The richest 10% of households now represent 70% of all U.S. wealth

https://www.marketwatch.com/story/the-richest-10-of-households-now-represent-70-of-all-us-wealth-2019-05-24?

by whack • 7 years ago

68 112 7 years ago

bfrog2• 7 years ago

When was the last time wealth accumulated so greatly in so few hands, the dark ages? It would be really interesting to know what history can tell us about what this potentially means for our future.

mikeash9• 7 years ago

The late 1920s. Fortunately, nothing bad happened after that.

itsaidpens4• 7 years ago

You get it.

andy_ppp• 7 years ago

You’d have to think we live in some kind of simulation if this happens with such invariability...

htk• 7 years ago

Maybe it is the opposite of what you're implying. ex: The creation of value is so high that the discrepancies increase, but everyone is reaping the benefits, just in different proportions.

itsaidpens4• 7 years ago

Tell that to someone making 35K/year.

harimau7772• 7 years ago

It's difficult to tell exactly due to changes in technology and culture, but I'm not sure the evidence points to that. My understanding is that both the rates of home ownership and the number of middle class families where only one person works are down.

It seems like a college degree is more necessary in order to get a middle class job. So if we equated college with apprenticeship I think college might result in more debt for a similar result. However, I'm not super informed about how apprenticeship worked so I could very well be mistaken.

mikeash9• 7 years ago

Unfortunately, median household income has barely budged in the last twenty years.

maxxxxx2• 7 years ago

I thought this has been the course of history for a long time. Elites take more and more for themselves until they push things too far and they get overthrown. Then the cycle starts again with a different elite.

phkahler• 7 years ago

I'm not sure the word "overthrown" is good - nobody is going to do that today. "Until things fall apart" is more general and entirely possible today. See Venezuela for example. Still no overthrow, but it has fallen apart and the leadership would probably prefer that hadn't happened - though I could be wrong about that.

shakyshakyshaky2• 7 years ago

Now I don't like the terminology "elites" as it lends itself to populism, but in this framework it's useful.

Soon enough, the elites will not be overthrowable. The advantage that the many have over the few is the retraction of their consent; without housekeepers, farmers, maintenance workers, the rich have historically been forced to capitulate because they couldn't maintain their standard of living without the workers. With the rising tide of automation, I can see a very near future where the workers are simply obsolete, and the division between classes will become so wide as to be completely un-transversable. Those in control of the farmland and the machines that tend it will have no use for the lower classes any more. That's why we need to work on decentralized production, with households owning a production factor of their own which will keep them producing value. Think decentralized factories.

bigredhdl• 7 years ago

The linked fed report is a good read. https://www.federalreserve.gov/econres/feds/files/2019017pap...

deogeo• 7 years ago

My comment from when this was posted a few days ago: "In other terms, top 1% owns 32%, leaving 38% for the 9% below that."

padobson2• 7 years ago

Any chance the next 10% after that owns exactly 10%? Have we reached a perfect pareto distribution?

necovek5• 7 years ago

The most interesting bit is that out of that 10 percentage points growth (60% to 70%) for the 10% wealthiest, 9 percentage points are attributed to the top 1% (23% to 32%)!

So, the rest of the top 10% have remained basically at the same level of (relative) wealth (37% to 38%), and the wealth from the poorest has moved to the top 1%!

So, looking at the top 10% here paints a less bleak picture of where the wealth is being accumulated/moved.

IOW, it's not even the rich getting richer, it's just the super rich!

mont• 7 years ago

How do you interpret less people owning a greater percentage of overall wealth as a less bleak picture?

duxup• 7 years ago

So we have a trend going up.

In the past what has driven this trend downward?

jtr1• 7 years ago

The Labor movement. Social democratic policies enacted out of a fear of communism.

NeedMoreTea• 7 years ago

The post war consensus, or the long boom as I think it was called in the US.

A period of sustained growth that saw full employment, adult vocational education - in the US in part from the GI Bill, healthy and rising welfare, rising wages, good pension provision and an unprecedented growth of the middle classes.

High income taxes, sometimes extremely high, from both sides of politics saw greater opportunities for infrastructure and redistribution.

It started to fall apart with the 73 oil crisis, that in good part marched us into neo-liberalism and Thatcherism/Reaganism.

bryanlarsen2• 7 years ago

The real estate bubble popping. To a first approximation the bottom 9.9% of the top 10% in wealth are older upper-middle class folks who have their mortgage paid off and some retirement savings.

(Wealth and income distributions have significant differences)

cabaalis• 7 years ago

Is this elaborated on anywhere to break down by age/etc? Because "9.9% of that 10% of households are actually just your parents/grandparents who've made good choices over the course of their life rather than a bunch of bankers" doesn't trigger people as much.

tonyedgecombe• 7 years ago

WW2?

shoo• 7 years ago

yes, big disruptive events like war can redistribute & destroy wealth.

