational Job Constant Education Status Age Tenure Overall Class Categories Employers $13,850 $3,170 $2,359 -$110 $77 Managers 10,090 1,477 570 67 43 Workers 7,512 607 147 18 25 White Males Employers 14,112 3,195 2,786 -51 23 Managers 11,246 1,555 671 71 6 Workers 8,889 729 184 33 12 White Females Managers 5,724 822 357 28 1 Workers 5,504 691 110 -2 72 Black Males Managers 10,288 2,245 -15 95 12 Workers 8,896 450 285 30 -123 Black Females Workers 5,871 1,227 33 65 -35 a The constant term is evaluated at the employer's mean levels on the independent variables: Educa- tion=3.2; Decile Status=7.0; Age=45.9; Job Tenure=11.3.

Table 7B. t-Values and Significant Levels of Average Income Gaps and Differences in Slopes for Various Class, Race and Sex Comparisons, Expanded Regression Equations t-Values for Differences in Coefficients t-Value Average for Decile Income Income Occupational Gap Gap Education Status Age Tenure Overall Class Comparisons 1. Employers versus Managers $3,883 3.9t 2.1** 2.9*** 1.8* <1 2. Employers versus Workers 4,270 5.2t 4.6t 5.2t 1.9* <1 3. Managers versus Workers 1,793 6.3t 3.8t 3. 1*** 2. 1** <1 White Males 4. Employers versus Managers 3,238 2.8*** 1.8* 2.7*** <1 <1 5. Employers versus Workers 2,909 2.6*** 3.4t 4.2t <1 <1 6. Managers versus Workers 1,557 3.9t 2.7** 2.5** 1.1 <1 White Females 7. Managers versus Workers 246 <1 <1 2.2** 1.5 1.4 Black Males 8. Managers versus Workers 379 1.8* <1 <1 <1 <1 Managers 9. White Male versus Black Male 997 <1 <1 <1 <1 <1 10. White Male versus White Female 5,365 8.3t 1.2 <1 <1 <1 11. Black Male versus White Female 3,821 4.71 1.8* <1 <1 <1 Workers 12. White Male versus Black Male 537 1.11 <1 <1 <1 <1 13. White Female versus Black Female -320 1.1 1.7* <1 2.0** 1. 7* 14. White Male versus White Female 3,352 16.2t <1 <1 2.0** 1.5 15. Black Male versus Black Female 2,377 4.5t 1.6* <1 <1 <1 See note to Table 6B. Significance levels (two-tailed test) as in Table 6B. 48 AMERICAN SOCIOLOGICAL REVIEW

Table 8. Means and Standard Deviations of Variables Used in Regression Equations

Income Education Decile Status Age Job Tenure mean (s.d.) mean (s.d.) mean (s.d.) mean (s.d.) mean (s.d.) All Respondents $8,344 (6862) 2.96 (1.5) 5.8 (2.7) 39.6 (13.4) 6.4 (6.9) Overall Classes 1. All Employers 15,179 (16252) 3.24 (1.4) 7.0 (1.7) 45.9 (12.2) 11.3 (8.0) la. Big Employers (? IOEmployees) 19,188 (7918) 3.79 (1.4) 7.6 (1.4) 45.3 (12.7) 10.6 (9.6) lb. Small Employers (<10 Employees) 12,915 (16064) 3.02 (1.3) 6.9 (1.7) 46.2 (12.3) 11.5 (7.6) 2. Managers 9,226 (6403) 3.42 (1.5) 6.6 (2.3) 41.4 (12.7) 6.3 (6.9) 3. Workers 6,145 (3180) 2.86 (1.5) 5.1 (2.8) 37.4 (14.0) 5.2 (6.1) White Males 1. Employers 16,241 (16780) 3.24 (1.4) 7.2 (1.6) 45.1 (12.6) 11.6 (8.4) 2. Managers 10,943 (6730) 3.45 (1.5) 6.8 (2.1) 42.3 (12.5) 7.2 (7.3) 3. Workers 7,727 (3225) 2.82 (1.5) 5.0 (2.6) 38.2 (14.1) 5.7 (6.7) White Females 1. Managers 5,188 (2790) 3.46 (1.1) 6.7 (2.1) 39.1 (13.3) 5.6 (5.6) 2. Workers 4,391 (2053) 3.06 (1.3) 5.6 (2.9) 37.0 (14.3) 4.1 (5.2) Black Males 1. Managers 8,037 (6011) 3.02 (1.8) 5.5 (2.3) 38.1 (10.9) 7.0 (7.2) 2. Workers 6,804 (2588) 2.28 (1.7) 4.2 (2.6) 36.8 (13.5) 5.3 (6.2) Black Females 1. Managers 5,131 (1982) 3.20 (1.8) 5.1 (2.9) 40.3 (11.9) 4.5 (4.5) 2. Workers 4,490 (2419) 2.69 (1.9) 4.4 (3.1) 33.4 (11.6) 4.5 (6.4)

tion ($5,081) and was only partially re- bles 6B:4 and 7B:4). In the expanded re- duced by the addition of the control gression, the absolute magnitude of the variables. Contrary to our expectations, difference in education slopes between however, the slope on the education vari- white male managers and employers is es- able was significantly flatter for managers sentially as large as for all managers and than employers in both regression equa- employers ($1,640 compared to $1,693), tions. Some possible interpretations of this although the t-ratio of the difference drops result will be discussed in the final section just below the 5% significance level. The of this paper. unexpected result of employers having Class comparison within the white male greater returns to education than managers category. By and large, the same results thus occurs among white males as well as are obtained for white males examined in the entire sample. Again, these class separately as for the entire sample. The interactions cannot be considered a conse- education coefficients are significantly quence of the race and sex composition of lower for white male workers than for the class categories. white male managers or employers in the Class comparisons within the black male simple regression and in the expanded re- and white female categories. Although the gression. The income gaps were also sub- direction of the income gap and the differ- stantial and statistically significant (Table ences in the education slopes between man- 6B:5-6 and Table 7B:5-6). Thus, these agers and workers within the black male class differences cannot be considered arti- and white female categories are the same as facts of the race-sex composition of the within the white male category, the magni- class categories. tude of the differences tends to be smaller. In the comparison of white male man- Among white females the education slopes agers and employers, the income gap is of workers and managers were not signifi- also significant in both equations, and the cantly different for either of the regressions education slope for managers is signifi- and, while there was a significant income cantly flatter in the simple regression (Ta- gap in the simple regression, this gap was MARXIST CLASS CATEGORIES AND INCOME INEQUALITY 49 Table 9. Class-Race-Sex Distributions (Full-Time Participantsin the Labor Force Only, 1969 Survey) Distribution of Classes within Race-Sex Categories White Black White Black Males Males Females Females Total Employers 10.9% 6.6% 3.0% 0. 0% 7.9% Managers 42.9 36.8 27.7 22.9 37.5 Workers 41.5 55. 3 66.6 77.1 50.7 Petty Bourgeoisie 4.6 1.3 2.7 0.0 3.9 Total 100.0% 100.0% 100.0% 100.0% 100. 0% N 804 76 365 48 1293

