Economy

Shocking Wealth Inequality in US

By Ryan McGreal
Published July 06, 2010

this blog entry has been updated

I just came across this astonishing chart:

Distribution of US Wealth, 2007
100th Percentile 91-99th Percentile 51-90th Percentile 0-50th Percentile

Just so this is perfectly clear:

Be sure to click through to the original set of charts, which sets this in the larger context of a long trend of steadily-growing inequality, decreasing socioeconomic mobility, and steadily flattening tax rates.

Update: Here's a roughly equivalent chart for Canada, based on a 2005 StatsCan survey:

Distribution of Canadian Wealth, 2005
81-100 Percentile 61-80 Percentile 41-60 Percentile 21-40 Percentile 0-20 Percentile

It groups wealth owners in the more standard quintiles rather than the 0-50, 51-90, 91-99, 9-100 breakdown of the US study, but it seems pretty clear that the distribution isn't far off.

For example, the bottom 40% in Canada control just 2.4 percent of total wealth, compared to the bottom 50% in the US controlling just 2.5%. However, it doesn't break out what share of the top quintile is crowded up at the very top 1%.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan writes a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. He also maintains a personal website and has been known to post passing thoughts on Twitter @RyanMcGreal. Recently, he took the plunge and finally joined Facebook.

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By stormysky_dw (registered) - website | Posted July 06, 2010 at 11:23:04

For comparisons sake, anyone know what an equivalent graph for Canada would look like?

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By Ryan (registered) - website | Posted July 06, 2010 at 12:04:16

Good question, stormysky_dw. I've updated the entry with a roughly comparative chart for Canada.

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By Capitalist (anonymous) | Posted July 06, 2010 at 12:09:43

Ryan,

I look at the numbers a bit differently:

- The top one percent of wealth owners CREATED fully 33.8 percent of the nation's total wealth.

- The 91th to 99th percentile of wealth owners CREATED another 27.7 percent of the nation's total wealth.

- The 51st (middle) to 90th percentile of wealth owners CREATED another 26% of the nation's total wealth.

- The bottom 50% of wealth owners CREATED the remaining wealth - just 2.5% of the total.

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By Ryan (registered) - website | Posted July 06, 2010 at 12:16:03

I look at the numbers a bit differently:

So how do you explain the fact that the distribution of wealth has been skewing more heavily to the very top and away from the rest of the percentiles over the past few decades?

Incidentally, the period over which inequality has grown has coincided with lower average economic growth rates, while the postwar period of relatively small inequality coincided with very high average economic growth rates.

It may just be that extreme concentration of wealth is bad for overall economic growth.

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By Brandon (registered) | Posted July 06, 2010 at 12:28:22

I guess it depends on your definition of "create".

"Company stores" were a great way to get the company shareholders rich and keep the men fully dependent and always in indebted to the company, yet it was the men who were doing the work that created the wealth in the first place. Then those men remain dirt poor and get their pensions stolen from them through legal trickery.

Ahh, pure capitalism...

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By Capitalist (anonymous) | Posted July 06, 2010 at 13:12:29

"Incidentally, the period over which inequality has grown has coincided with lower average economic growth rates, while the postwar period of relatively small inequality coincided with very high average economic growth rates.

It may just be that extreme concentration of wealth is bad for overall economic growth."

Or the other way around?

This inequality analysis excludes many things:

1. It doesn't control for demographics. People who are middle aged and older tend to have more wealth then recent university graduates because they had time to build wealth.

2. It doesn't control for people's occupations. Someone employed as a doctor will earn more than a social worker and build more wealth over time.

3. It doesn't control for people's risk tolearance. People who are entrepreneurial and take on more risks are likely to be rewarded with greater wealth.

If you were to do an anlysis controlling for these factors you will discover that wealth is much more evenly distributed than you think. You can't just take the whole nation and state the wealth is disproportionately distributed when you don't take the above factors into account.

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By jason (registered) | Posted July 06, 2010 at 15:37:55

These graphs are pretty straight forward. Trying to figure out who 'created' the wealth is a futile exercise with this data.

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By jasonaallen (registered) - website | Posted July 06, 2010 at 19:47:27

So just to clarify: "Jobless Recovery" = Amassing of huge amounts of largely imaginary wealth (stock markets, mutual funds, etc) by a tiny minority. Thanks, I think I've got it now.

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By A Smith (anonymous) | Posted July 06, 2010 at 23:33:20

In 1980, the top 1% of earners in the U.S. paid 19.05% of federal income tax, while the bottom 50% paid 7.05%. In 2007, the top 1% had seen their share of federal income tax increase to 40.42%, while the bottom 50% paid only 2.89%.

If anyone should be complaining about losing out, shouldn't it be the rich?

http://www.taxfoundation.org/research/show/250.html

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By WRCU2 (registered) - website | Posted July 08, 2010 at 21:47:04

ASmith says:

If anyone should be complaining about losing out, shouldn't it be the rich?

You're a funny guy Mr. Smith. Try to understand that with a finite supply of money, and those at the top accumulating more and more of IT, those at the bottom will have less and less.

From Economic Apartheid to Political Revolution

Do most Americans really believe that the game is not rigged by rich powerful elites to preferentially benefit them? As certain as the law of gravity, the game IS rigged, and more than ever.

Economic statistics keep solidly documenting growing economic inequality. But I fear that the most economically oppressed and barely surviving peasants have neither the time nor energy to ponder and fret over these data. Here are some new data that reveal an important historic reality.

Even in 1980, the richest of the rich took home 175 times more than Americans in the bottom 90 percent - still relatively good economic equality. Then things changed.

Here is more painful statistical truth: In 2004, the most recent year with IRS data just about 25,000 taxpayers took home over $5 million. After exploiting every loophole they paid an average 21.9 percent of their incomes in federal income tax. Back in 1952, at the height of the Korean War, the comparable federal tax bite on America’s richest 25,000 averaged 51.9 percent. About a decade earlier, in the middle of World War II, the 25,000 highest-income taxpayers in the United States paid 68.4 percent of their incomes in federal income tax. How things have changed for the wealthy. A greater fraction of the nation’s prosperity has gone to the Upper Class AND they pay less tax! Economic power produces political power.

This is worth pondering: When will the economic inequality that has morphed into two-class economic apartheid provide sufficient pain and disgust for a few hundred million Americans to fuel political revolution?

When will the stranglehold of the Upper Class on the political system that criminally distorts the economic system be busted? When will Lower Class consumers that drive the economy take back their sovereign power? When will they understand they are losing the class war and revolt?

Money, Money, Money

Comment edited by WRCU2 on 2010-07-08 20:50:54

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