By Emily Schwartz Greco
As Fed Chair Janet Yellen recently pointed out, half of us now own a mere 1 percent of America’s household wealth.
On average, the lower half of all U.S. households command $11,000 in net worth – that’s what’s left when you subtract all forms of debt from your home equity, savings and other investments (if you’ve got any). Put another way, half of us possess next to nothing.
How about at the top? Families in the top 5 percent on average have $6.8 million to their name – nearly twice what they possessed 25 years ago.
With a contrast that stark, it’s hard not to agree with Yellen’s suggestion that the nation’s inequality could be downright un-American.
“I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity,” she said at a recent conference.
Income, while not quite as concentrated in the pockets of the few as wealth, is also getting more skewed.
After correcting for inflation, the Fed found that the income of the wealthiest 5 percent of households soared by 38 percent between 1989 and 2013, while the income of the other 95 percent inched up less than 10 percent.
The top 0.1 percent of Americans now controls 22 percent of the nation’s wealth, about the same share as the bottom 90 percent.
By crimping consumption, inequality is a key factor behind the failure of the U.S. economy to fully recover from the Great Recession. As a recent Center for American Progress report said: “When households do not have money, retailers do not have customers.”
Emily Schwartz Greco is the managing editor of OtherWords, a non-profit national editorial service run by the Institute for Policy Studies.
