America’s super rich now hold more wealth than the entire middle class in this country.
Super Rich in America Has Bigger Share of Wealth than Middle Class
It’s not news that middle class wealth in America has been dwindling for years. What is news is that the super-rich in this country, the top 1%, now has a larger share of wealth in this country than the entire middle class.
According to data from the Federal Reserve, the middle 60% of US households saw their combined assets drop to 26.6% of our country’s national wealth in June 2021 while the top 1% by income now have combined assets of 27% of America’s national wealth.
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Slow-Motion Erosion of Financial Security of Mid-Tier Earners
Mid-tier or middle-class earners in this country are economically defined as those earning about $27,000 – $141,000 annually. Based on Census Bureau data, approximately 77.5M families represent the mid-tier earners, or the 60% of the country’s nearly 130M households.
The top 1%, approximately 1.3M households out of a total of just under 130M households, earn more than $500,000.
In one generation, the middle class share of assets in real estate, private businesses and equities have slumped. Take a look at this Federal Reserve data:
- 3% share of wealth in real estate
- 0% share of wealth in equities and mutual funds
- 3% share of wealth in private businesses
- 3% in real estate
- 9% in equities and mutual bonds
- 3% in private businesses
- 8% in real estate
- 0% in equities and mutual bonds
- 4% in private businesses
- 0% in real estate
- 0% in equities and mutual bonds
- 5% in private businesses
This slump translates into 60% of the people in this country having fewer financial reserves from which to draw if/when they lose their jobs. This slump over 30 years also translates into 10% of America’s wealth shifting to the top 20% of earners who now hold 70% of America’s wealth.
Pandemic Exacerbated Wealth Shift
Yes, the COVID pandemic has generated a boom in housing values that’s benefited those who already owned real estate. BUT, over the last 30 years, the number of middle-class earners who have owned real estate assets has dropped from 44% to 38%. Those who now don’t own real estate assets and now can’t afford to do so because of soaring home prices are only seeing soaring rents as well.
And yes, this wealth shift is also happening because middle-class families hold a much larger and growing portion of non-mortgage consumer debt. Debt that comes with higher interest.
All of this only feeds in to the scenario of the rich getting richer while the poor and middle-class get poorer.
Thanks to the Federal Reserve and Bloomberg.