Distribution of Net Worth, 1998
Source: Edward N. Wolff, "Recent Trends in Wealth Ownership, 1983-1998," April 2000. Table 2. Available on the website of the Jerome Levy Economics Institute at www.levy.org/docs/wrkpap/papers/300.html
* The top 10% own 71% of all private wealth.
* The top 1% now own more than the bottom 90%.
* Among the industrialized nations, the U.S. has the highest concentration of individual wealth -- roughly 3 times that of the No. 2 nation, Germany. (UN Human Development Report, 1998)
top
? How much wealth does it take to be in the top 10% of the population? The top 1%?
In 1998, the last year for which figures are available, it took over $250,000 to be in the top 10% of wealth holders. It took over $3,000,000 to reach the top 1%.
Household Net Worth, 1998
Population Threshold Average Net Worth
Top 1% $3,352,100 $10,204,000
Next 4% $1,441,000
Next 5% $475,600 $623,500
Next 10% $257,700 $344,900
Fourth 20% $161,300
Middle 20% $61,000
Bottom 40% (Negative) $1,100
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? What is the median wealth of U.S. households?
Median Wealth in the U.S. in 1998 dollars
1989 1992 1995 1998
$58,400 $49,900 $48,800 $60,700
Source: Edward N. Wolff, "Recent Trends in Wealth Ownership, 1983-98
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? How has wealth concentration changed during the last 20 years?
In the 22 years between 1976 and 1998, the share of the nation's private wealth held by the top 1% nearly doubled, going from 22% to 38%. During those two decades, the size of the overall "wealth pie" grew, but the ownership of that wealth is now more concentrated than at any time since the 1920s.
The following table shows the change in relative shares of wealth from 1983 to 1998.
Changes in Wealth Ownership
1983 1989 1992 1995 1998
Top
1% 33.8% 37.4% 37.2% 38.5% 38.1%
Next
4%
22.3
21.6 22.8 21.8 21.3
Next
5% 12.1 11.6 11.8 11.5 11.5
Next
10%
13.1
13.0
12.0
12.1
12.5
Next
20%
12.6
12.3
11.5
11.4
11.9
Middle
20%
5.2
4.8
4.4
4.5
4.5
Bottom
40%
0.9
-0.7
0.4
0.2
0.2
The following chart shows the change in average household net worth over the same period.
Change in Average Household Net Worth, 1983-98
Source: Edward N. Wolff, "Recent Trends in Wealth Ownership, 1983-1998," April 2000. Table 3. http://www.levy.org/docs/wrkpap/papers/300.html
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? How does wealth vary according to race?
Racial Wealth Gap, 1983-98
Median Net Worth
1983
1989
1992
1995
1998
White $71,500 $84,900 $71,300 $65,200 $81,700
African-American $4,800 $2,200 $12,000 $7,900 $10,000
Hispanic $2,800 $1,800 $4,300 $5,300 $3,000
Since most wealth for African-American and Hispanic families is held in the form of housing, the racial wealth gap is much worse when housing is excluded from the calculations and only "financial wealth" is considered.
Median
Financial Wealth
White $19,900 $26,900 $21,900 $19,300 $37,600
African-American $0 $0 $200 $200 $1,200
Hispanic $0 $0 $0 $0 $0
Note: Financial Wealth is Net Worth minus the value of owner-occupied housing.
Source: Edward N. Wolff, "Recent Trends in Wealth Ownership, 1983-1998," April 2000. http://www.levy.org/docs/wrkpap/papers/300.html
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? How does the wealth of the typical family in the bottom 80% of the population compare to the wealth of a family in the top 1%?
If the financial wealth of the average family in the bottom 80% of families were represented by a bar graph one inch high, the bar representing the financial wealth of the average family in the top 1% would be 33 feet high.
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? Who own stocks and bonds in America?
About half of American households own stock either directly or through a mutual fund. However, over 86 percent of the value of all stocks and mutual funds, including pensions, was held by the top 10 percent of households. In 1998, the top 1 percent of Americans owned 47.7 percent of all stock, while the bottom 80 percent owned 4.1 percent.
