The wealthiest 10% of Americans own a record 89% of all U.S. stocks

https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-americans-own-a-record-89percent-of-all-us-stocks.html

by batmaniam • 5 years ago

393 547 5 years ago

cnbc.com

bfrog• 5 years ago

I wonder what this looked like in the 20's right before it really hit the fan

paulpauper9• 5 years ago

People have been predicting this shit hit the fan moment for the past decade

lexapro10• 5 years ago

And we already had a massive crash last year caused by the pandemic.

mandmandam• 5 years ago

Then the market can remain irrational for at least that long. The shit will hit the fan, and it will be because of shit like this.

imtringued17• 5 years ago

I have no idea why but I insist that something will happen in 2025. I picked this year randomly some time ago.

ziml77• 5 years ago

What makes you think this statistic would be at all correlated to the leadup to a depression?

mtnGoat2• 5 years ago

so if the rest of us took a hit and just crashed the market we could even the playing field?

asking for a friend who is into stonks. :)

</s>

bellyfullofbac2• 5 years ago

The rest of us? If you earn more than $201K you're in the top 10%[1]. I wonder what percentage of HN earns more than that.

The site also says 33% earn more than $100K. I guess the majority of the leftover 11% is owned by the people in the 10%-33% bracket.

[1] https://dqydj.com/household-income-percentile-calculator/

bgentry• 5 years ago

You're conflating income and wealth; the latter is what this article is about.

If anybody finds a reliable recent source for this wealth data, please share. I'm not seeing anything particularly trustworthy with a quick search.

bobbyi• 5 years ago

That is household income. A lot of households have two adults with jobs, so don't conflate that number with what an individual makes.

mtnGoat2• 5 years ago

my comment was sarcasm/rhetorical, 11% cant tank 89% of a market.

however, to answer your question, i would guess the majority of US based HN readers are in that 100k+ bracket. the audience here skews very high income i would guess.

tomschlick• 5 years ago

and just crashed the market we could even the playing field?

Yeah and you'd crash the entire middle class's retirement accounts.

Findeton• 5 years ago

Good for them. I'm not envious.

brightstep• 5 years ago

What this effectively means is, that ten percent exercises majority control over huge portions of the US economy. That ten percent is the group making decisions on how to direct huge amounts of resources created by our economy. Such a healthy democracy.

anovikov• 5 years ago

And we should understand that majority of top 10% are still poor, irrelevant, working class people.

vkou2• 5 years ago

Working class, maybe ~half of them. Poor, no.

tantalor2• 5 years ago

poor

The 90%ile is $129,000/yr individual income.

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

onemoresoop3• 5 years ago

The problem with the 10% is that it conflates households who barely get by, who make 100-200k per year with others who make way more than that. 100-200k in SV or say NY is really not that much, definitely not enough to be considered wealthy. I've read about a few middle class folks in that range who tanked rapidly with massive debt and foreclosures when a medical misfortune hit them.

j_walter2• 5 years ago

You could also argue that 0.1% is directing all of the laws surrounding our economy...and those are our elected leaders. I'm not sure they are any better at figuring out where to direct the resources than those 10% are.

afavour• 5 years ago

and those are our elected leaders

Kind of an important caveat, no? It’s the entire principle behind having a democracy.

Grustaf3• 5 years ago

Yeah, 0.1% are directing the laws, but they are not our elected leaders. They are the unelected leaders of the largest corporations.

jakelazaroff2• 5 years ago

You could also argue that 0.1% is directing all of the laws surrounding our economy...and those are our elected leaders.

If they're doing a bad job, the recourse (at least in theory) is to elect better leaders. What recourse do we have when the rich abuse their power?

roflc0ptic• 5 years ago

Well, not really. Most of this is going to be in some kind of managed funds where individuals aren’t exercising voting rights. So it’s a much smaller subset that exercises control

guerrilla3• 5 years ago

Yeah, banks. I think the economy may be a lot more centralized than people think.

kayge• 5 years ago

Potentially dumb question: once you own a certain percentage of public stock of a company, do they start contacting you for board meetings or decision-making of any kind? I think I understand your comment, but I'm curious what real-world examples of this look like.

CGamesPlay2• 5 years ago

Yes, every voting share (most shares are voting shares but there are some exceptions) is worth 1 vote, and you receive invitations to the shareholder meetings if you have even 1.

tshaddox4• 5 years ago

Common stock shareholders generally have some voting rights, e.g. for electing board members.

https://www.investopedia.com/ask/answers/040315/what-can-sha...

jdsully• 5 years ago

Shareholder power is diffuse, a lot like voting for your congressman is. If you hold over 50% of the vote there are more tools available but then your getting lawyers involved. Sometimes corporations are organized in such a way that even 50% doesn't give you effective direct control without very unpleasant side effects (e.g. poison pills).

jldugger5• 5 years ago

Potentially dumb question: once you own a certain percentage of public stock of a company, do they start contacting you for board meetings or decision-making of any kind?

Well, most decisions are outsourced to the board members, who's membership is the main thing shareholders vote on.

Mandatory reporting kicks in at 5 percent ownership. At 10 percent, the SEC considers you an insider[1]. Before that, I doubt board members even know you exist unless you talk to them first (and they aren't taking your calls or mine).

[1] https://www.sec.gov/smallbusiness/goingpublic/officersanddir...

friedman234• 5 years ago

Democracy is about democratic control over the government, not democratic control over all individuals or aspects of life.

It's not injustice that people can't vote to control what you learn, read, eat, or do. If you write a book, our government isn't suddenly not a democracy because people can't vote on what you write even though you technically now have more power over other individuals since you can control what goes in your next book.

guerrilla3• 5 years ago

Counterpoint: Those effected by decisions should be making them and those not effected by decisions should not be making them.

zaik• 5 years ago

By funding campaigns, lobbying, running think tanks, owning media reaching millions of people, having people of your company sit in government agencies (...) economic power quickly translates to political power.

austincheney2• 5 years ago

Or, you could just simply argue that 10% is the group in the best position to beat inflation while the rest of us get poorer.

Not taxing the rich, capital gains as income, seems to contribute to inflation about as equally as government social spending due to both second and third order effects of policy influence and economic consequences.

padobson• 5 years ago

Not taxing the rich, capital gains as income, seems to contribute to inflation

I'd say you're half right, here. The Fed prints money spends $80 billion a month on treasuries and $40 billion a month on mortgage backed securities, so if you're a government contractor or you have a lot of real estate assets, you're effectively robbing everyone else's savings and devaluing their wages.

imtringued17• 5 years ago

If all you want to do is beat inflation you can just buy stocks instead of saving money. The real problem is that people get higher returns than inflation. Often higher returns than the growth rate of the economy as a whole.

The idea that inflation is killing us is simply not true.

spamizbad• 5 years ago

It's central planning without anything as messy as a communist revolution

oliv__• 5 years ago

No it's not. Those 10% are all independent actors with individual and private interests.

I'd much rather the economy be controlled by the top 10% of a productive society than by the 1% of a bureaucratic structure.

MuffinFlavored3• 5 years ago

over huge portions of the US economy

"The stock market isn't the economy"

https://www.bloomberg.com/opinion/articles/2020-10-27/stock-...

https://www.nytimes.com/2020/05/10/business/stock-market-eco...

https://tcf.org/content/commentary/stock-market-not-economy/

what_is_orcas5• 5 years ago

"The stock market isn't the economy"

This is one of my favorite Kai Ryssdal-isms.

