Wealth inequality in the US is reaching its most extreme point since just before the start of the Great Depression in 1929, according to a new economic analysis. Even the 1 percent are lagging behind the 0.01 percent.
By Henry Gass
The study, from Emmanuel Saez of the University of California at Berkeley and Gabriel Zucman of the London School of Economics, uses a greater variety of sources to paint its picture of wealth inequality in the US than other recent analyses.
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Recent economic growth in the US appears to be positive and steady.
The latest jobs report for October saw unemployment drop to a six-year
low and the economy add 214,000 jobs. But while more people appear to be
working, America's overall wealth is being concentrated in fewer and
fewer hands.
According to an
analysis of data sourced through 2012 – including detailed data on
personal income taxes and property tax – Professors Saez and Zucman
found that the richest 0.1 percent of Americans have as much of the
country's wealth as the poorest 90 percent. Both groups control roughly
22 percent of total wealth, but while the average wealth of the bottom
90 percent is $84,000, the top 0.1 percent were comprised of 160,700
families with net assets above $20 million, according to their study.
An
even closer look at their data has shown that while the growth of the
American middle class has been restricted by modest income growth and
soaring debt –thanks in large part to the 2008 mortgage crisis – the
super-rich have been making significant gains in income and wealth.
While
the bottom 90 percent of Americans and the top 0.1 percent control
about 22 percent of the country's wealth each, the top 0.01 percent of
Americans now control 11.2 percent of total wealth. That share of the
wealth held by the country's richest 0.01 percent – a group of roughly
16,000 families with an average net worth of $371 million – is the
largest share they've had since 1916, the highest on record, according
to the study.
The study's
authors say that income inequality in the US is less extreme than wealth
inequality, even though both have been increasing steadily for decades.
Real
income for the top 1 percent of Americans grew 3.4 percent a year from
1986 to 2012, while those for the bottom 90 percent grew 0.7 percent,
according to The Economist.
And according to the Saez-Zucman study, the top 0.1 percent wealth
share is about as large as the top 1 percent income share in 2012.
"By that metric, wealth is ten times more concentrated than income today," the authors write in their study.In an interview, Zucman says he was surprised that income inequality had not improved in the US since the Great Recession in 2008, triggered in part by the mortgage crisis that still weighs heavily on the middle class.
Instead,
the average wealth of the bottom 90 percent of Americans has not
changed since 1986, around the same time the average wealth of the
richest Americans started to increase.
"That
is almost 30 years of zero growth in the bottom 90 recent of the
distribution," Zucman says. "That is very extreme and very surprising,
and unique to the United States."
The
Economist, in its report on the study, notes that America's super-rich
contain not only entrepreneurs like Mark Zuckerberg, but heirs and
heiresses like Paris Hilton. In recent years, the proportion of wealth
held by the very rich in the form of bonds has risen, while the
proportion held in stocks has declined, meaning that an increasing
portion of America's wealth could be inherited rather than built through
business.
"Since the
fortunes of most entrepreneurs are tied up in the stock of the firms
that they found," The Economist concluded, "these shifts hint that
America’s biggest fortunes may be starting to have less to do with
building businesses."
Zucman says that the wealth of the top fraction of Americans is a lot more established than people tend to imagine.
"People
tend to image in that a lot of the wealth at the top is newly created,"
he adds. "Actually, when you look at the data that’s not the case."
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