U.S. wealth inequality is vast

Wall Street Occupiers have brought out into the open the magnitude of the inequality of wealth and income in America.

William Domhoff of the University of California Santa Cruz found that in . 2007, 1 percent households (the upper class) owned 34.6 percent of the privately held wealth (defined as marketable assets minus any debt). The next 19 percent (the managerial, business and small business stratum) owned 50.5 percent of the wealth. That left only 15 percent of the wealth for the bottom 80 percent (wage and salary workers).

In terms of financial wealth (total net worth minus the value of one’s home), the top 1 percent and the next 19 percent owned 42.7 percent and 50.3 percent, respectively, leaving only 7 percent for the bottom 80 percent.

Income, the total amount of dollars earned (including wages, dividends, interest, rents and royalties) per year, in 2006 was that the top 1 percent earned 21.3 percent, the next 19 percent earned 40.1 percent, leaving only 38.6 percent for the bottom 80 percent of income earners.

Frequently encountered are CEOs of large companies. Their median compensation (in all industries) was $3.9 million in 2010. But for those who worked for companies in the Standard & Poor’s 500 it was $10.6 million, and for those listed on the Dow Jones Index it was $19.8 million.

Imagine that all the people in the U. S. (approximately 309 million, or 77.3 million households consisting of 2 adults and 2 children under 18) lived in a pyramid.

At the bottom of the pyramid would live those officially classified as the poor – 9.8 million families (12.65 percent of total people) with an annual household income of $22,162. Families living in the middle of pyramid would earn an income of $49,445 per family. As you move up the pyramid, the number of dwellings (and dwellers) decrease dramatically. This is where the top 20 percent live (about 15.45 million households). At the threshold are households that earn about $170,000 annually. Above that, the rise in the income levels per step upward is very steep, ending with a small spike at the top of the pyramid where the highest earners live. In 2007, the top 400 of these averaged $344.8 million per person.

The traffic up and down the pyramid ladder is equally fascinating but more alarming. Data published by the Congressional Budget Office revealed that two-thirds of the rising share of the top percentile in income went to the top 0.1 percent – the richest 1000 who saw their real income rise more than 400 percent over the period from 1979 to 2005. The ratio of CEO pay to factory worker pay rose from 42:1 in 1960 to a high of 531:1 in 2000 when CEOs were cashing in stock options; it was 411:1 in 2005 and came down to 344:1 in 2007. By way of comparison, the same ratio in Europe is 25:1. Also by way of comparison, CEO pay rose 300 percent (adjusted for inflation) from 1990 to 2005, while production workers gained a scant 4.3 percent. The purchasing power of the federal minimum wage earner declined by 9.3 percent during that period. The median household income declined 7.1 percent from 1999 to 2010.

From here