What is socioeconomic status?

The term socioeconomic status is frequently batted around. But just what is socioeconomic status exactly?

Socioeconomic status (SES) is a multi-faceted measure of a person’s position in a society in relation to other people. There is no single, standardized version of what socioeconomic status looks like. Across cultures, it usually incorporates at least the “big three” indicators of status: income, education, and occupation, all of which are informed in many societies by a person’s race, gender, and ability. That said, many people — and, more consequently, government agencies — have a more narrow definition of socioeconomic status: income alone. Socioeconomic status is often used as a way to conceptualize the stratification of society into what historically has been called “class” levels: high, middle, and low. (Note: We don’t use the term “class” today, per inclusive language best practices.)

Read on for a breakdown of the meaning, role, and impact of socioeconomic status in the U.S. today.

SES in the United States

Pew Research indicates that in 2021, 29% of adults in the U.S. were lower income, 50% were middle income, and 21% were upper income. Research also indicates that in the U.S., the middle class is steadily shrinking and poverty is increasing Today, 37.2 million people in the U.S. live in poverty.

Socioeconomic status has been shown to have direct correlation with long-term educational and health outcomes. It’s important that we both understand and measure the factors behind socioeconomic status if we’re going to redress inequalities in society.

How does socioeconomic status affect society?

Not everyone in society is treated or perceived the same. Society categorizes people into rankings based on different social factors. This is known as social stratification. Some societies have a strict stratification system, like the caste system.

Sociologists as far back as 19th century German sociologist Max Weber attempted to develop ways to explain how and why society is stratified into levels. Also in the 19th century, revolutionary philosophers Karl Marx and Friedrich Engels wrote about the bourgeoisie (those who own the means of production) and the proletariat (those who labor). In 1947, two sociologists named Cecil North and Paul Hatt conducted research asking respondents to rate the “prestige” of certain occupations. They understood that there was a social element to inequality. Later, 20th century American sociologist Otis Dudley Duncan combined the “prestige” measure with the incomes and education of those occupations, incorporating the economic factor of inequality. From this, Duncan constructed the Socioeconomic Index (SEI), still used for research.

Today, socioeconomic status research is used for policy making and the distribution of resources. It’s used to understand student outcomes in standardized testing and to develop curriculum. It’s used to understand how diseases disproportionately affect certain populations and then to develop public health policy.

Socioeconomic status is also used for university admissions by the University of California (UC) system. Because both voters (1996) and the Supreme Court (2023) banned admissions based on race, the UC system incorporated socioeconomic status instead.

Socioeconomic factors

In the U.S., there is no consensus on how to measure socioeconomic status. Some researchers approach it based on the concept of “prestige” mentioned earlier — in other words, that your standing in society is based on how you are regarded by others in society. Another approach is through a material resources perspective — your family’s assets and income determine your socioeconomic status. There’s also a relative factor of socioeconomic status: a person’s subjective perception of their own SES.

Socioeconomic status classification can be approached at different levels, as well: individual, family, and community. This helps to explain the context in which a person lives. Measures at a community level could be rates of home ownership, average rates of education, income levels, unemployment levels, and more.

As we’ve discussed, the most common factors used to determine socioeconomic status are income, education, and occupation. But many other factors can be added to this, such as:

• Wealth/net worth (which isn’t always synonymous with income)
• Housing, and whether you rent or own
• Area of residence
• Personal perception of one’s own SES
• Psychological factors

Shortcomings of socioeconomic status as a measure

Is socioeconomic status effective at addressing systemic inequalities? Maybe.

While the University of California system has had some success with SES policies, they found it does not yield as much racial diversity as race-based policies. Here are some of the key shortcomings of socioeconomic status as a tool for social justice.

Intersectionality. While socioeconomic status attempts to combine a number of factors, it doesn’t account for much of the intersectionality experienced by people in the U.S. None of the factors behind socioeconomic status explicitly account for race or ethnicity, effectively ignoring the experience of Black, Indigenous, Latino, Asian-American, and other racially or ethnically marginalized communities. Intersectionality tells us that people in these communities experience multiple, simultaneous inequalities that “intersect” and compound one another. With 80% of Americans saying there is a lot of or some discrimination against Black people, how can we address systemic inequalities without addressing race?

Meritocracy and bootstrap politics. Socioeconomic status is the basis for how welfare and other government benefits are often distributed. When social assistance is targeted at “poor” people, it attaches a stigma to the assistance. Anyone growing up on food stamps, EBT, or free school lunch understands how this feels.

In the U.S., this stigma morphs into an oversimplification that poverty, poor education, and poor health are somehow the result of individual choices — that people in these situations need only to pick themselves up by their bootstraps in order to succeed. This ignores the complex and deeply entrenched social issues facing many Americans. The U.S. is believed by many to be a meritocracy — you get what you deserve based on your abilities. In that context, many believe you deserve your socioeconomic status – even though we acknowledge how childhood can affect opportunities later in life (more on that below).

Outcomes of socioeconomic status

People with or from backgrounds of low socioeconomic status face a series of long-term outcomes as a result.

Education. There are serious correlations between socioeconomic status and education. Children from low-SES households develop slower academic skills and lower literacy rates than children from higher-SES households. Low SES in childhood is related to reduced cognitive development, language, memory, and emotional processing. School systems in low-SES communities are underfunded, further negatively affecting student performance. Students with low SES enter high school at a reading level that’s five years behind high-SES students. In college, they are three time more likely to drop out before completing their degree. Socioeconomic status and education statistics like this are alarming.

Health. SES may be one of the most decisive factors on a person’s physical health and life expectancy. People with higher SES have more employment options, don’t often work in manual labor, and are exposed to less risk at work. Higher SES also means better incomes to afford more nutritional food, better housing, and medical services. Those with higher SES have often received better education about health knowledge, as well.

Career. Those with low SES experience significant barriers in terms of vocation. Those from higher SES are often better prepared for employment because they have access to resources like career offices, guidance counselors, better schools, and family members that have been to college. Just consider the role of internships alone in early career prospects. Research has shown that a student’s socioeconomic background impacts not just the quality of university they attend (or indeed, whether they go to college at all), but what experiences they can take advantage of while in school. We know that internships positively influence post-graduation income; yet, who can afford to work an unpaid internship? Usually not students from lower socioeconomic backgrounds.

The mountain of socioeconomic status

Socioeconomic status tells you where you are on the mountain. Maybe your privileges have put you on or near the top. There’s not much climbing to do from there. A lot of folks have started out on the bottom, crushed by the weight of systemic inequalities. It’s hard to even move around, let alone begin to climb. While SES has its shortcomings as a measurement, it helps us define and measure the challenges we face as a society.

To learn more about social justice issues and how they appear in the workplace, search through our resources for employers.