Bottom Half Of American Households Own Just 1.1% Of Nation's Wealth: Report

on July 20 2012 4:04 PM
UN income inequality
A chart of Human Development Index rankings compared to inequality-adjusted rankings. UN Development Program

The bottom 50 percent of American households held just 1.1. percent of the nation's wealth in 2010 as they saw their net worth steadily decline following the financial crisis, according to a report from the nonpartisan Congressional Research Service, while the top 10 percent of earners held a whopping 74.5 of the nation's wealth during the same period.

The report, drawing from the Federal Reserve's Survey of Consumer Finances data ranging from 1989 to 2010, analyzed the change in the concentration of net worth across all income groups. Wealth distribution -- or income inequality -- is particularly relevant this election cycle as it is an underlying concern in policy debates regarding tax code reform and the funding and distribution of social welfare programs.

The richest 1 percent of American's held 34.5 percent of the nation's wealth in 2010, a percentage that has risen steadily from 1989 (when the demographic held 30.1 percent of the wealth) aside from a brief dip between 1998 and 2001. All in all, the top 10 percent of earners have seen their net worth increase over the past two decades, according to the report, which said people in that bracket have largely recovered any losses they sustained during the financial crisis.

Meanwhile, declines in wealth occurred in the remaining 90 percent of households. The share of total net worth by households in the 50th to 90th percentile of wealth distribution fell to 24.3 percent in 2010 (from 29.9 percent in 1989), while the bottom half of households saw their net worth fall from 3 percent to just 1.1 percent.

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Two summary measures are commonly used to analyze the national distribution of wealth, the Congressional Research Service reports -- median and mean household wealth. The median net worth - that is, the value at which one-half of households in the distribution have less wealth and the other half has more -- is a better indication of the typical household than the mean, because if a minority of affluent households own more than one-half of all wealth (as they do) the mean (in this case, net worth) will be greater than the median.

A mean over six times a median suggests substantial concentration of wealth among households at the upper end of the wealth distribution, states the CRS report.

In 2010, the median household net worth in the U.S. was $77,300, while the median was $498,800 -- almost 6.5 times the median.

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