While this is true, it's not true to a lot of people: politicians and us regular-folk alike often equate the stock market's performance to the state of the economy (hence why this is a saying at all).

I like to think of the stock market as an insight into wealth-transfer (from the poor to the rich, obviously... it doesn't flow any other way in the US at this point). When stocks do really well, especially those of service/retail companies, the already-rich are getting richer, generally at the expense of the rest of us.

paulpauper9• 5 years ago

Pensions are a major stakeholder, more so than individual stock holders. Most people are invested in stock indirectly through pension funds. This is can in part explain why the fed and monetary policy has been so easy, in part to prop up the value of these fund.

mdorazio• 5 years ago

I hope by pension you mean general retirement savings. Because only about 20% of American workers get a pension [1]. Also note that less than 60% of American workers participate in a 401k-type retirement plan. So saying that “most” people are invested in stocks this way is just barely true and kind of distorts the picture.

[1] http://www.pensionrights.org/publications/statistic/how-many...

LorenPechtel3• 5 years ago

This. I keep seeing numbers like this article that simply make no sense when you look at the pension fund (and some other such institutional investors) capitalization vs total market capitalization.

TameAntelope19• 5 years ago

Okay, I'll say it; good. Democracy is fine as a method to run a government, but democracy is a terrible way to run an economy. Not nearly everyone should have a say in what happens in the economy.

Democracy ought not be a meritocracy, but the economy should be, which means some people will and should be left out of decisions.

I would love it if the government could grow the number of people who, on their merits, help guide the economy, and there are groups of people who are unfairly barred from access to the economy and that is bad, but the idea that everyone should get a say in what happens in the economy is very much against the capitalistic principles upon which the US economy is built upon.

vegai_• 5 years ago

Not nearly everyone should have a say in what happens in the economy.

I mean sure, democracy isn't optimal for selecting the best people, but do you think those 10% that do own most of that stock were selected by their skills and abilities?

jldugger5• 5 years ago

Not nearly everyone should have a say in what happens in the economy.

Alternative take: everyone already does have a say in what happens, as they participate. Nobody gets to dictate their own terms, though, but neither does anyone in politics.

cmrdporcupine• 5 years ago

Before you can make this claim, you'll need to put your definition of merit out there, and additionally defend that the 10% we're talking about here truly has this meritorious status.

newsclues• 5 years ago

Do you still think it’s good if you aren’t part of the 10%, nor do you own part of the 11% the 10% don’t own, and when you try to amass wealth policy created by and for the 10% harm your meritorious attempts to improve?

alasano• 5 years ago

Your last paragraph pretty much sums it up for the US.

The primary objective of the US government for its people should be to provide everyone with the same basic opportunities. What they do with those opportunities is up to them, like it is in any other country which already does these things.

Access to education and universal healthcare + a livable minimum wage at the very least.

Once your children are fed, happy and healthy and you don't have to work 2 jobs to make ends meet, you have more time to spend with your kids and provide them with an upbringing which will allow them to have a fair chance at becoming one of the people who make those decisions.

There's obviously a major influence on US democracy coming from the decision makers of the "economy".

So the question is, which is more important, and to whom? The majority doesn't have much of a say in the economy unless they band together, which is nearly impossible in a diverse and (intentionally) divided US.

A flawed democracy also means that the kind of drastic change that's needed to correct this imbalance can't happen.

VictorPath• 5 years ago

Democracy ought not be a meritocracy, but the economy should be

The Walton heirs have over $200 billion. I guess Alice Walton ($60 billion), who killed someone with her car in 1989, nine years before being charged with DWI for driving her car into a gas meter is one of those epitomes of meritocracy. Or the Koch heirs, the Mars heirs and so on and so forth. The economy is designed for the benefit of the heirs of the St. Grottlesex set, of this meritocracy you speak of.

ls-lah_33• 5 years ago

The US was founded as a rebellion against aristocracy.

However, in 1825 Jefferson noted that, much like today, the country was becoming increasingly controlled by what he termed 'monied in corporations' and therefore seemed to be eroding the achievements of the revolution:

[T]his opens with a vast accession of strength from their younger recruits, who having nothing in them of the feelings or principles of ’76 now look to a single and splendid government of an Aristocracy, founded on banking institutions and monied in corporations under the guise and cloak of their favored branches of manufactures commerce and navigation, riding and ruling over the plundered ploughman and beggared yeomanry. this will be to them a next best blessing to the Monarchy of their first aim, and perhaps the surest stepping stone to it.

https://founders.archives.gov/documents/Jefferson/98-01-02-5...

dfxm12• 5 years ago

It also means you should ignore people who use the stock market as a proxy for how "the economy" is doing.

imtringued17• 5 years ago

I have seen some youtubers use the word central planner as an insult for government institutions. In my opinion there's a different class of central planners that nobody really gives a damn about. Billionaires influence governments and also have an outsize impact on the economy either by concentrating wealth and thereby denying that wealth to others or by directing their wealth on things that they personally care about but the majority of the economy does not.

The conventional trickle down hypothesis is that giving the rich money lets them do their job more efficiently because of centralization. That is basically a belief that only people who do not believe in a liberal(or free) market would have. The idea that 300 million decision makers are worse than a handful of billionaires is absurd. If the work of these billionaires is truly needed then let people make that decision for themselves and give them the option to avoid them.

pwned12• 5 years ago

Related: 61% of Americans paid no federal income taxes in 2020

https://www.cnbc.com/2021/08/18/61percent-of-americans-paid-...

Jweb_Guru• 5 years ago

I assure you that people would happily trade paying some taxes for owning any assets whatsoever.

nerdponx2• 5 years ago

And having functioning public services like healthcare.

Aunche2• 5 years ago

If this were true, they would spend more of their discretionary money on assets rather than consumer purchases.

newacct5834• 5 years ago

That's because of the covid downturn, though. A ton of people saw a rapid shortfall in income, but it's was (as the article calls out) transitory. It doesn't reflect what we saw in 2019 or will see this year. Questions about wealth distribution are, by definition, not transitory.

flyingfences• 5 years ago

Even during a "good" year, though, the number is still around half. (Recall Romney's "47%".)

ehnto• 5 years ago

It will definitely reflect what you see this year, and probably a few years to come. It hasn't gone away, international travel is not the same (changing who is available to work due to reduced emigration), supply chain disruptions and reconfigurations continue. The workforce has changed, too, wealth inequality is now on the forefront of many people's minds, remote work is more prevalent than ever, and it has changed how people are engaging with work.

jerf• 5 years ago

We do not know that COVID impacts are "transitory". It is only by assertion, by people who I would say have all the motivation in the world to claim they are "transitory". At the moment I can't provide any evidence that they are "transitory" beyond the bald assertion. They can just as easily be permanent.

We won't know for at least another five years at a minimum.

tshaddox4• 5 years ago

In what way is that related?

Berobero3• 5 years ago

It's related in that it morally licenses the privileged to be OK with wealth inequality because, see, the masses are actually being supported by the magnanimous benevolence of their betters.

stonemetal12• 5 years ago

Owning stocks is one of the ways to avoid paying taxes?

dv_dt• 5 years ago

But they very likely paid sales, property taxes, tolls, and service fees

marwatk• 5 years ago

And payroll taxes, everyone always forgets payroll taxes.

pessimizer5• 5 years ago

And payroll taxes, which are practically targeted towards the poor in order to parody an savings account.

jldugger5• 5 years ago

None of these are federal taxes though. From that set, they likely paid a lot of payroll tax, which is a fancy way of saying "income tax paid to support social security & medicare" that is kept distinct from "federal income tax" when these sorts of statistics are trotted out.

m_ke2• 5 years ago

Might have something to do with this: https://christiankull.files.wordpress.com/2020/06/economist-...

bagels2• 5 years ago

Wondering what that looks like after taxes.

literallyWTF• 5 years ago

This just in, poor people don’t have much money.

