Middle Class Wealth Is So ’90s


Tim Fernholz outlines the findings a new working paper by economists Gabriel Zucman and Emmanuel Saez, briefly referenced on the Dish last week, which “shows that growing income inequality is fueling a commensurate disparity in total wealth”:

The two economists used tax data to build the most complete picture to date of U.S. wealth. Their findings are worrisome. Today, the top 0.1 percent of Americans—about 160,000 families, with net assets greater than $20 million—own 22 percent of household wealth, while the share of wealth held by the bottom 90 percent of Americans is no different than during their grandparents’ time. What does this look like at the household level? Perhaps the most striking chart produced by the economists’ efforts to measure U.S. wealth is the one [above], which shows that after a long march upward, and then a steep decline, the “average real wealth of bottom 90 percent families is no higher in 2012 than in 1986.” Meanwhile, the top 1 percent of wealthy families has almost completely recovered from the ill effects of the financial crisis.

Bryce Covert mentions how the paper connects the growing wealth gap to income inequality:

Wealth inequality is a separate phenomenon from income inequality, but one has fueled the other. “[T]he combination of higher income inequality alongside a growing disparity in the ability to save for most Americans is fuelling the explosion in wealth inequality,” the economists write. The bottom 60 percent of Americans have experienced a lost decade of either stagnant or falling wages since 2000 despite increasing their productivity 25 percent over the same period. But wages for the 1 percent grew by about 200 percent since the 1960s. At the same time, the wealthy have been able to put away more of that money into savings [while] the rest of America struggled to save. The 1 percent now saves more than a third of its income while the bottom 90 percent doesn’t save anything.