Between 1989 and 1998, nearly 35 percent of all stock market gains went to the top 1 percent of shareholders. 64 percent of American households have stock holdings worth $5,000 or less, or own no stock at all.
Source: Economic Policy Institute, The State of Working America 2002-03, pp. 286-289
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? How many millionaires are there in the United States?
Number of Millionaires in the U.S.
1997 1998 1999 2000 2001
1,800,000 2,060,000 2,480,000 2,180,000 2,220,000
Sources: Merrill Lynch / Gemini Consulting, World Wealth Report 2000, Figure 3, and
Merrill Lynch / Cap Gemini Ernst & Young, World Wealth Report 2001
How many billionaires?
Number of Billionaires in the U.S.
1996 1997 1998 1999 2000 2001 2003
179 220 239 307 298 266 228
Source: Forbes 400 website: http://www.forbes.com/2002/09/13/rich400land.html
top
? Who are some of the richest people in America?
Richest Individuals and Families in the U.S., 2002
Name Net Worth Source
Bill Gates $43 billion Microsoft
Warren Buffett $36 billion Berkshire Hathaway
Paul Allen $21 billion Microsoft
Alice Walton $19 billion Inheritance: Wal-Mart
Helen Walton $19 billion Inheritance: Wal-Mart
Jim Walton $19 billion Inheritance: Wal-Mart
John Walton $19 billion Inheritance: Wal-Mart
S. Robson Walton $19 billion Inheritance: Wal-Mart
Lawrence Ellison $15 billion Oracle Corp.
Steven Ballmer $12 billion Microsoft
Michael Dell $11 billion Dell Computer
John Werner Kluge $10 billion Metromedia
Forrest E. Mars $10 billion Inheritance: Mars Candy
Jacqueline Mars $10 billion Inheritance: Mars Candy
John Franklyn Mars $10 billion Inheritance: Mars Candy
In 1982 the wealthiest 400 individuals in the "Forbes 400" owned $92 billion. By 2000 their wealth increased to over $1.2 trillion.
top
? How does Bill Gates' wealth compare to the rest of the population?
Bill Gates alone has as much wealth as the bottom 40% of U.S. households.
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Read it here first: Wealth Concentration in America is Rising
in Finance
As we discussed last week (The Disconnect and Economic Classes), the middle class is starting to disappear mean revert, while the group we described as the "ultra-wealthy" are expanding.
Here's an excerpt from Sunday's NYT:
"Twenty years ago, there were 14 American billionaires on the Forbes 400. Today, the list includes 374 (known) billionaires. In 1985, the combined wealth of the Forbes 400 was $238 billion, adjusted for inflation. Today, the 400 richest people in America are together worth $1.13 trillion. To put that number in perspective, $1.13 trillion is more than the gross domestic product of Canada. And it is more than the G.D.P. of Switzerland, Poland, Norway and Greece - combined.
The median household income of Americans has been stuck at around $44,000 for five years now. The poverty rate is up. Members of the Forbes 400, meanwhile, are richer than Croesus, and every hour they are getting richer."
As previously mentioned, I find the significance of this to be the waning middle class -- a group that increasingly appears to be a mostly post-war phenomena.
The author of the Times piece takes a different perspective, lamenting that there is not much change amongst the top of the Ultras:
"A few days ago, I read through the newest Forbes 400 list of the richest people in America, hoping to find many names I'd never heard of. They're not there. Through no fault of its own, the list no longer reflects a dynamic and elastic economy; instead, it reflects a growing concentration of wealth and economic power. Warren E. Buffett, Paul G. Allen, Kirk Kerkorian, John W. Kluge, Carl C. Icahn, Michael R. Bloomberg, Ronald O. Perelman, Leona Helmsley, Henry R. Kravis, the Waltons, the Pritzkers, the Newhouses, the Lauders - the same old names, one after another.
It's hard to say when the Forbes 400 list started to stagnate, but 1999 may have been a turning point. That was the year when Bill Gates's estimated net worth hit $100 billion. So quickly had his fortune grown that over the previous 12 months, according to Forbes's calculations, Mr. Gates had made himself another $1 billion every eight days. Mr. Gates, who has held the No. 1 position on the list continuously since 1994, is an extreme example of accumulated and self-generating wealth, but he's part of a trend."
