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The contemporary concept of the underclass is a sanitized term for what was known in the eighteenth and nineteenth centuries as the undeserving poor, and was first used by Gunnar Myrdal in 1962. The usage came into wide circulation in the early 1980s, following Ken Auletta`s (1982) use of the term in three articles published in The New Yorker in 1981, and in book form a year later. Auletta refers to the underclass as a group who do not "assimilate" (1982: xvi quoted in Morris, 1994: 81), identifying four main groups:

• the passive poor, usually long term welfare recipients;
• the hostile street criminal, drop-outs, and drug addicts;
• the hustlers, dependent on the underground economy, but rarely involved in violent crime;
• the traumatised drunks, drifters, homeless bag ladies, and released mental patients.

In 1984 Charles Murray published a book called Losing Ground, which popularized the term underclass.<ref>Murray, C. 1984. Losing Ground: American Social Policy, 1950-1980. Basic Books. ISBN 0-465-04231-7</ref> This was far from the first time the idea of a group of people below or outside the class structure was discussed. Karl Marx referred to a group he called the lumpenproletariat. He described this group as

This scum of the depraved elements of all classes ... decayed roués, vagabonds, discharged soldiers, discharged jailbirds, escaped galley slaves, swindlers, mountebanks, lazzaroni, pickpockets, tricksters, gamblers, brothel keepers, tinkers, beggars, the dangerous class, the social scum, that passively rotting mass thrown off by the lowest layers of the old society." <ref>Marx and Engels, 1950, p. 267.</ref>

Many other terms have been used to "describe a section of society which is seen to exist within and yet at the base of the working class."<ref>Mann, 1992, p. 2.</ref>