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 liabilities. Assets can include everything from an owned personal residence and cash in savings accounts to investments in stocks and bonds, real estate, and retirement accounts. Liabilities cover what a household owes: a car loan, credit card balance, student loan, mortgage, or any other bill yet to be paid.
In the United States, wealth inequality runs even more pronounced than income inequality
The best official U.S. source of data on household wealth distribution comes from the Federal Reserve’s Survey of Consumer Finances, an in-depth survey of the finances of some 6,000 American families conducted every three years over the past three decades. The latest Fed survey results, released in September 2014, reflect data collected in 2013.
The wealth share of America’s top 3 percent, Fed researchers calculate, rose from 44.8 percent of the nation’s wealth in 1989 to 51.8 percent in 2007 and 54.4 percent in 2013. The top 3 percent now hold over double the wealth of America’s poorest 90 percent of families.
The vast majority of American families — 94.5 percent, the latest Federal Reserve survey data make clear — hold one sort of financial asset or another, from savings and checking accounts to stocks and cash-value life insurance policies. But the overall ownership of these financial assets has become stunningly concentrated. America’s richest 10 percent now hold nearly 85 percent of these assets. In 1989, the nation’s richest tenth of families held 79 percent of them.
All the Federal Reserve data reflect the responses surveyed households give to the triennial Survey of Consumer Finances questionnaire. In 2014, economists Emmanuel Saez of the University of California Berkeley and Gabriel Zucman of the London School of Economics unveiled a different approach to measuring wealth.
The pair base their research on the comprehensive data on capital income — dividends, interest, rents, and business profits — that have been reported on individual U.S. income tax returns since 1913. They then essentially worked backwards from these income flows to calculate the wealth that produced this income. The resulting calculations enabled them to track the nation’s distribution of wealth back a century.
The Forbes 400
The most visible indicator of wealth inequality in America today may be the Forbes magazine list of the nation’s 400 richest. In 1982, the year Forbes began annually listing America’s 400 richest, the United States sported only 13 billionaires. To make the 2014 Forbes 400, wealthy Americans needed a fortune worth at least $1.55 billion.
The Racial Wealth Divide
The Great Recession, a new Pew Research Center analysis of Federal Reserve Survey of Consumer Finances data shows, has deepened the longstanding racial and ethnic wealth divide in the United States. The typical white family held a net worth six times greater than the typical black family at the end of the 20th century. That gap has now doubled. The wealth gap between white and Hispanic households has widened as well.