Wealth inequality can be described as the unequal distribution of assets within a population. The United States exhibits wider disparities of wealth between rich and poor than any other major developed nation.
We equate wealth with “net worth,” the sum total of your assets minus your liabilities.
Examples of assets: checking and savings accounts, vehicles, a home that you own, mutual funds, stocks and bonds, real estate, and retirement accounts.
Examples of liabilities: a car loan, credit card balance, student loan, personal loan, mortgage, and other bills you still need to pay.
In the United States, wealth inequality runs even more pronounced than income inequality
Median net worth in 2009, the latest year with estimates available, stood at $62,000. Half of American households had net worth greater than this figure, half had less.
Wealth inequality can be assessed by looking at the share of wealth owned by the richest 1 percent of Americans. In 2009, this top 1 percent of U.S. households owned 35.6 percent of the nation’s private wealth. That’s more than the combined wealth of the bottom 90 percent.
The top 1 percent also owned 38.2 percent of all stock market wealth in 2007.
One of the most visible indicators of wealth inequality in the United States is the list of the 400 richest Americans published by Forbes magazine every year. The total inflation-adjusted net worth of the Forbes 400 rose from $507 billion in 1995 to $1.62 trillion in 2007, before dropping back to $1.37 trillion in 2010.
Racial Wealth Divide
Wealth inequality becomes particularly stark when we look at racial breakdowns. In 2007, the latest year with Federal Reserve figures available, the typical white household had a net worth about 14 times as large as the typical African American or Hispanic household.
Over recent decades, with incomes for most Americans stagnant, typical American families saved less, and wealth inequality increased. We now know that much of the economic growth of recent years was fueled by unsustainable levels of household spending and debt. The U.S. Personal Savings Rate declined from 10.9 percent in 1982 to 1.4 percent in 2005, before rising back to 5.8 percent in 2010. The sharp rise in saving since 2007 reflects cutbacks in household spending after the Great Recession hit.