Census Bureau: The Rich Got Richer
Net worth declines for bottom-tier households correlate with flat or declining wages.
Overall household wealth declined between 2000 and 2011, although not for the richest Americans.
By Katherine Peralta
Aug. 21, 2014 | 6:45 p.m. EDT
The rich have gotten even richer, and the poor have gotten poorer.
In addition to stagnant and even declining wages in the U.S. over time, a new report from the Census Bureau shows that net worth – the sum of a household’s assets minus its liabilities – has also fallen.
[READ: Growth in Luxury Spending Not Necessarily the Best Gauge of U.S. Economy]
Overall household wealth declined by $5,046, or 6.8 percent, between 2000 and 2011. But not everyone experienced the decline: While the bottom 60 percent of households saw decreases in their overall net worth, the richest 40 percent saw sizably bigger increases. The ratio of median net worth of the highest 20 percent of households to the second highest 20 percent increased by more than double, a sign the wealthiest Americans became even richer over a little more than a decade.
“The types of assets that households hold may vary,” Census Bureau economist Alfred Gottschalck said in a statement. “Therefore, business cycle changes over time may affect households differently based on their net worth quintile and demographic characteristics.”
The value of someone’s wealth is rooted in assets like stocks and mutual funds, savings accounts, vehicles and homes. The sharp drops and rebounds of home values stemming from the Great Recession that lasted from December 2007 to June 2009 can therefore help explain the change in wealth for many groups. For others, stock market gains helped build wealth.
But less than half of households own any stock at all, and less than a third own stock worth $10,000 or more, says Heidi Shierholz, an economist at the Economic Policy Institute who did not contribute to the Census Bureau report.
The majority of Americans build their wealth instead in the labor market, so the fact that less affluent American households didn’t see their wealth increase can be tied to the fact that they also didn’t experience much wage growth, Shierholz says.
According to EPI’s research, inflation-adjusted wages between 2002 and 2013 were flat or fell for the bottom 70 percent of wage earners. Between 1979 and 2013, the median worker’s wages and benefits increased by only 7.9 percent, even though productivity grew 64.9 percent over the same period – a sign that income growth instead went to corporate profits and wealthier Americans.
[ALSO: Inequality’s Not All Equal]
“If people had seen their wages grow with productivity growth in the decades leading up to the Great Recession, then their incomes would have been much higher and there would have been much higher opportunity to save,” Shierholz says.
She adds that wealth inequality isn’t anything new, either.
“If you look even before that at the vast majority of accrual in wealth since the early '80s, it went to the top. It isn’t just because of the Great Recession that this is happening,” Shierholz says.
The charts below show the changes in net worth between 2000 and 2011. The wealth shifts vary by socioeconomics and age.
http://www.usnews.com/news/blogs/data-mine/2014/08/21/census-bureau-the-rich-got-richer-between-2000-and-2011?int=995508