Do you expect to squeeze blood out of a stone as well?

skinnymuch17• 5 years ago

Key word “federal”. Why specify what specific tax it is? Does it not muddy the waters vs talking about taxes overall?

I did an anecdotal test with a few people near me. They read this as those people pay no taxes. Most people aren’t thinking about the specifics of state, federal, FICA (SS + Medicare), sales, property, and more.

I can’t think of any good faith reason this is done.

MuffinFlavored3• 5 years ago

Why specify what specific tax it is?

Because the majority (50%) of the money spent by the US Federal government is mainly from federal income tax.

https://www.taxpolicycenter.org/briefing-book/what-are-sourc...

megaman821• 5 years ago

I totally agree, but people pull this same move when comparing our tax rates to European countries. People frame their arguments in a light most beneficial to their points they are trying to make.

jimbob452• 5 years ago

Several states (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming) don't pay any state tax. I'm sure you could make a statement like "85% of US residents don't pay state tax" that would be true but also be incredibly misleading.

mooreds• 5 years ago

How about "X% of people paid no tax" which is really the meaning of this.

Here's a page which talks about the effective tax rates of, as far as I can tell, all taxes people in the USA pay:

https://itep.org/who-pays-taxes-in-america-in-2020/

This is far more useful for the discussion about how we pay for common goods than "61% of Americans pay no federal income taxes".

(Never heard of ITEP before this, but they claim to be non-partisan, FWIW.)

bidirectional• 5 years ago

Shouldn't taxes be thought of as a contribution to some form of spending rather than a purely punitive measure? Why is it not important that 61% of people do not contribute anything to the spending done by the federal government, even if they do contribute to other spending?

Berobero3• 5 years ago

Also, "federal" here does not include not include payroll taxes, which are, nonetheless, considered "federal taxes" in any colloquial conception of the term.

Of course, in addition to the lying by omission, the true irony here is that the "lack" of "federal" taxes paid by the masses is more so a symptom of a deeply inequitable economic system than the counterbalancing endorsement of the status quo the OP likely envisions it to be.

throwawaycities3• 5 years ago

I think you have it backwards. The extremely rich that might make millions or even billions a year but pay $0 income taxes love to play that game and muddy the water by saying they paid taxes…everyone in these contexts is talking about federal income taxes, not sales tax or property taxes.

How about turn your question around and ask why the top CEOs (especially in tech) pay $0 federal income taxes claim they did pay taxes when they are referencing having paid sales tax, as if not paying sales tax is even a real issue, is in good faith.

dec0dedab0de• 5 years ago

Because most people are smart enough to understand that they mean federal income tax. Especially when comparing the entire country, or talking about federal tax policy.

thoughtstheseus• 5 years ago

Do you pay sales tax on purchases? SALT deductions also reduced those paying federal taxes paid when they were still around. Agreed that people misunderstand it quite easily.

SquishyPanda235• 5 years ago

This is an odd line of reasoning.

It's like responding to "Joe didn't pay for his main course at the restaurant" with "yeah but he paid for some of the appetizers."

wang_li2• 5 years ago

I've not looked for a new edition of the report but the CBO has put out reports that calculates net tax rates and more than half of the country are not federal net tax payers (this includes all federal taxes.) And more than 40% of them are so much not net payers that it offsets their entire non-federal tax burden. Ultimately a very large portion of Americans don't pay for any of government and government spending and services.

jandrewrogers• 5 years ago

At the Federal level, it is more useful to talk about net taxes of all types. That is, taxes of all types paid to the Federal government (income, excise, payroll/social, etc) after subtracting all transfers and distributions to the taxpayer. This is a more accurate accounting of the situation. It paints a slightly different picture, but not that different.

It turns out that only about 20% of taxpayers send more money to the government than they receive in aggregate across all forms of taxation and transfers. Another 20% of taxpayers roughly pay their own way, providing about as much tax revenue as they receive in transfers. 60% of taxpayers receive more in transfer payments and other distributions than they pay in taxes (not that surprising with things like Social Security).

tl;dr: across all Federal taxes and transfer payments taken as net, 20% of taxpayers are paying taxes that are transferred to 60% of taxpayers.

Individual States have diverse taxation structures, so the net taxpayer statistics likely vary widely.

commandlinefan• 5 years ago

They read this as those people pay no taxes

Nobody on earth would ever read "not paying federal taxes" as meaning also not paying social security, medicare, sales or property taxes.

fallingknife• 5 years ago

Federal income taxes are the money that funds the federal government. The military, congress, FBI, courts, EPA, etc. Payroll taxes go to entitlement programs, so they are more similar to paying insurance premiums than actually funding the activities of the government.

RC_ITR2• 5 years ago

Because almost everyone who purchases anything pays 'sales tax' and almost all homeowners pay 'property tax,' but the problem we care about is income/capital gains tax evasion.

cactus2093• 5 years ago

I don't really see how it misleads the argument in a way that would be considered bad faith. But I do agree focusing on the $0 number does seem kind of arbitrary. A better metric might be percentage of the total tax burden paid by the bottom 50% of the income distribution. Maybe that is 0% if you look purely at federal income tax, and maybe it rises to something like 5% if you include all the other taxes you mention. But I don't think it changes the picture significantly.

suzzer99• 5 years ago

The funniest part is that a good chunk of the people who pass along this link in grievance are probably in the group that technically pays no income tax, and don't even realize it.

AdamN3• 5 years ago

That's even worse. It presents even more clearly that the United States has been captured by the upper class, who pay all the bills but also receive all the proceeds (aside from small supports to keep the lower and middle classes working and productive).

This isn't much different than Rome, which of course the US is modeled on.

The only solution is a wealth tax for the next 10 years which dovetails into more sensible taxation on capital gains to prevent this from happening again.

The thing is that most CEOs of Fortune 500 companies aren't even in the 1%, which requires $11.1MM in assets:

https://www.investopedia.com/financial-edge/1212/average-net...

vinay427• 5 years ago

This isn't much different than Rome, which of course the US is modeled on.

Do you have a source for either of these claims? I can’t seem to find a clear one, especially for the latter claim.

fddhjjj• 5 years ago

The Fortune 500 CEOs might be closer than you think. Median pay last year was $12.7 million.

[1] https://www.equilar.com/reports/83-equilar-associated-press-...

SavantIdiot5• 5 years ago

How is that related? I believe that statement is completely unrelated. And possibly flamebait.

kome• 5 years ago

Related: 61% of Americans paid no federal income taxes in 2020

It means their income is very low: OP is just pointing out how US society is very very polarized between a small group rich owners (10% that own almost all the stocks) and and a big group of poor people (60% of the population).

learc83• 5 years ago

I don't pay any federal income tax on the first x dollars of income I earn either. This is nothing but a recognition that money has diminishing marginal utility.

