(en) Wealth: The Rich get Richer, The Rest Get Poorer (fwd)

Francisco Lopez (d005734c@dc.seflin.org)
Sat, 17 May 1997 15:26:35 -0400 (EDT)

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Stagnant and falling wages and incomes tell only part of the story of rising inequality. A family's ability to plan for the future and to cope with financial emergencies is strongly affected by its wealth (tangible assets such as a house and car plus financial assets such as stocks and bonds).

The distribution of wealth has historically been more unequal than the distribution of income and grew even more so during the economic recovery of 1983-89. In 1983, the richest 1% of families held 33.8% of all wealth; by 1989 their share had grown 5.2 percentage points to 39.0%. Meanwhile, the share of wealth held by the bottom 80% of families fell from 18.7% of the total to 16.3%. In the first part of the 1990s, the distribution of wealth became slightly more equal. The share of the top 1% of families fell to 37.2%, while the bottom 80% increased their share by 0.8%. From 1983 to 1992 (the most recent year for which we have complete data on the distribution of wealth), however, inequality increased.

Another worrying trend is the recent decline in total wealth per adult in the United States. Between 1989 and 1994, the value of tangible assets (the most widely held type of asset) has dropped nearly 2% each year. In contrast, the value of financial assets (held mostly by the wealthy) grew, though at only a 0.4% annual rate. Other measures also show a decline in the wealth owned by middle-class families. The net wealth of a middle-income family, for example, fell about 14.4% between 1984 and 1993. The decline in the wealth holdings of typical families has made an important contribution to the rise in economic insecurity in the early 1990s.

The stock market boom of the 1980s and 1990s has not enriched working families for the simple reason that the broad middle class does not own much stock. Less than one-third of households hold more than $2,000 in stock, and two-thirds of the value of all stock is owned by the wealthiest 10% of households. This concentrated ownership is as evident in pension and savings plans (where stock is held indirectly) as in the direct ownership of stock and mutual funds. In 1993, for example, only 15% of the bottom 80% of families (in terms of annual income) owned stocks or mutual funds; only 17% of the same families had an individual retirement account (IRA) or Keogh plan.

Source: State Of Working America 1996-97

Shawgi Tell University at Buffalo Graduate School of Education V600A8E6@UBVMS.CC.BUFFALO.EDU

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