March 5, 2006
The Top Tenth
On March 2 The Wall Street Journal had a wonderful report about the Federal Reserve's new Survey of Consumer Finances. The bottom line of the report -- available at http://online.wsj.com/article_print/SB11412617049687080.html -- is that the rich are doing very well.
The total net worth of all American families in 2004 was $50 trillion. Those in the 90th percentile of wealth (not income) had net worth of $831,600. The median American family has wealth of $93,100, approximately one-ninth of the level of the top 10 percent.
The article reports that "the typical family in that top tenth enjoyed a 4.5 percent gain since 2001 and 71 percent since 1995. after adjusting for inflation. The family at the middle saw a more modest increase of 1.5 percent over 2001, much less than during the '90s boom, and an increase of 31 percent since 1995. If not for rising house prices, the typical family at the middle would have been worse off than it was three years earlier."
Approximately 70 percent of the total American net worth is in the hands of the top 10 percent. The bottom half of all households hold about 2.5 percent of all household wealth.
March 5, 2006 | Permalink
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All true, but the increase in the concentration of INCOME in recent years has been much more dramatic than the increase in wealth concentration. The dramatic increases in the relative shares of income going to the top 10%, the top 1% as compared to the entire top 10%, the top 0.1% as compared to the entire top 1%, and in particular the top 0.01% of income earners as compared to the entire top 0.1% over the past 35 years is truly astounding and troubling; an example of a fractal geometry structure replicating at different levels of observation in an area where we don't really want to see it. Take a look at the Paul Krugman editorial in the February 27, 2006 NY Times (more balanced and less shrill than most of his editorials!) or, better yet, take a look at the excellent and comprehensive study by Ian Dew-Becker and Robert Gordon that Krugman briefly cites a few statistics from that one can download (for about a $5 fee) from the Centre for Economic Policy Research website. It suggests a few interesting explanations for this phenomenum besides the usual "increasing returns to higher education" arguments. Greg Crespi
Posted by: Greg Crespi | Mar 6, 2006 1:50:23 PM