The issue is that there are too many people earning less than x.

paulpauper9• 5 years ago

A decent chunk of adult Americans are effectively on the margins .. not contributing much at all to the economy. It's sad but a reality

Berobero3• 5 years ago

The "economy" is not just what is captured in formally taxable income. Large swaths of the economy is composed by absolutely essential reproductive labor that receives no direct monetary compensation. Conversely, the existence monetary income doesn't necessitate that economically meaningful or necessary labor is being performed, just that it is being compensated for in a formal manner.

Then, of course, there's unearned income -- very much so related to the topic of "stock ownership" that started this thread -- which, by definition, is acquired not through any meaningful contribution of labor to the "economy", but instead as a reward for the incidental private claim to profits our economic system happens to allow to people.

imtringued17• 5 years ago

They still do a big chunk of the work.

varelse2• 5 years ago

But do the wealthiest 10% pay 90% of the taxes? Answer: nope. Eventually there's a reckoning for this discrepancy, but that's why we have corporate media to delay that as long as possible.

https://taxfoundation.org/publications/latest-federal-income...

opo• 5 years ago

From your link it says the top 10% received 47.7% of gross income but paid 71.4% of total income taxes paid.

Why do you think that if they receive 47.7%, they should pay 90% of the taxes?

klyrs• 5 years ago

There's a $10k deduction for state taxes. If the state tax rate is greater than the federal rate, then they won't pay federal income tax. Also, federal income tax doesn't include payroll taxes. Indeed, the last paragraph mentions this:

Federal income taxes do not include payroll taxes. The Tax Policy Center estimates that only 20% of households paid neither federal income taxes nor payroll taxes. And “nearly everyone” paid some other form of taxes, including state and local sales taxes, excise taxes, property taxes and state income taxes, according to the report.

Nice cherry-picked, but meaningless, statistic you've got there.

lotsofpulp2• 5 years ago

The $10k SALT deduction does not apply to the 90% of tax filers who do not itemize since the standard deduction is worth more.

drdec3• 5 years ago

There's a $10k deduction for state taxes. If the state tax rate is greater than the federal rate, then they won't pay federal income tax.

That would be true if it were a credit, but it is a deduction.

ypcx• 5 years ago

Governments should be forced to choose between collecting income taxes _or_ taxing everyone through the general monetary inflation (a.k.a. money printing). They currently practice both - the income tax taxes the non-rich, and the inflation also only taxes the non-rich, because the freshly-printed money goes to the rich.

whakim5• 5 years ago

One of the reasons central banks and monetary policy have taken on such a strong role over since the 2008 financial crisis is an unwillingness to have honest discussions about taxation. If we want "nice things" however you define them, it's easier to outsource the details to an amorphous central bank than actually discuss a just and equitable tax regime that can support those things.

BeFlatXIII• 5 years ago

The entire point of taxes in the modern day is a polite fiction to prevent money-printing from ending up like the Weimar Republic or Zimbabwe.

vkou2• 5 years ago

And if we do the accounting, we'll find that most states paid no net federal taxes in 2020, and are wholly dependent on states that did.

Is there a particular point you are trying to make, here?

purple_ferret• 5 years ago

Also related (and not spun in a way to make it seem like 61% of Americans aren't paying their fair share):

From 1975 to 2018, the difference between the aggregate taxable income for those below the 90th percentile and the equitable growth counterfactual totals $47 trillion.

"Trends in Income From 1975 to 2018" https://www.rand.org/pubs/working_papers/WRA516-1.html

vngzs• 5 years ago

That CNBC article is unbelievably misleading. If you dig into the sources, it links to the actual report [0] where they state that 80% of households paid federal income or payroll taxes:

Remember, this reflects only those who pay no federal individual income tax. TPC estimates that while the number of households paying neither payroll nor income taxes also rose significantly, roughly 4 out of every 5 did pay one of these two taxes.

The trick is that "income tax" is used as a technical term in the headline, while the colloquial use of it is quite different (average readers would probably consider their payroll tax to be "income tax").

[0] https://www.taxpolicycenter.org/taxvox/covid-19-pandemic-dro...

GhostVII• 5 years ago

I don't think that is really misleading, at least I wouldn't consider Medicare/social security as a part of my federal income tax. When I think of income tax I think of tax brackets and deductions, not payroll taxes which are deducted before I ever receive any income, and which I never really have to deal with.

Based on the headline, I would have assumed that 57% of people had enough deductions/low enough income to be below the bottom income tax bracket. Which is correct, based on what you said.

vmception3• 5 years ago

Even as a technical term, income has like 5 different meanings and contexts in the tax code, only sometimes distinguished by adjectives such as "ordinary", "adjusted gross", "modified adjusted gross", etc

So its very easy to use this to your advantage and appeal to emotion, when convenient, or pass tougher tax laws that never affect you, which is even more convenient.

vmception3• 5 years ago

I just filed my taxes on Friday, the last date of the extension. When you change the tax code 3 times in one year, after overhauling it a few years earlier, it can complicate the ability to report.

Also the 2020 tax code changes allowed for 100% deductions against your income for donations to some kinds of non-profits. That plus being able to withdraw from 401ks, plus having large drops in income, means many people would not have anything to pay. You can always spend more than you earn (on certain things) and nullify your taxes that year. You just have to have more than you earn already, whether its savings, credit card debt, or other capital. So it should be obvious thats not an experience most people ever have, if they are barely making ends meet to cover living costs monthly. But its always available.

Grustaf3• 5 years ago

And yet curiously all political discussions focus on the inequality between the lower middle class and the upper middle class.

newacct5834• 5 years ago

The top 10% demographic is made up mostly by people who consider themselves middle class. The 10th percentile income is like $180k/year, or a little more than an entry level FAANG job. The 1% borderline is a little over half a million dollars, and while obviously very comfortable is not a lifestyle something people would consider genuinely "rich".

So, yeah. It's stocks owned by these folks -- people with normal houses and normal cars and normal jobs, but with a ton of disposable income to stuff into Robinhood accounts -- that seem the most unfairly distributed.

pgeorgi• 5 years ago

"wealthiest 10%" != "10th percentile income"

You can be part of the wealthiest 10% while having no income at all (not forever, but...)

pessimizer5• 5 years ago

The top 1% consider themselves middle-class half the time. That's no reason to pretend like they are - unless you're British and the usage of "middle-class" means rich but without a title.

paulpauper9• 5 years ago

Compared to the Forbes 50, it feels like everyone is middle class. it's hard to fathom having as much money as Musk even if you are rich

paulpauper9• 5 years ago

that is because that is a large and reliable voting bloc

burkaman• 5 years ago

Do they? I don't really think that's the case, and you can seek out different discussions if that's what you've been hearing.

Mainstream discussions are generally about "the 1%" vs. everyone else, or Biden's income threshold of $400,000 (the top ~5%).

lexapro10• 5 years ago

Really? Most discussions on inequality I witnessed focused on the ultra-rich: Bezos, Musk and so on. I actually think it would make sense to include the upper middle class as well.

Grustaf3• 5 years ago

Well ok, maybe on twitter. But in elections the middle classes are typically pitted against each other. "Raise taxes for lawyers", "Decrease welfare payments".

yalogin• 5 years ago

I don’t know what to make of this statistic. Wealth begets wealth so this is not surprising. Stocks are not a limited scarce resource so it’s not like the top are hoarding them. A more interesting stat would be to see if the bottom 90% increased their stock holdings or not. It would be a shame if that reduced for some population bracket.

pwned12• 5 years ago

From the article:

The bottom 90% of Americans held about 11% of stocks, and added $1.2 trillion in wealth during the Covid-19 pandemic.