Distribution of Race-Sex Categorieswithin Classes Petty Employers Managers Workers Bourgeoisie Total White Males 84.6% 71.1% 50.9% 77.1% 62.5% White Females 10.6 20.8 37.0 20.8 27.9 Black Males 4.8 5.8 6.4 2.1 6.0 Black Females 0.0 2.3 5.6 0.0 3.7 Total 100.0% 100.0% 100.0% 100.0% 100.0% N 104 485 656 48 1293

almost eliminated with the addition of the among workers and among managers, it control variables (Tables 6B :7 and 7B :7). should be kept in mind that these are dif- Among black males, the education slopes ferences which occur after the effects of were marginally significantly different in racism and sexism have operated to keep both regressions, but the average gap in some people out of the labor force alto- income was not significant in either regres- gether, to prevent others from finding sion. stable full-time employment, and to influ- ence the race and sex distribution among Race and Sex Comparisons within classes of those people who are full-time Class Categories participants in the labor force. Before examining the differences be- Race and sex comparisons within the tween race and sex categories within manager class. Black and white male man- classes, it is important to stress that some agers do not differ significantly in the of the most significant race and sex effects slopes of any variables in either the simple undoubtedly operate through mechanisms or the expanded regressions (Tables 6B:9; which sort people into the various class 7B:9). It can reasonably be said that an categories in the first place. Both women increment of education has essentially the and blacks are underrepresented in the em- same payoff for blacks and whites, once ployer category, and women are under- they become managers. represented in the manager category as There is greater ambiguity, however, in well (see Table 9). Furthermore, the pres- the analysis of income gaps. While in ent study is limited to full-time participants formal statistical terms, the average income in the labor force. It has been shown that, gap between black and white male man- even when educational and skill levels are agers is not statistically different at the 5% controlled for, blacks have considerably level in either the simple or the expanded higher levels of involuntary unemployment regression, the absolute magnitudes of the than whites (Harrison, 1972). It hardly gaps are still large when compared to many needs to be added that sexism has acted as of the other comparisons we are making. a powerful force for keeping women out of These results reflect the intrinsic ambiguity the labor force entirely or restricting them of using "significance level" as the criterion to part-time work. When we examine the of the relative strength of the difference differences between sex and race categories between groups. A low level of significance 50 AMERICAN SOCIOLOGICALREVIEW of a difference in coefficients can mean male and white female workers, over either that the two groups really do not $2,600 in the simple regressions. Adding differ in the coefficient or that they do dif- the control variables has virtually no effect fer substantially, but the difference is mea- on these differences. Thus again, as in the sured very imprecisely (i.e., the test is of managerial category, the sex differences low power). within the working class are much more The comparison of sexes within the man- striking than the race differences. agerial class is less problematic (Tables 6B: 10- Again, there are no 1; 7B:10-11). GENERALIZATIONS AND INTERPRETATIONS significant differences in the slopes of any of the variables, with the exception of the At the most general level, the results of education slope in the expanded regression this study clearly show that classes defined in the comparison of white female and in terms of social relations of production black male managers. We have no explana- are consequential in American society. tion for this result. However, there is a The differences between classes in levels of very substantial average gap in income be- income and in the relationship between tween white female managers and both education and income are substantial, and white and black male managers in both re- these differences do not disappear when we gression equations. With a large sample, control for variables such as occupational even if it should turn out that there was a status, age, job tenure, sex or race. Fur- significant income gap between black and thermore, in terms of explained variance white male managers, these data strongly in income, class position is at least as pow- indicate that the sex differences among erful an explanatory variable as occupa- managers are considerably greater than the tional status.'5 A number of other more race differences. specific generalizations can be made. Race and sex comparisons within the The