America’s wealthiest families smash income ceiling, middle-class left far behind
Despite, or because of, the fallout from the 2007 Great Recession, annual earnings between the richest Americans and everybody else have exploded to record levels. Meanwhile middle- and lower-class wealth growth remains stagnant.
The median wealth for high-income families hit $639,400 last year, a whopping 7 percent jump from three years earlier and seven times greater than middle-class incomes, which stood at $96,500 according to Pew Research Center, citing data from the Federal Reserve.
Middle-class median wealth, which Pew defines as the difference
between the value of a household’s total assets and debts, has
not advanced since 2010.
The financial chasm now separating the rich and everybody else is the widest since the Fed began tracking earnings 30 years ago, which became even more pronounced following the 2008 global financial crisis.
"The latest data reinforces the larger story of America's middle-class household wealth stagnation over the past three decades," Pew said. "The Great Recession destroyed a significant amount of middle-income and lower-income families' wealth, and the economic 'recovery' has yet to be felt for them."
Pew defines middle-income households – a broad grouping - as those earning between two-thirds of and double the median income, after adjusting for the number of family members living under one roof.
America’s upper-income families have median net worth nearly 70 times that of the country’s lower-income families http://t.co/LweKQup3HU
— Pew Research Center (@pewresearch) December 18, 2014
For example, a single individual living alone was ranked as
middle income if his/her earnings last year were between $22,000
and $66,000. For a family of four to qualify as middle-income,
earnings would have to be between $44,000 and $132,000.
According to this standard, 46 percent of US households last year fell into the middle-income category, while about 33 percent were considered lower income, and 21 percent high income.
Perhaps the most shocking bit of information skimmed from the data is the poor performance of the American middle- and lower-class wealth accumulation over the last 30 years.
For middle-income families, Pew reported “practically no change in wealth over the 30-year period.” The median wealth for the middle class was $94,300 in 1983. That peaked at $158,400 in 2007 and has since fallen back to $96,500.
At the same time, the wealth of lower-income families jumped to a high of $19,100 in 2001, but has since plummeted to $9,300 last year. Median wealth for this group stood at just $11,400 in 1983.
— Wall Street Journal (@WSJ) December 18, 2014
It should perhaps come as no surprise that the wealthiest US
families showed the smallest percentage drop of wealth from the
outbreak of the 2007 crisis to 2010.
Due in large part to their “disproportionately large stock holdings,” the upper-income class recovered a “substantial part” of losses sustained during the crisis - primarily due to government bailout packages that injected trillions of dollars into the market to shore up the financial system - while lower-income families saw no recovery.
Over the longer period, the average wealth of upper-income
families recorded last year was about double what it was in 1983,
when it stood at $318,100 to $639,400 in 2013, it reported.
Pew ventured to speculate that the wide wealth disparity between the classes “could help explain why…the majority of Americans are not feeling the impact of the economic recovery, despite an improvement in the unemployment rate, stock market and housing prices.”
In October, just 20 percent of Americans rated the country’s economic conditions as ‘excellent’ or ‘good’, the polling agency said, an increase from the 8 percent who said that four years ago, but far from an optimistic outlook.