The top 10% saw the value of their stocks gain 43% between January 2020 and June of 2021, according to the Fed. The bottom 90% saw stock wealth rise at a lower rate — 33%.

drdec3• 5 years ago

Part of the phenomenon in the 2nd paragraph might be the way the data is picked, in the same way you might find that a basketball team averages 8 more points per game in wins vs losses.

worrycue• 5 years ago

Stocks are not a limited scarce resource so it’s not like the top are hoarding them.

How are stocks not a limited resource? I know companies occasionally issue new stock to rise capital for new business ventures but that doesn’t happen that often no?

itake• 5 years ago

Employees are paid in stock. New stock is issued regularly for them.

colinmhayes6• 5 years ago

I think he was trying to say that they're liquid, so it's not like vc/private equity where you're locked out of the game until you're rich.

tshaddox4• 5 years ago

One potential take-away is that aphorisms like “vote with your wallet” are a bit silly, assuming you’re nowhere near that top 10%.

what_is_orcas5• 5 years ago

This is complicated.

I live in a poor neighborhood in a reasonably large city.

I shop locally (even avoiding the more affluent neighborhoods), exclusively if possible, as a matter of voting with my wallet because the businesses in my neighborhood employ mostly local folks.

At large scale, yeah, you're right. But for a small local business, one or two extra regular customers can be a bigger difference (drop in a bucket vs drop in the ocean). Even something like shopping at a local big-box supports the local proletariat more than shopping at Amazon, where the proletariat isn't guaranteed to be local at all (and to be clear: it's more about supporting the proletariat than the capitalists).

newacct5834• 5 years ago

Stocks are not a limited scarce resource so it’s not like the top are hoarding them.

Securities are by definition limited. Splits and IPOs are the only places stocks are born, and those are carefully regulated.

And... while the language is inflammatory, it seems to me like the top are meeting the definition of "hoarding" them. That's what owning 89% of something means.

ResearchCode2• 5 years ago

It doesn't if you tax capital gains properly. It's more important to speak of relative ownership as that reflects the change in power held by the 90% majority of Americans - it's vanishing before your eyes.

paconbork• 5 years ago

If the most important thing is relative ownership then it sounds like you would prefer the poor to be poorer, provided the rich were less rich

louis___• 5 years ago

To me, this simply shows how inequal the american society has become, and how the stock market amplifies it.

You can have an impact on the real economy with stocks. Look at what happened with GameStop. But that impact is done and decided by the wealthiest, who will reap the benefits of it.

But if you live paychecks by paychecks, having no money to put into stocks, you just suffer the consequences of this impact.

jleyank• 5 years ago

I assume this is through mutual funds and ETF's? I would think it riskier to actually own the stock directly unless this headline is biased by the founders of the key NASDAQ stocks owning 80% of the 89% (by value) by dint of being founders...

It would be more interesting to see the breakdown of what's held in retirement and pension accounts vs. post-tax accounts.

haolez2• 5 years ago

There is another perspective: these 10% are more vulnerable to a stocks pricing crisis. They are taking most of the risk to themselves.

lexapro10• 5 years ago

I'd rather have a big portfolio that could go to zero than nothing at all.

jakelazaroff2• 5 years ago

Are they? If you can't afford to own stock, you're probably much more vulnerable to the secondary impacts of a stock market crisis (losing one's job, etc).

noahtallen• 5 years ago

If it was that risky, they wouldn’t have these assets. People have investments because they understand cash alone won’t grow. Someone like Jeff Bezos has most of his wealth in Amazon stock partly because he perceives Amazon stock as better than cash. (Which is a very good analysis. Even a huge crash in stock value would still outperform cash by a huge margin over time.)

If these assets were very risky or likely to cause a portfolio to never grow, the rich would absolutely not be utilizing them as much.

lexapro10• 5 years ago

Yes, in the long term cash is much riskier than stocks.

crate_barre• 5 years ago

It’s also just a simple strategy to avoid the tax burden until necessary.

paulpauper9• 5 years ago

when the market falls it always recovers fast, so not a concern.

dkirill• 5 years ago

This is ridiculously privileged pov to have

haolez2• 5 years ago

Hacker News is the perfect place to discuss ridiculous points of view :)

ClumsyPilot5• 5 years ago

Another perspective: by owning your house, you are vulnerable to a risk of fire, or the house market crashing.

Everyone should give me ownership of their house so that I can kindly take care or this terrible risk on their behalf.

CGamesPlay2• 5 years ago

If the wealthiest 10% of Americans owned 89% of all U.S. mega yachts, what would that imply about the rest of the Americans?

GuB-42• 5 years ago

I expected an even more unequal distribution. Owning stocks is risky, and stock portfolios are mostly bought with money people don't need to live on a day to day basis.

The poor simply can't afford stocks, and I expect the middle class to make different kinds of investment. Like property (buy a house), and low risk saving accounts that may be backed by stocks but the owner of the account is not the owner of the stocks. There may be a small part of gamblers who play the stock market like they are in Vegas, but I expect most stocks to be owned by very rich individuals or institutions, who can mitigate the risks by having lots of stocks, and also have some amount of control on the companies they invested into, rather than a millionth of a vote for small investors. Among the institutions are the ones that provide financial services to the middle class.

lexapro10• 5 years ago

The middle class owns stocks through pension accounts.

SavantIdiot5• 5 years ago

Where does one get a job with pension today?

I've heard of them, but thought they vanished when the boomers left the workforce.

karma_daemon• 5 years ago

I'm not sure you need to be very rich, or an institution to diversify. In fact, it's never been easier to own hundreds, or thousands, of stocks as an individual. All you need to do is buy etfs.

ohazi• 5 years ago

low risk saving accounts

No, the interest rates for retail savings accounts are zero (or near as makes no difference), and have been for at least two decades. Basically everybody knows that they are completely useless by now, and that even "regular" people need to move to bonds or stocks in order to see any kind of return.

SavantIdiot5• 5 years ago

I switched to interest free accounts simply because I got tired of having to add a few dollars (or less) of interest to reconcile my Quicken accounts at the end of every month.

Such a joke. I remember when an ING money market was paying like some crazy 4 or 5% in the late 90's.

mg2• 5 years ago

With the advent of AI, wealth inequality is probably going to widen. Manual work is getting less and less valuable while ownership of the machines that do the work is getting more and more valuable.

I wonder if the wealth inequality is growing via transfer - aka "The rich get richer and the poor get poorer" - or if everybody is getting richer and the rich just get richer faster?

A good way to look at this might be some measure of the living standard / quality of life.

Over the last 10 years for example - did it go up for everyone? Or did it go up for some and down for some?

sidlls• 5 years ago

"A good way to look at this might be some measure of the living standard / quality of life."

We have a lower percentage of the populace that is poor--but they still live with little or no access to health care, in poor housing with problems (pests, access to clean resources, food supply, rampant violent criminal activity, etc.) and in other conditions such that they may as well be in corrugated metal shanties with dirty water and little/no access to electricity and other "amenities".

The living standard and quality of life for poor americans is marginally better than for poor people in third-world countries. We put a better spin on it and (ab)use statistics to paint a better picture.

