Social policy plays a central role in redistributing resources to ensure greater equality or at least increased opportunities for members of disadvantaged groups. This essay considers how the U.S. welfare state redistributes incomes through social policies, while reinforcing other forms of stratification. The essay begins by comparing inequality in the United States to other advanced industrialized countries, and shows that the level of income inequality is higher in the United States than in most of these nations. It then presents data on inequality in the United States by race and gender. Finally, it discusses how specific policies alter levels of inequality by redistributing income or institutionalizing sources of income inequality. In general, U.S. social policies help to reduce inequality, but they have limited effectiveness, particularly in comparison to other advanced industrialized countries, in reducing inequality by race, class, gender, and family structure.