The Rise of Corporations and Subsequent Effects on Social Inequality

Patrick Elahmadie
SOC 139 ? Winter 2012
Midterm 1

The Rise of Corporations and Subsequent Effects on Social Inequality

The rise of social inequality has become a paramount and controversial issue in the United States. Over the last few decades, higher income disparities, wealth concentration, and uneven access to social protection characterize our society. Scholars argue that there is a direct correlation between this social inequality and the rise of corporations in America. Some believe that corporations can act to decrease social inequality by ensuring equal opportunities and benefits to all qualified citizens, regardless of race or gender. Others believe that the government, through tax incentives and complex federal regulations that promote corporate expansion of pension, healthcare, etc. to full time employees as opposed to promoting social programs that apply to all citizens, has effectively increased social inequality by increasing the concentration of wealth and creating unequal access to social benefits. I will argue that, although the implementation of equal opportunity rights reduced social inequality by granting minorities and women access to previously white male-dominated jobs, it was the government?s delegation of social protection to corporations that created a severely imbalanced access to benefits, which in turn acted to greatly increase social inequality.
Many believe that the corporations themselves do not account for the rise in social inequality. In order to understand corporate action, however, we must understand the institutional environment in which the corporation is embedded. This institutional environment, comprised of informal and formal laws and regulations, heavily influences the actions taken by corporations. The Civil Rights Act of 1964, for example, changed the entire hiring, promotion and termination procedures of large companies by outlawing discrimination in employment and ensuring equal opportunity of employment under the law regardless of race or gender. By making discrimination illegal, it became very costly for corporations to discriminate against minorities or women and potentially risk millions of dollars? worth of lawsuits, as well as bad publicity in front of an increasingly moral society.
Although outlawing discrimination sounded appropriate, compliance with this new law was vaguely defined. It took several court cases in order to implement some of the common practices our companies hold today. A Supreme Court ruling against the Duke Power Company, who purposefully tested black employees on knowledge unnecessary for the job in order to justify rejection, clearly outlawed test validation practices. In 1998, the Supreme Court also imposed liability on employers for any sexual harassment that takes place within the workplace, highlighting the need for businesses to adopt policies designed to prevent harassment (Dobbin 2011: 4).
Rationally, it became in a corporation?s best interests to combat discrimination and promote equal opportunity in job employment. This newfound interest sparked companies to undertake several experimental measures, some effective and several ineffective, to promote diversity in all facets of business .One solution that has proven effective is the formalization of mentoring programs, programs that help create social connections between ambitious, lower-level women or minorities and upper-management ?mentors? in order to help the former move up in the corporation. Most effectively, many corporations have chosen to appoint a specialized person, or committee, with the sole purpose of overseeing diversity efforts in hiring, promoting and terminating women or minorities in the workplace. By directly linking an employee?s or employees? job welfare to company diversity, a corporation can delegate the responsibility of diversity to a specialized expert. This responsibility makes ?managers and taskforces feel accountable for change, and they monitor quarterly employment data to see if their efforts are paying off (Dobbin, Kalev, and Kelly 2007: 27).? The diversity trend caught on quickly, and by 1980 ? most big time employers had hired equal opportunity managers, if not entire departments, and were in the process of creating race-relations workshops, special recruitment systems, and a host of programs designed to improve opportunities for women and minorities (Dobbin, Kalev, and Kelly 2007: 23).?
These aforementioned diversity managers and taskforces then combined legislation, case law, and administrative law to create an informal code of business that ?translated the law into practice (Dobbin 2011: 3).? This code set the rules governing a wide assortment of issues from hiring, firing, and promotion to sexual harassment and maternity leave. Once placed into practice at the largest corporations, mimetic processes led smaller and less successful corporations to adapt and create very similar codes of conduct, eventually