Report: Wealthy Thrive and Poorest Dive as Surge in US Inequality Continues
Researcher: “The income recovery thus far for a wide swath of US households has not existed”
The great wealth divide in the United States has only become more exacerbated since the recession, as national policies have buoyed only the wealthiest Americans while the remainder have been left adrift.
According to a new analysis (pdf) of Census Bureau data published Tuesday by the Pew Research Center, since the economy officially emerged from the recession in mid-2009, the wealthiest 7 percent of households saw soaring gains of an estimated $5.6 trillion, while the remaining 93 percent—111 million households—saw their overall wealth fall by an estimated $0.6 trillion.
“It has been a very good recovery for those at the upper end of the wealth distribution,” said Paul Taylor, executive vice president of the Pew Research Center and co-author of the report. “But there has been no recovery for the lower 93, which is nearly everybody.”
Though hailed as a success by many, this pattern of the rich getting richer was predominantly fueled by the stock market rallies during that period.
"Affluent households typically have their assets concentrated in stocks and other financial holdings," the report notes, "while less affluent households typically have their wealth more heavily concentrated in the value of their home," whose market has suffered or, at best, remained flat during that time.
“The income recovery thus far for a wide swath of US households has not existed,” Richard Fry, senior research associate at the Pew Research Center told Huffington Post.
Mijin Cha writing for the Demos weblog, Policy Shop, points out that the Pew report does not even take into account those at the very lowest end of the income spectrum.
"[T]he Pew report's cutoff for the 93 percentile is a household net worth of $836,033. The average household net worth is just $77,300. For communities of color, the average net household worth drops to just $10,824. If anything, the Pew study doesn't tell the full extent to which the wealthy advanced over the average household, particularly the average household in communities of color," she writes.
Cha adds that the findings demonstrate, "how it is the rich, not the poor, that benefit from government handouts. It was direct government support with taxpayer funds that saved the big banks and, in turn, enriched their shareholders. It's not social safety net programs that are bankrupting our country: it's the rich."
It was direct government support with taxpayer funds that saved the big banks and, in turn, enriched their shareholders. It's not social safety net programs that are bankrupting our country: it's the rich. -Mijin Cha, Demos
Government policies following the recession drove an even larger gap in wealth disparity as the richest 7 percent's slice of the nation's wealth grew from 56 to 63 percent by 2011.
"The Fed has kept things pretty good for the wealthy," said New York University economist Edward Wolff, of the policies that supported these gains in stock and bond markets.
Reporting on the research, the Washington Post adds:
The wealthiest Americans were those most likely to own the financial assets that have done well in the recovery. They were 13 times as likely as other households to own government securities or municipal or corporate bonds. They were more than four times as likely to own stock or mutual-fund shares. And while almost two-thirds of households with at least $500,000 in wealth owned a 401(k) or Thrift Savings Plan, only 39 percent of those with less than half a million dollars in net worth owned one of those assets.
The report notes that overall American wealth increased by 14 percent between 2009 and 2011—a figure likely touted as evidence of a successful recovery. However, only a scant 13 percent of families, those with a net worth of $500,000 or more, ever saw any growth.
"The findings throw into stark relief the dramatically uneven nature of the recovery," writes Don Lee at the Los Angeles Times.