ClumsyPilot5• 5 years ago

"The living standard and quality of life for poor americans is marginally better than for poor people in third-world countries"

I have no experience of third world countries, but if I am destined to be poor, I would rather live in ex-soviet block countries like Czech Republic. They gave half-decent public services, healthcare, etc.

sudosysgen16• 5 years ago

From experience in third world countries I'd say it's quite accurate, being poor in a country with ~3000$ GDP per capita is not that different from being very poor in America.

nerdponx2• 5 years ago

I don't have good sources handy right now, but from the research I've read, it seems mostly like (on a multi-decade scale) the poorest have gotten moderately richer, the middle classes has stagnated at best, the upper-middle class has gotten moderately richer, and the richest have gotten much much richer.

boringg• 5 years ago

Actually I am not sure ownership of the machines, I think it is ownership of the algorithms as the machines are commodity and lose value over time.

mg2• 5 years ago

Hard to say how this will play out. When I say "machines", I mean a combination of hardware and software. And these machines will be "machines that build machines". Including new software.

asdff• 5 years ago

Can you cite an algorithm that today needs to be licensed for use? All the underlying algorothms anyone is going to be using are going to be publicly available. I don't pay a severance to Markov, Poisson, or Bayes.

unethical_ban• 5 years ago

"means of production". Machines is not to be taken literally, I believe.

Whether people get replaced by AI/ML/Algos for middle-management decision-making, or they get replaced by kiosks and hamburger assembly devices at a fast food hut, there will be the owners of the means of production, and there will be the newly unemployed workers.

The fear expressed by the OP (and me) is over the long run, how will we keep the owners of all that capital and production from wringing out the lower 90% to the point where "snow crash" reads like a documentary?

imtringued17• 5 years ago

You mean intellectual property? It's not just the algorithms. You also need patents and the design of the machines.

missedthecue3• 5 years ago

In my experience, manual work seems to be getting more and more valuable, at least in the US, and it's because you cannot computerize wiring a house or pouring a concrete foundation or plumbing a bathroom.

at-fates-hands• 5 years ago

> or is everybody getting richer but the rich get richer faster?

There is some truth to this statement. Just a few years ago (20018), the US added a record number of millionaires:

The number of millionaire households in the U.S. jumped by more than 700,000 last year, thanks to surging stock prices and housing values, according to a new report.

The U.S. now has more than 11 million millionaire households, according to Spectrem Group, up more than 6 percent from 2016. The number of new millionaires and the total population of millionaires set records. Spectrem defines millionaire households as those with at least $1 million in investible assets, not including primary residence.

Since the financial crisis, the number of millionaire households has nearly doubled. In 2009, there were just under 6 million millionaire households. It’s grown every year since, and is now well past the precrisis level of 9 million millionaires.

https://www.cnbc.com/2018/03/21/us-added-700000-new-milliona...

mprovost• 5 years ago

During the Industrial Revolution the owners of the factories became richer and richer and the workers got poorer and poorer. I seem to remember some quote about the workers "seizing the means of production"... I wonder what that looks like with AI?

sudosysgen16• 5 years ago

It looks like abolishing intellectual property and making all source code into a libre license, really.

thih9• 5 years ago

How many percent of all Americans own any U.S. stocks? What is the wealth spread of the Americans who do own stocks?

robotresearcher• 5 years ago

About 1/3 of US adults have a 401(k), with the money invested in stocks, etc. So that's a lower bound.

asow922• 5 years ago

Why does this article sound so misleading on its face?

pessimizer5• 5 years ago

Because it contradicts a previously held belief that you have, so you feel that it has to be wrong no matter what the facts say.

asow922• 5 years ago

It does not in fact contradict my beliefs, although it seems like it aims to make my beliefs sound unattractive to others.

pumaontheprowl• 5 years ago

Because they don't discuss the methodology used to arrive at these numbers nor do they link to any sort of full report explaining these stats. For all we know, these numbers are complete bunk.

Furthermore, these sorts of wealth-inequality stats are typically used by disingenuous media outlets as a propaganda tool to support the political goals of their ownership. Reading such articles with a large dose of skepticism is a necessity.

stinkytaco• 5 years ago

Perhaps this is a foolish question, but how do retirement accounts fit into this? I assume many of us have retirement accounts that own parts of mutual funds or ETFs, are those counted, or are the banks that managed those considered the "owner" and we're just getting a share?

alistairSH4• 5 years ago

They're included, which makes the headline (and article itself) mostly meaningless. Yeah, I have >$1million in the market, but it's almost all via funds in my 401k. I'm not actively voting on any of the companies and I largely don't even know which companies I hold.

It would be more interesting to know what % of the market the top-1% hold.

lexapro10• 5 years ago

Why does it make the headline meaningless? It doesn't really matter whether you vote or know what you own, what matters is the wealth concentration.

colinmhayes6• 5 years ago

I'm not sure if the point of the article was that the top 10% control corporations. I think they were more trying to point out the extreme wealth inequality in this country.

pessimizer5• 5 years ago

And that's an inflated number because of 401k accounts, which were largely a PR exercise to convince the population that market swings affect Americans in general rather than just the wealthy (although mainly a pretense to cut national labor costs by eliminating pensions.)

csours• 5 years ago

Hmm this doesn't entirely make sense. What kind(s) of ownership are they talking about? Direct stock ownership? Mutual Funds? Index Funds?

Something to think about: the Fed has been POURING money into the stock market, to keep "the economy" stable. They don't have to use money in that way; they could also use money to actually help people (theoretically anyway)

imtringued17• 5 years ago

They don't have to use money in that way; they could also use money to actually help people (theoretically anyway)

No, that would require fiscal policy. The president would have to come up with a way to use the money to create jobs or at least invest into something with a future benefit. cough infrastructure bill cough

yathern2• 5 years ago

Keep in mind that most people are their wealthiest at retirement age. People near retirement tend to have a lot invested. People under 30 make up 50% of the population - but will not be their wealthiest for another 30 years.

But in 30 years, those same people will also have significant amounts of savings (ideally).

Not at all saying that there are no issues with wealth distribution, or stock-ownership-distribution. But the top 10% aren't necessarily the "elites". They could also just be your parents.

julienchastang• 5 years ago

Another related question is how many Americans will be part of the top 10% sometime during their lives?

xikrib• 5 years ago

This makes a lot more sense when you consider that the vast, vast majority of accumulated wealth over the last 100 years is corporate wealth.

To depoliticize ... I would interpret this statistic as an indication of the correlation between wealth and corporate stock ownership, which is almost tautological. If you own or help run a public company you are probably very rich.

And even in the hypothetical case where more of the "90%" are benefiting from stock ownership than ever, this statistic will always simply highlight the reality that running or owning a business makes you money.

ggregoire• 5 years ago

How is it that the article says 100% of _all_ the U.S. stocks are owned by Americans? Aren’t foreigners able to own U.S. stocks? Investopedia says they can.

https://www.investopedia.com/ask/answers/05/foreignownership...

ipnon• 5 years ago

One example: Chinese stocks oftentimes can't be owned by foreigners. The workaround is to start an offshore company that pegs its share price to the price of the onshore asset. Many Chinese stocks on Robinhood use this model, like Alibaba.

amin• 5 years ago

Can confirm. I'm not American but most my stock holdings are.

tim333• 5 years ago

They must mean of stocks owned by Americans. I'm guessing they are only talking stocks owned directly and not the ones held by your pension fund?

dsizzle2• 5 years ago

Based on one of the links within that article https://www.cnbc.com/2021/10/01/stocks-are-at-a-70-year-high... I think that by "U.S. stocks" they mean "stocks held by U.S. households", but I'm not 100% sure and I agree that's confusingly worded.

sschueller• 5 years ago

The Swiss National Bank also holds a very large amount of US stocks [1]

"The Swiss National Bank owned U.S. equities worth a record $162 billion as of end June, reaping the benefits of a rallying market.