What a shame that this accellerating economic shift isn't more entertaining . . .
Source:
Don't Blink. You'll Miss the 258th-Richest American
NINA MUNK
NYT, September 25, 2005
http://www.nytimes.com/2005/09/25/business/yourmoney/25trail.html
Wednesday, September 28, 2005 | Permalink
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Comments
Please note that the author of the NYT piece, Nina Munk (who wrote the book "Fools Rush In" about AOL/Time Warner), is a scion of a hugely wealthy Canadian mining family (Barrik Gold). To hear here talk about lack of change on the Forbes 400 is somewhat disingenuous, especially since there has been a lot of turnover in the last 20 years.
Here's who caught it first:
http://www.janegalt.net/blog/archives/005468.html
As for a waning middle class, eh, you may be right. The world has certainly changed now that 2 billion east and south Asians are back into the workforce.
Posted by: ElamBend | Sep 28, 2005 9:38:02 AM
So what are we in the post-war middle class going to do? Move back onto the farms our grandparents left?
You're not going to get invited on Kudlow's show again with this kind of talk.
[BR -- That really made me LOL! ]
Posted by: Brian | Sep 28, 2005 9:43:59 AM
I'd be curious to see the incomes of those billionaires. Income and wealth are two different things, and there are many wealthy people who have very little income. I know my parents are millionaires, but according to their tax return, they are below the poverty line. That means they are actually pulling "median household income" down, despite being well-off. Also consider, for example, that the value of your home contributes to an increase in your wealth, but does not count as income. I would guess that although median incomes may be stagnant, median wealth is probably rising.
Posted by: Doug | Sep 28, 2005 10:00:54 AM
Doug, with respect, I'd suggest you may be making assumptions. "Millionaires" is a squishy word, so let's give your folks $3 million. $44,000 is less than 1.5% of that total. Unless your parents manage entirely tax-free or -deferred investments, I would guesstimate their incomes are above-median, not below.
Posted by: wcw | Sep 28, 2005 10:22:18 AM
"I know my parents are millionaires, but according to their tax return, they are below the poverty line. "
Wow. I bet you're a Republican, too. I can imagine how you & your folks justify those tax cuts. "Really, I'm poor. Really. Really!"
Below the poverty line!
Hah, that's a good one.
Posted by: camille roy | Sep 28, 2005 12:23:45 PM
I'm not sure if the writer's comment was about entertainment. I think he suggested that if the economy was dynamic that there would be changes in the hierarchy of wealth and that the fact that it was becoming rigid indicated an ossifying economy.
This would be consistent with the observation that large parts of the middle class are being squeezed.
Paradoxically if not checked this "wealth based economy" may contain the seeds of it's own destruction. I wonder what the response of those kids at elite universities who have always assumed success with their 5.0 gpas and the like, if opportunities tighten. Such individuals have often been the cadre of revolution which historically is fueled not by absolute need, but diminishing expectations.
Posted by: rebecca | Sep 28, 2005 12:30:09 PM
The kids at the elite universities have nothing the worry about, it's the kids at the respectable state schools who merely desire to better than their parents.
And forget about people who don't go to university, there are fewer and fewer UAW, US Steel type jobs that allow you to physical work for money and a pension. Now, even the upscale airline pilots cannot count on their pensions and a labor job means something behind the counter.
Posted by: ElamBend | Sep 28, 2005 12:39:39 PM
"It's hard to say when the Forbes 400 list started to stagnate, but 1999 may have been a turning point. "
6 years? Have we really shrunk our attention span so much that she's lamenting that radical change to who has money in this country hasn't changed in SIX YEARS??
On the other hand, let's get rid of estate taxes, so that we can permanently entrench wealth in the hands of the few and create the aristocracy the rich always wanted us to have!
Posted by: Andy | Sep 28, 2005 1:38:07 PM
Except that the estate tax is often effectively structured out of many wealthy people's estate because they can afford expensive lawyers and acountants to set things up for them; so that its distributional affect is minimal.
Obviously the existence of the estate has