See picketty's book "capital in the 21st century" if are interested in light bedtime reading of statistical evidence for changes in wealth over the last century or two

itsaidpens4• 7 years ago

I'm telling you - and I mean this completely without hyperbole, lower your conspicuous consumption. Get rid of your luxury car, don't project your wealth.

To be honest, if you live anywhere on the peninsula (looking at you Atherton) and even areas of San Francisco - a reckoning is coming. Neighborhoods will burn.

"There's a storm coming, Mr. Wayne. You and your friends better batten down the hatches, because when it hits, you're all gonna wonder how you ever thought you could live so large and leave so little for the rest of us."

paulryanrogers• 7 years ago

Is this predicting or threatening violence? If so I don't see how that's constructive.

itsaidpens4• 7 years ago

Predicting. And threatening.

padobson2• 7 years ago

The article points out that record low interest rates have pushed easy money into the hands of the already-wealthy, exacerbating wealth inequality.

I see that as only half the story. While 0% loans were filling the coffers of Bank of America and Sallie Mae and Chase and Wells Fargo, those same banks were turning around and loaning the money out for consumption at 25% or for assets that rapidly depreciate like cars and TVs at 5-25%, or purchases of questionable value like college tuition at more variable rates.

r > g is still something of an open question in my mind, but the economic weaponization of debt and the inability of consumers to shield themselves from its adverse effects seems to be the reason for the wealth gap and why the increase in capital returns has payed better than overall economic growth, effectively transfering the future wealth of the poor to the present assets of the rich.

It could probably be solved in a generation with stricter regulations on consumer lending and the conversion of social security into a mandatory 401k, similar to Australia's "Super" program.

The fix for capitalism is to force everyone to be capitalists.

refurb2• 7 years ago

Top 10%? That would include a lot of HN folks reading this article.

And I'm sure the housing crash of 2008 didn't help. Real estate is often a key financial investment for the middle class. Housing has recovered (and more!), but a lot of middle class lost/sold their homes and didn't benefit from the appreciation.

kasey_junk2• 7 years ago

Just to put some numbers on it 2017 you'd need a net worth of about 1.1 million dollars to be in the top 10%.

https://dqydj.com/net-worth-brackets-wealth-brackets-one-per...

djsumdog• 7 years ago

What would annual income requirements be? I remember a few years ago when I looked it up, the 1% of top income earners was somewhere around $350~$400k/year minimum (depending on which stat you used). Think about that. Less than 1% of Americans ear over $350k/yr ... and most of them earn far far more than than (several million).

I assume the average senior developer here in a mid-range city probably makes around $120k ~ $160k. Where does that fall into national averages on just income (and yes, I realize this article is talking about overall wealth and not necessarily income).

alexnewman• 7 years ago

I think housing prices going up is the problem. Real estate has been growing at at least 10 years of growth for every real year since 1996. The financial crisis was a speed bump and we are far beyond those highs

smcg2• 7 years ago

Housing prices go up because housing is treated as a commodity and financial investment (ideally, it should be neither).

douglaswlance2• 7 years ago

Wow. The bottom 90% should find ways to contribute more.

mtgx• 7 years ago

I'm not sure if sarcasm or not, but do you believe that what would be "fair" would be for the bottom 90% to pay for 90% of the budget in taxes?

Maybe in an ideal world that could be true, but it would also require for the bottom 90% to get 90% of the total income received in an given year. As we can see, that's nowhere near the case.

So of course the single digit percentage of the population that makes the lion's share of total income also has to pay the lion's share in taxes.

douglaswlance2• 7 years ago

The bottom 90% should contribute 90% of the value to the world, instead they're only contributing 30%; while the 10% most successful contributors generate 70% of the value.

That means 90% of people are not contributing as much as they could to society.

mensetmanusman• 7 years ago

The interesting thing about today is that the rich don’t have access to better technology than anyone else due to massive scale. Also, they have no leisure time...

mikepurvis5• 7 years ago

I think it depends which rich you're talking about. Certainly some of them seem to have plenty of time on their hands: https://www.instagram.com/rkoi/

aaronarduino• 7 years ago

I wonder how many of those kids rent cars, clothes, etc. to look rich. I mean it is Instagram after all.

learc83• 7 years ago

There is a leisure class, but it's more like the top 0.1%.

frgtpsswrdlame• 7 years ago

Okay everyone agrees that absolute position matters -> less deprivation is better. But I'm interested in HN's perspective on relative position. It seems that there are people for who relative position shouldn't matter at all and people for whom relative position matters quite a bit, why?

mooreds• 7 years ago

I looked through the paper for the wealth level that qualifies you as a 1%er or 10%er but didn't find anything. Anyone have any numbers for that?

sithadmin• 7 years ago

Based on 2018 figures, being a 1%'er in the US requires an approximate annual household income of ~$434,454 USD.

brianwawok2• 7 years ago

It is usually by FAMILY income, so include both earners in a two income family

https://www.cnbc.com/2018/07/27/how-much-you-have-to-earn-to...