Data published on Friday showed the SNB held shares in 2,642 companies, including a $6 billion stake in Amazon Inc. and one worth $1.1 billion in Exxon Mobil Corp."

[1] https://www.swissinfo.ch/eng/swiss-central-bank-owns-record-...

dsizzle2• 5 years ago

Pretty sure the percentages are not of "U.S. stocks" per se, but rather of stocks owned by U.S. households (the percentages by income add to 100% and obviously foreigners own some U.S. stocks).

chmod60010• 5 years ago

Whenever I see stats like this that don't account for age, I ignore them. They are worthless.

It compares a recent Stanford grad from a wealthy family to a 55-year-old who was scraping through the first 35-40 years of life, but now makes $190k/yr as a successful tradesman during boom time. The former will count as "poor" and the latter will count as "top 10%".

In other words, no, it's not comparing Americans of different classes. It's comparing Americans at different stages of life. Or just the ebb and flow of income over and individual's life (selling a house even in a modest area can easily put you into the top 10% for a year).

You need to follow individuals over their lives to get a better picture of who is struggling and who is thriving.

downWidOutaFite• 5 years ago

Your complaint would have always applied to this stat. The fact that it is at an all-time record high signifies that something has changed.

chmod60010• 5 years ago

The reaction then should be curiosity and a starting place for research, not the uninformed outrage that the article is peddling.

Once you start looking at the numbers behind this, it's almost guaranteed that the real picture will be less outragous and suggest different policy prescriptions than whatever you might think looking at the headline.

Or maybe you already know the details, and already know what we should do. But if so, you got your information from elsewhere, because the article doesn't offer much.

darth_avocado2• 5 years ago

Am I the only one seeing a lot of headlines pitting top 10% against the rest? It’s disingenuous to make up headlines like this without mentioning too 10% consists of, you guessed it, top 1% which owns more than 50% of all the stocks.

dominotw• 5 years ago

oh yea i saw this recently too. here is one from last week that was making the rounds.

"The problem with America’s semi-rich" https://www.vox.com/the-goods/22673605/upper-middle-class-me...

thinkloop• 5 years ago

Top 1%? How disingenuous can you be, that's made up of the top 0.01% who own 30% of the top 1%'s wealth alone [1]

[1] https://review.chicagobooth.edu/economics/2017/article/never...

chmod60010• 5 years ago

The top 10% is not a static category. People move in and out all the time as a result of ordinary life changes (rising income as you enter prime working years, selling assets to buy a house, selling a house, job loss, etc.).

It doesn't really make sense to be mad at the 10%, because it will probably include you or others in your family unless you are really stuck.

And there are a lot of people who are stuck. Let's not diminish that. But we will never address that if we are conflating them with young people who just happen to have a low income today but have every reason to see themselves in the middle class.

standardUser• 5 years ago

That's a myth. There's plenty of data on this. Most American never get anywhere close to the top 10% - not even remotely - regardless of age. The idea that everyone is just waiting around for their career to advance enough to put them in the upper-middle class is ludicrous on its face. Just as ludicrous as the myth that only high school kids work for minimum wage.

6gvONxR4sf7o2• 5 years ago

The top 10% are worth a ton, there’s not getting around that. But not slicing by age really does muddy things. The US median net worth for 65-74 is over a quarter million dollars. The median net worth for under 35 is $14k. That’s about a 20x difference! Anything that doesn’t split by age is nearly impossible to interpret.

For reference the top 10% net worth splits at about $1.2M, so both of your points are important.

zsmi3• 5 years ago

Isn't this a truism though. If most Americans could get to the top 10% then it wouldn't be the top 10%.

chmod60010• 5 years ago

Then perhaps you should be writing the article, not Robert Frank. As written, the article is worthless except as a way to generate uninformed outrage.

If you have information to share, I have an open mind. I suspect it will be less outragous than the 10%/89% headline, though.

nostromo2• 5 years ago

A large number of Americans will be in the top 10% by income at some point during their life. Edit: I looked it up, and it's actually a majority of Americans (57%) will be in the top 10% at least one year of their life.

As noted, even just selling a house in a random state like Wisconsin can easily put you in that bucket.

Top 10% by wealth is a different story harder to attain. It's frustrating that we pay for things with taxes on income and not wealth, because it hits the upper-middle-class harder than it hits the people with all of the equity.

https://www.aei.org/carpe-diem/evidence-shows-significant-in...

cscurmudgeon• 5 years ago

Data says what you are saying is false.

US is high in social mobility. #27 and improving

https://en.wikipedia.org/wiki/Global_Social_Mobility_Index

bko2• 5 years ago

Some 11% of Americans will join the Top 1% for at least one year during their prime working lives (age 25 to 60), according to research done by Thomas Hirschl, a sociology professor at Cornell University. But only 5.8% will be in it for two years or more.
The same holds true for those lower on the income ladder. While just over half of Americans reach the Top 10% at least once in their careers, only 14% stay in it for a decade or more, Hirschl found. (The minimum income threshold for the Top 10% was $141,000.)

https://money.cnn.com/2016/01/07/news/economy/top-1/index.ht...

rsj_hn2• 5 years ago

That's a myth. There's plenty of data on this. Most American never get anywhere close to the top 10% - not even remotely - regardless of age.

OK, let's take a look, because the GP was arguing about income mobility across different years of a person's life - intra-generational mobility -- not earnings compared to your parents -- inter-generational mobility. That distinction was the key point made. And the GP is basically correct:

From two studies about intragenerational bottom[1] and top[2] income mobility:

* 53.1 percent will have experienced at least one year within the top 10th percentile

* 36.4 percent will have encountered one year within the top 5th percentile

* 11.1 percent will have experienced one year within the top 1st percentile.

* 70% of Americans spend at least 1 year in the top quintile

* 61% of Americans spend at least 1 year in the bottom quintile.

* 42% of Americans experience at least one year in the bottom decile

Summarizing:

"Taken together, these findings indicate that across the American life course there is a large amount of income volatility. Rather than a rigid class structure, the top and bottom ends of the income distribution are fairly porous. This finding provides an interesting and important caveat to the overall story of rising levels of income inequality across the past 40 years." [2]

Note that a key issue when studying mobility is that you need to do it across a few business cycles. If your study is only during an economic expansion, then it's not going to be meaningful, as life changes tend to clustered around contractions and recoveries, and several such episodes are needed. Thus the studies I selected cover 44 year periods. Some of the studies are for 5-10 year periods, and that's really too small.

---

[1] https://www.researchgate.net/publication/271598246_The_Life_...

[2] https://journals.plos.org/plosone/article?id=10.1371/journal...

RickJWagner• 5 years ago

I completely disagree.

I'm in my middle 50s. I have friends who have lived below their means all their lives and invested in wisely-- almost all of these people have sizeable savings now.

I also have friends of my age who did not live below means. They spent what they had and invested almost nothing. Predictably, they have nothing to show.

The system works. It's been foretold in investing books for decades.

Today, we have resources like Bogleheads, Mr. Money Mustache, Dave Ramsey, etc. they all preach the same message, and the message is overwhelmingly truthful.

