USA wealth gap

from David Ruccio

Pew-wealth

Pew refers to it as a “nest egg.” The rest of us call it net worth, the difference between total assets and outstanding debt. Whatever name we give it, the problem is the same: the wealth gap between those at the top and everyone else continues to grow.

In 2013, the median wealth of the nation’s upper-income families ($639,400) was nearly seven times the median wealth of middle-income families ($96,500), the widest wealth gap seen in 30 years when the Federal Reserve began collecting these data.

I can’t say I’m a big fan of the way Pew divides up the population—into upper-, middle-, and low-income groups—since it fails to distinguish the tiny minority at the top who hold the lion’s share of the wealth and make the decisions that determine the lives of everyone else. However, their analysis does show that both the much-vaunted middle-class (defined as families whose size-adjusted income is between two-thirds and twice the median size-adjusted income) and those with low incomes (families that have a size-adjusted household income less than two-thirds the median) are falling further and further behind so-called high-income families (those with more than twice the median).

FT_14.12.16_wealthInequality4

Which puts members of high-income families in an interesting position: on one hand, they lost a great deal of their wealth after the crash; on the other hand, they’re the only ones who have benefited from the current recovery.

So, those at the top can, in fact, identify with the rest of the population—middle- and low-income—who also lost a large portion of what little wealth they held prior to 2007. They all got hurt by capitalism’s most recent crises. However, like the tiny minority at the top, high-income households are beginning to claw back some of their wealth—unlike those below them.

Those who find themselves in the high-income bracket face a real choice, then: They can get behind proposals to fundamentally transform existing economic institutions, so that they don’t go through another wrenching dislocation. Or they can go along with things just as they are—and sit on their growing nest eggs.

 

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