To be among the top 1 percent of U.S. earners, a family needs an income of $421,926

For top 10%, you have $178,793.00 per

https://dqydj.com/household-income-percentile-calculator/

bryanlarsen2• 7 years ago

That's income, not wealth. Big difference. @casey_junk found the wealth numbers: (https://news.ycombinator.com/item?id=20051782)

Just to put some numbers on it 2017 you'd need a net worth of about 1.1 million dollars to be in the top 10%.
https://dqydj.com/net-worth-brackets-wealth-brackets-one-per....

burlesona• 7 years ago

A quick google yields the following:

Top 1% - more than $434k/year household income.

Top 10% - more than $179k/year.

50% is $61k/year.

Source: https://dqydj.com/united-states-household-income-brackets-pe...

neogodless• 7 years ago

Looks like in 2018, "total assets" is $110 trillion, and an overall net worth of just under $98 trillion.

This puts 70% of net worth/total wealth at $68.5 trillion, owned by the top 10%. I'm sure someone can find the "number of households" but I don't have it handy, so I'm going to just go with 120 million, and see what the average wealth of the top 10% (12 million households) is:

$5.7 million

Of course, the 9.999% above the bottom person could own way more, and that final 0.001% that qualifies might have much less than $5.7 million. So how do you figure out that piece?

Oh - someone else provided a link: https://news.ycombinator.com/item?id=20051782

Looks like in 2017 $1.1 million qualified you for 10%, while a little over $10 million qualifies you for 1%. (That's almost too neat...)

whb07• 7 years ago

This of course is a big side effect of quantitative easing aka printing money. Those who held on to securities and other advanced financial instruments saw prices being pulled upward due to the massive flood of hot off the press money.

Guess what people don’t own large number of those types of assets?

So before everyone does the typical “we should get government involved” rabble rousing, be aware that it is because the government got involved that this is happening.

necovek5• 7 years ago

I am not from US, but I remember loud complaints about how Federal Reserve was bailing out banks and the rich vs the non-wealthy folks. My memory of govt reasoning was that they need to help the economy survive to avoid unfamiliar consequences (if they bankrupted the banks for giving bad loans and let home buyers keep their not fully paid homes, the argument was that crediting would stop in the future, which would be a bigger detriment to the not-wealthy).

IOW, government got involved on behalf of the rich claiming to also benefit non-wealthy in the long run.

This is all a bit simplified, and coming from someone only affected transitively (so without full focus on the developments).

partiallypro7• 7 years ago

This is basically the Pareto principle in action, and isn't surprising.

Most of the top tier wealth is driven by investments and in the wake of globalization (and "easy" money from CBs,) stocks and other asset classes have risen drastically. Given that the lower rungs in the world all have little to no investments compared to the "upper class" it's just basic math than people with investments will out perform those with none.

There will undoubtedly be a mean reversion on asset prices at some point in the future, which will lower the wealth gap as prices fall...but that might not be a good thing. What we really need, if we want to bridge the gap, imo, is teaching people to invest their money...and I mean in more than just a 401K and a house. If you look at actual living standards, even the middle and lower classes are in much better shape than they were in every previous decade. So we're making strides there. So we need to improve our education system (specifically for the lower class) and teach everyone to invest in the economy as a whole.

idlewords4• 7 years ago

The thing about poor people is, they don't have money to invest. Teaching the poor to invest is like teaching the starving to cook.

Moreover, you are simply not correct to say that living standards are improving for everyone. Life expectancy in the United States has gone down for the third year running (the first time that's happened since WWI) due in large part to crises that disproportionately affect poor people.

partiallypro7• 7 years ago

Life expectancy has gone down because of the Opioid crisis and suicides. That certainly does effect poor people, but it is not -because- they are poor.

And poor people usually do have money to invest, I grew up very poor. My grand mother had no plumbing, no A/C or central heating (and this is the US,) so I know what true poverty is. You will not find that virtually anywhere in the US now.

mikepurvis5• 7 years ago

You not only have to have money to invest, you have to have the further means to be able to leave it there for the long term.

I'm middle class and about 18 months ago finally moved some modest savings (5 figure amt) into a robo-advisor controlled account. It's basically been flat the entire time, and is now up 1.4%, not even beating inflation over the same time period. Now, I get it, patience is everything. But it's definitely pretty detached from reality to blame poor people for their bad financial literacy in not having tens of thousands to drop into "investments" when this kind of thing is the reality even for those of us that do.

necovek5• 7 years ago

Why didn't this apply to the rest of the top 10%, but only to the top 1%? (see my comment below)

partiallypro7• 7 years ago

It did. If you invest $1 Million but someone else invested $1 Billion, and you both made a 25% return, the wealth gap between you still widened fairly drastically. And it gets much worse when people have no investments at all.

refurb2• 7 years ago

And age is strongly correlated with wealth, with people nearing or in retirement often having the highest level of wealth. When the value of equities goes up, they benefit the most.