returns to education within the man- working class. By and large, the results for agerial category are greater than within the the comparisons of sex and race categories working class category. This result was among workers are substantially the same strongly supported both for the sample as as among managers. None of the race-sex a whole and for white males taken sepa- categories differ in education slope in the rately in both regression equations. simple regression and, with the marginal This is one of the most important find- exception of the comparison of black and ings of the study and has considerable im- white women, none differ in the expanded plications for the understanding of income regression (Tables 6B: 12-15; 7B: 12-15). inequality. While much more research is Therefore, it appears that the returns to necessary to decipher fully this class inter- education are roughly the same for all action in returns to education, we can offer workers regardless of race and sex. some preliminary lines of interpretation. Furthermore, within sex categories, there As suggested earlier, we argue that the are also no significant income gaps be- higher returns to education among man- tween blacks and whites. Therefore, as in agers than among workers reflect the steep the managerial category, we cannot reject income gradients associated with mana- the null hypothesis that black and white male workers have essentially the same re- 'l It must be recognized that class itself still gression equations, and black and white explains only a relatively small proportion of the female workers have essentially the same total variance in income (14.5 percent in Table for the sim- 4). A full model explaining income variation regression equations, especially would have to include many other variables, ple regressions of income on education. such as economic sector, region of country, un- Between male and female workers of ionization, etc. The critical argument of this both races, however, there is a very signifi- paper is not that class explains everything but, cant average gap in income. The gap be- rather, that other variables must be examined in terms of their interactions with class position tween white female and white male work- in order to unravel the nature of income deter- ers is some $3,300 and between black mination. MARXIST CLASS CATEGORIES AND INCOME INEQUALITY 51 gerial hierarchies on the one hand, and the mode of control of managers reflects a role of education in sorting people into basic asymmetry of punishments and in- different levels of the hierarchy on the ducements as mechanisms of social con- other. trol: punishments are administered only In both Marxist and non-Marxist tradi- when concrete infractions are committed tions, "wages" (and, correspondingly, in- and discovered. They are, therefore, gen- come from wages and salaries) have been erally effective only for preventing bad be- conceptualized as part of an exchange re- havior. Punishments are not a very effec- lationship-an unequal, asymmetrical ex- tive strategy for encouraging responsible change in the Marxist perspective which behavior. Rewards, on the other hand, can hides an exploitive relation; an equal, reci- be doled out roughly in proportion to the procal exchange in non-Marxist perspec- quality of the individual's performance and tives which reflects the marginal produc- thus can be used as a more flexible instru- tivity of the wage earner. ment for encouraging enthusiastic, respons- An alternative view is that wages are not ible and even innovative behavior. In the merely payment for services rendered (i.e., case of workers at the bottom, there is little exchange), but are also part of a structure need for them to perform in a responsible of social control within businesses and and creative way. As with the private in the bureaucracies. Wage differentials should army, the employer is mainly concerned be considered, in part, a political response that the production line worker more or to the problem of social order within or- less does what he/she is told to do. Obedi- ganizations rather than either simply an ence rather than initiative is the basic per- economic response to the human capital formance norm. But for supervisors in of the wage earner or merely the phenom- general, and supervisors at the middle and enal form of a system of surplus value top levels of the management hierarchy in extraction. particular, the interests of the organization The conformity of the individual to the require more than dependability and me- norms of any institution is guaranteed by chanical obedience. For the power of man- a variety of threats of punishment for de- agers to be wielded effectively, their be- viance and promises of rewards for com- havior must be controlled by mechanisms pliance. The balance between these punish- which encourage responsibility rather than ments and inducements, and their specific simply repress deviance from the rules. It forms, depends strongly upon the individ- is therefore expected that authority hier- ual's position in the process of production. archies will be characterized by very steep For workers in the lowest skill levels, es- income gradients.'0 pecially when they are in peripheral busi- It might well be asked, what has this to nesses, the dominant mode of control is do with the relationship of income to edu- threats of various sorts, especially the cation in the manager