Since the housing and financial crises of the late 2000s there has been no recovery in the wealth of the middle class and the poor. The average wealth of the bottom 90 percent of families is equal to $80,000 in 2012—the same level as in 1986. In contrast, the average wealth for the top 1 percent more than tripled between 1980 and 2012. [On the left hand axis in the graph: it is $14 million, more than 100 times greater.] In 2012, the wealth of the top 1 percent increased almost back to its peak level of 2007. The Great Recession looks only like a small bump along an upward trajectory. How can we explain the growing disparity in American wealth? The answer is that the combination of higher income inequality alongside a growing disparity in the ability to save for most Americans is fueling the explosion in wealth inequality. For the bottom 90 percent of families, real wage gains (after factoring in inflation) were very limited over the past three decades, but for their counterparts in the top 1 percent real wages grew fast. In addition, the saving rate of middle class and lower class families collapsed over the same period while it remained substantial at the top. Today, the top 1 percent families save about 35 percent of their income, while bottom 90 percent families save about zero.
Blogs I Follow
- A visit to Bougounam library in #Burkina Faso
- I have evolved to a proud Type 3.7 Stata user, but know that still has problems
- Ancillary Justice by Ann Leckie
- What an unfortunate example to use to explain reverse correlation technique in social psychology
- Great article by Emily Oster and Geoffrey Kocks on vaccination in California
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