Saturday, September 24, 2016

The rich get richer, the rest get poorer

Since the late-1970s, the top one percent of families have been steadily accumulating a larger share of the nation's wealth (total assets people own net of their debts), recessions notwithstanding. In 2012 (the most recent available data), the top one percent of families (1.6 million families, each with at least $4 million in assets in 2012) held about 42 percent of all the wealth. Although still below the 1928 peak of 51 percent, the growth has been spectacular, almost doubling in close to 40 years.

As large as income inequality is, the 42 percent wealth share held by the top one percent of families far surpasses the 22 percent income share held by the top one percent in the income distribution.

By contrast, the share of wealth held by the bottom 90 percent (almost 145 million families) has been depleting steadily, falling from a high of 36.4 percent in 1984 to 22.8 percent in 2012. The income share of the bottom 90 percent is less, but still severely, skewed, standing at almost 50 percent in 2012.

The rich are entrenching their wealth. The wealthy are growing their wealth by more than their income as they pull even further away from the bottom 90 percent. Since 1979, the real average wealth of the top one percent of families has grown 245 percent -- from 4 million dollars, on average, to almost 14 million dollars (in 2010 dollars) per family. Over the same period, the income growth of the top one percent of families, although impressive, has not been as spectacular, increasing by 178 percent.

The real average wealth of the bottom 90 percent, by contrast, fell dramatically after the Great Recession, plummeting from the 118 percent growth mark reached in 2006 to a 40 percent increase in 2012. The real average wealth of the bottom 90 percent of families, which was $60,000 (2010 dollars) in 1979, rose to a peak of $130,000 in 2006, before falling to almost $84,000 in 2012. Over the same 1979 to 2012 period, the bottom 90 percent of families also saw their real average incomes decline by 9 percent.

The dramatic increase in wealth inequality is also illustrated by the stunning growth in the ratio of wealth held by the top one percent to the bottom 90 percent of families. In 1979 the real average wealth held by the top one percent was 67 times larger than the bottom 90 percent. By 2012, this ratio had increased to 165 times, while the disparity in real average income between the top one percent and the bottom 90 percent expanded from 14-to-1 to 42-to-1.







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