category and the threat of being fired. For workers with worker class? In addition to developing higher levels of skills, particularly when various skills, education can be seen as they are employed in core industries, there is much more reliance on various positive inducements: progressively increasing pay 1haIt should be noted that this interpretationof the authority hierarchy income gradient is quite and vacation time, good pensions, job pro- different from the logic of the Davis-Moore motions, and so on (Stone, 1974). For ( 1945) interpretation. We are not arguing that employees who occupy positions in the au- there is any inherent scarcity of talent or any thority structure of an enterprise, the in- inherent problems of recruiting people for posi- tions in the authority hierarchy, but rather that ducement mode of control is even more once a person is in such a position, there is a dominant. Repressive forms of control problem of social control which is, in part, solved (such as the threat of being fired) become by the structure of income rewards. For a some- residual instruments used only in the last what different elaboration of this perspective which emphasizes the punishment aspect of the resort. control apparatus rather than inducement (see The dominance of rewards as the basic Wright, 1973:314-20). 52 AMERICAN SOCIOLOGICALREVIEW having two complementary functions with difference in education slopes between respect to authority structures (Edwards, managers and workers among black men, 1972; Bowles and Gintis, 1975). First, the income gap is quite small. education serves as a legitimation for in- These results suggest that black male equalities of power and second, education and white female managers look more like helps to socialize people to the different workers than do their white male counter- work habits, patterns of discipline and parts. One partial explanation for this social demands of different positions in the might be that black male and white female production process. In particular, higher managers are more highly concentrated at levels of education tend to socialize people the very bottom of managerial hierarchies to the work habits appropriate for occupy- than are white male managers. It would ing positions in the authority hierarchy. be expected that they would tend to be Among managers, it would be expected line supervisors of various sorts rather that there would be a fairly close associa- than middle managers, and that very few tion between their position in the authority indeed would become top level managers hierarchy and their level of schooling. This in either private businesses or public bu- association has been demonstrated by Tan- reaucracies. This would tend to depress the nenbaum et al. (1974:110-3). On the overall payoff for becoming a manager and basis of the logic of social control elab- reduce the differences between managers orated above, we would also expect that and workers. The present survey provides there should be a fairly close association no data directly relevant to this hypothesis, between income and the authority hier- and we have been unable to find other archy (see Tannenbaum et al., 1974:106- studies which systematically analyze the 8). Thus, we would predict that among position of blacks and women in compari- managers there should be a fairly steep son with white males in authority hier- income gradient for educational attainment archies. as well. This is precisely the result we have Even when education, occupational observed. status, age and job tenure are controlled In these terms, the education coefficient for, employers have greater income than for workers in Figure 2A can be thought either managers or workers. This result of as the payoff to education for those peo- occurs in spite of the fact that the em- ple with zero authority, while the difference ployers in the sample overwhelmingly are between the worker and manager regres- small businessment rather than large capi- sions at each level of education reflects the talists (see footnote 7). Thus, despite the- extra income managers can get by cashing ories of the managerial revolution, the in their education on positions in the man- postindustrial society and other perspec- agerial hierarchy. If this interpretation of tives which claim that authority and/or the steeper managerial returns to education knowledge stratification has superseded is correct, then it would be predicted that, property stratification, the results of the within specific levels of managerial hier- present research indicate that the class di- archies, the returns to education should be vision between property-holders and non- much closer to those of workers. Unfor- property-holders is still very real, even tunately, in the present study there are no when only small property-holders are con- data appropriate for testing this proposi- sidered. tion. The returns to education for small em- The class differences between managers ployers are much greater than for workers and workers tend to be less marked among and managers. This was an unexpected re- white women and black men than among sult. Since employers are not paid a direct white men. White female managers and return to education but, rather, pay them- workers differ hardly at all in returns to selves an income out of their profits, the education, and the average gap in their income of employers should be linked to income