Wealth inequality in US not seen since Great Depression - study
A new study has revealed that 0.01 percent of the population holds more and more of America’s wealth. The share of wealth in the hands of middle class families has tumbled to levels not seen since before the Wall Street Crash in 1929.
A research paper from the London School of Economics shows previous estimates have seriously underestimated the amount of wealth controlled by the very rich in the US. Authors Saez and Gabriel Zuchman, have used a greater variety of sources, including the effect of things like property tax and tax avoidance strategies.
The researchers used the bottom 90 percent of families as a measure of middle class wealth. They found that in the late 1920’s, just before the Wall Street Crash, the bottom 90 percent controlled 16 percent of America’s wealth.
This share rose steadily from the beginning of the great depression until the end of the Second World War, due to a collapse in wealth of the richest households, and continued to rise after World War Two as the middle class wealth grew on a par with national wealth.
The middle class also saw rising rates of home ownership during this period and by the early 1980s the share of wealth owned by the middle class was reckoned at 36 percent, roughly four times what the top 0.1 percent controlled.
But since the early 1980’s the net worth of the US middle class has collapsed, due to a sluggish growth in middle class incomes but mainly because of soaring debt, including mortgages.
Meanwhile the fortunes of the very rich have grown. 16,000 families make up 0.01 percent of households in America, and are worth an average $371 million. They control 11.2 percent of total US wealth, which is a similar share to that seen back in 1916.
But even coming slightly down the spectrum, the top 0.1 percent, consisting of 160,000 families, hasn’t done nearly as well and holds 22 percent of US wealth – a bit less than their 1929 peak. This is the same share as the bottom 90 percent.
The authors also sound the alarm over how these huge fortunes were amassed. Although some young families have grown rich through entrepreneurial activity, such as billionaires like Mark Zuckerberg, many are rich through fortunes they have inherited.