Balgair3• 7 years ago

40% of the US would have a hard time covering a $400 expense [0]. How in God's name do you think they have any kind of stability to think about investing? 2 out of 5 Americans are essentially living paycheck to paycheck.

[0] https://money.cnn.com/2018/05/22/pf/emergency-expenses-house...

partiallypro7• 7 years ago

By teaching people to manage their money better? Financial education in US schools is basically non-existent.

jvreagan• 7 years ago

And due to great income mobility in the US those 2 out of 5 Americans don't stay there long. Or they don't have to.

http://www.aei.org/publication/some-amazing-findings-on-inco...

salawat• 7 years ago

I keep seeing people make the push to have people invest; but what I never see is any clarification in in what or how; which leads me to assume the pusher is really saying, put your cash in money manager's hands and let them make those decisions for you, and enjoy the interest.

Here's the thing though: I'm not really sure that even with a fiduciary responsibility that the mere incentive of "getting a percent of interest earned on the behalf of clients" really does the market any good.

A 10000 dollar investment in the right place at the right time can make the difference for a small business, which won't even appear on the radar for an investment fund.

These types of money management schemes basically bias the system in favor of a smaller population of larger beneficiaries.

I don't know about anyone else, but I think if people held onto their cash, and managed it to improve what they can locally, I think that we'd see more bang for the capital buck expenditure.

I have seen much more get done with a bit of money in the right place at the right time rather than just throwing absurdly large amounts around and just banking on getting a couple percent back.

My layman's point-of-view at least.

hurryskurry3• 7 years ago

The interesting part is the historical contingency of the distribution, that is based not just on rational economic principles but purposeful policy.

For example, you would need to explain why up from post-war until the mid-70s you see increases in income for most people basically matching increases in productivity, and why today there is a disjunction between the two.

It isn't merely a principle at work.

idlewords4• 7 years ago

The better headline here is that 1% own a third of the wealth.

xtiansimon• 7 years ago

Better than 2% own 90% in banana republics.

b_tterc_p• 7 years ago

I’ve been thinking that an exponentially progressive estate tax setup could help here.

Expez• 7 years ago

There's so much talk about the growing inequality that I tried to find out what would happen if the rich were mobbed and all the money redistributed.

According to [0] there were 73,110 ultra wealthy US citizens in 2017, i.e. individuals with more than $30m in net worth. The same article says that the average net worth in this group is $120m.

In aggregate this group thus controls 120m * 77 110 = 9.3 trillion dollars.

Since there are around 330m people living in the US this would amount to only a little over 28k per person when redistributed.

[0] http://money.com/money/4833875/ultra-wealthy-americans-milli...

mcphage• 7 years ago

So you're saying, by redistributing wealth from only 73k people, everybody in the country would get almost $30,000?

That's... that's a lot. And that's only from the top 0.02%.

defective• 7 years ago

Or roughly $72,000-73,000 per household, assuming 127 million households and working with the numbers in your comment.

If we stole all the money from every 10%er household, who control 70% of aggregate household wealth, we'd have 70% of $93 trillion (2016 value) or $65.1T. Spreading that across 90% of 127M households nets about $564,500 per.

bin0• 7 years ago

Some one quoted a number that you need about $1mm in income to be in the top 1%. You know what's perverse? "Qualified investor" mark is at $1mm net worth. The best way to make money is to invest what you have, and this blocks people out.

From what I understand, it might be possible to set up a partnership which does investments, and pool money from about 50 partners. That would allow a decent angel investment group with a few-thousand-dollar buy in. Why don't more people do this? It's very doable to learn about how to read a business plan, read financials, etc. Though it's a risk, it might be helpful to allow the middle class to make informed investments to grow wealth.

scarface743• 7 years ago

In the grand scheme of things, not that I think it would make that much of a difference, but how would the wealth of the middle class that are close to retirement be different if you counted the present value of annuities such as pension plans and even maybe social security?

I know my parents could afford to have a lot less “wealth” and be comfortable thanks to my mom’s pension as a public school employee.

On the other hand, how much worse off is the middle class now that private pensions are rapidly disappearing?

RickJWagner• 7 years ago

According to this inflation-adjusted accounting, today's billionares aren't in the same ballpark as the rich of yesteryear.

It's why 'The rich get richer, the poor get poorer' is an old expression, I guess.

https://www.celebritynetworth.com/articles/billionaire-news/...

The richest 10% of households now represent 70% of all U.S. wealth

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