is very small in both regression education only to the extent that the quant- equations. Although there is a significant ity and profitability of their property was MARXIST CLASS CATEGORIES AND INCOME INEQUALITY 53 closely associated with the level of their the education of the employer matters less education. We did not expect this to be the as a determinant of his income. It would case but, apparently, at least for small be expected that for truly large capitalists businessmen, such a link is present. (employing 500 or more workers) the re- In retrospect, this is not so terribly sur- turns to education would be even smaller prising. Among quite small employers, and the adjusted constants correspondingly after all, differences in education would higher. correspond to differences between shop- The class differences between workers keepers on the one hand and doctors, law- and employers are considerably greater yers and other professionals on the other. than the differences between men and Since 78% of the employers in the present women or between blacks and whites sample employ fewer than ten employees, within the working class. The standardized it seems likely that the relationship of edu- income gap between workers and employ- cation to type of business may account for ers is generally two to three times as great much of the steepness of the employer edu- as the standardized gap between male and cation coefficient. Among larger employers, female workers of either race, and the gap it would be expected that education would between black and white workers of the make less difference in income. same sex is, at most, a tenth as large as the There is some suggestive evidence in the gap between workers and employers.18 The present survey which supports this inter- differences in education slopes are very pretation. Eighteen employers in the sam- small between sexes or races within the ple stated that they employed ten or more working class, but are quite substantial and employees. When the regression equations highly significant between workers and em- are run separately for this subgroup, it is ployers. Furthermore, race and sex groups found that indeed they do have much flat- within the working class differ by a maxi- ter education coefficients than employers mum of about $200 in returns for a decile who employed fewer than ten employees. increase in occupational status, whereas In the simple regression, small employers employers and workers differ by over received $4,285 for each increment in edu- $2,000. In a Marxist perspective, these re- cation whereas the larger employers re- sults are very much what would be ex- ceived only $1,221.17 This coefficient is pected. In economic terms, class exploita- smaller than the one for managers. The tion is a theoretically more fundamental average income gap between large and division within capitalist society than is small employers, as one would expect, was either sex or race, and thus the differences relatively large-$4,155. Because of the between the working class and the capital- small number of large employers, it was ist class should be more substantial than not possible to test formally the signifi- the differences between male and female cance levels of these comparisons. How- workers or black and white workers. ever, they do suggest that as the actual Within class categories, races and sexes labor of an employer becomes a smaller appear to have very similar returns to edu- proportion of the total labor of a business, cation. These results must be considered somewhat tentative since the sample size, especially for the race comparisons, is rela- 17 There was one outlier in the large employer group-an individual who employed more than tively small. Nevertheless, it seems fairly ten workers but reported an annual income of safe to conclude that at least part of the only $3,000. This individual also happened to have a low level of education, and leaving him in the regression increased the education slope for 18Note that we are comparing "standardized large employers considerably (to $2,100 from income gaps" rather than "average income gaps" $1,221).) Since it is implausible that an employer in this conclusion. It is impossible to compare of more than ten people would actually have a average income gaps since they are assessed at a real income of only $3,000 a year (presumably different point for each comparison. The stan- in this case the employer had a bad year and dardized income gaps, on the other hand, are lived off his capital), we have excluded this indi- assessed at the same point, mean values of the vidual from the regression. independent variables for the employer category. 54 AMERICAN SOCIOLOGICAL REVIEW differential returns to education for blacks dimension in the structure of inequality in and whites is a consequence of the class American society. composition of the two races. If this result is confirmed with more extensive data, it REFERENCES would suggest that racial discrimination Balibar, E. operates more in sorting people into class 1970 "The basic concepts of historical ma- positions in the first place than in giving terialism." Pp. 199-308 in L. Althauser and E. Balibar, Reading Capital. Lon- them lower income for given levels of edu- don: New Left Books. cation and skills once they are in a class Barber, B. position. 1957 Social Stratification. 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