Accumulating wealth is relatively certain, if you follow the process. There will be rare exceptions, but that's true of most everything.

temp8964• 5 years ago

Yes. This same kind of error also applies to racial comparisons. A large component of racial disparate in income is caused by age gap. One would assume that different races have the same age distribution, but in reality it is not. The difference is huge, see: https://www.pewresearch.org/fact-tank/2019/07/30/most-common...

vmception3• 5 years ago

That's the tip of the iceberg, a lot of privilege and inequality discussion marginalizes younger white people that would otherwise be interested in helping make society more egalitarian. At best, many people get a freedom from some distractions, but the term privilege does not convey that well, which is very counterproductive, so that chart could help a lot!

ricardoplouis• 5 years ago

That's a fair point assuming upward economic mobility in the U.S but statistically speaking it's more likely someone stays rich or stays poor than it is that they move upward into a different bracket entirely

https://www.forbes.com/sites/aparnamathur/2018/07/16/the-u-s...

While it is true that much of the recent wealth in the U.S. is self-made and not entirely inherited. It's also true that a child born poor in this country is far more likely to stay as such than they are to become part of the top 10%.

If we lived in an egalitarian society, then pointing out the wealth of the top 10% might be divisive, but considering that our current wealth inequality is worst than 1774 France, then I believe it's a fairly accurate picture being painted.

https://www.theatlantic.com/business/archive/2012/09/us-inco...

ghostwriter• 5 years ago

It's also true that a child born poor in this country is far more likely to stay as such than they are to become part of the top 10%.

how many of them get to the top 20%, how many more get to the top 30%? in other words, there's no need to be the best basketball player to succeed in life.

but considering that our current wealth inequality is worst than 1774 France, then I believe it's a fairly accurate picture being painted.

wealth inequality is a meaningless measure, as J. K. Rowling increased it the moment she published her first book, and made it even larger with subsequent releases. If you look at the statistics of it, it might look as if she took advantage of her readers by making them financially poorer by the cost of books they bought. Obviously, the stats have no concern of non-monetary value exchanged here, and proclaim wealth inequality instead.

chmod60010• 5 years ago

The Forbes article study is a bit too creative to apply to this discussion:

"Rather than using the more traditional metric of income, this study uses educational attainment as the basis for defining upward mobility."

The Atlantic article seems like more of the same: comparing brackets and ignoring mobility.

btbuildem• 5 years ago

I'll go along with your point. Demographics of the US skew heavily towards the old. If your hypothesis were true, you'd expect to see the wealth distributed roughly with age.

chmod60010• 5 years ago

What hypothesis? The article here doesn't control for some very important factors. I refuse to be outraged until I see numbers corrected for non-outragous factors, like mobility.

spywaregorilla2• 5 years ago

I think you're confusing "income" for "wealth". The wealthiest people are the people with the most assets. You don't pop into the top 10% just by selling a house. That doesn't affect your wealth at all.

The wealthiest do tend to be older because they've accrued wealth over a lifetime, but it's definitely not true that if you're old, you're wealthy.

Wealth is not income, and neither are class.

chmod60010• 5 years ago

You're right that the "ebb and flow" on wealth is much less of a factor than on income, and that I conflated those two.

But not controlling for age is still a major omission. A lot of middle class people are in the top 10% as they near retirement because they've been saving throughout their life. How many? The article doesn't say.

simonebrunozzi• 5 years ago

Whenever I see stats like this that don't account for age, I ignore them. They are worthless.

This, this, 100 times this. I wish I could upvote you 100 times. Yes, exactly that. I agree with you 100% on this.

beckman466• 5 years ago

it's not comparing Americans of different classes. It's comparing Americans at different stages of life. Or just the ebb and flow of income over and individual's life

no, what we should really measure is property, ownership. the richest people pay little to no income. many years ago, before i learned about today's economic system, i remember being impressed upon hearing that Steve Jobs only took a $1 salary. now i know this is just incredibly beneficial tax-wise (along with a bunch of other tricks that aren't available to the non-propertied class).

seriously all this talk about 'measuring income' or whatever is just a distraction from the underlying property systems and relations in our current system.

"In the coming years you’ll read a lot of columns agonising over how to ‘fix’ Silicon Valley. Most will be technocratic, evacuating politics from the discussion. This is, after all, the framing that allowed Silicon Valley to grow so powerful in the first place: a binary choice between technological development on capital’s terms, or remaining stuck in the past. But structural problems require structural solutions. Rather than relying on ‘ethical’ founders or investors to change the system, we need collective action to challenge it.

This will mean undoing the labyrinth of intellectual property rights, which are intended to protect corporations and commodify information. It will mean revisiting the funding model that gave rise to the ‘go-big-or-go-home’ culture responsible for so many wasteful start-ups, shifting away from the return-driven venture capital model, and towards a state-backed social entrepreneurship with public responsibilities.

It will also mean building worker power, within the tech industry and beyond it. Within it, the long-term goal must be a union culture encompassing all workers involved in production. That means not just the highly-paid software engineers but contractors packing boxes for Amazon, or driving for Uber, or cleaning offices in Silicon Valley should all have representation in decision-making structures. And beyond the confines of the industry, a wider-organised labour movement needs to offer resistance to technology being used to facilitate increased worker exploitation through surveillance or regulatory arbitrage.

None of this will be easy, of course. Reclaiming the emancipatory potential of technology will require prying it from the clutches of capital. But that is a worthy fight. If the task of politics is to imagine a different world, then the job of technology is to help us get there. Whether technology is developed for the right ends — for the public good, instead of creating a privatised dystopia — will depend on the outcome of political struggles."

https://tribunemag.co.uk/2019/01/abolish-silicon-valley

dragonwriter3• 5 years ago

While there is a correlation of net worth and age, there is no age band [0] where the median net worth is even 2/3 of the 75th percentile population net worth. [1]

Age is not a major explanatory factor in wealth inequality. (The fact that the mean income in the 35-44 age range is much greater than the median income at the 65-74 age range, that has the highest median of any age range, also underlines this.)

[0] https://www.visualcapitalist.com/visualizing-net-worth-by-ag...

[1] https://dqydj.com/average-median-top-net-worth-percentiles/

YetAnotherNick• 5 years ago

If average family size is 4 and one of the member has stock, even then the stat will be 25% of people hold 100% stock.

ghufran_syed• 5 years ago

Isn’t this logically equivalent to “The most successful 10% of athletes have won 90% of olympic gold medals”?

We’re using their wealth (which naturally includes a lot of stock because it can be held in tax-deferred retirement accounts and has the greatest growth expectation historically) to identify the top decile, then we find that they, err, own a lot of stock. How surprising.

xboxnolifes• 5 years ago

If there was anything interesting with the comparison, it would be to look at the difference between total wealth inequality and stock ownership inequality and see if there was anything that is unexpected. We may expect A group owning 90% of wealth to own 90% of stocks. If this isn't the case, is this surprising? (I don't remember the wealth inequality statistics, so I'm just theorizing here).

yathern2• 5 years ago

You're right, it's similar. It's sort of tautological to say that the 10% wealthiest own more of the wealth. But we're talking specifically about distribution here.

The top 10% could own anywhere between 10% of the wealth, and 100%. If the top 10% own 15% of the wealth, that means everyone's basically in the same boat. If they own 100% - that means 90% of people have nothing, and 10% have everything - sort of like a fiefdom. That doesn't seem great. What's the best for society? Some might think it's when 10% owns 10%, period - as evenly distributed as possible. Maybe - but I don't think I agree. Though it's not likely the 100%/0% hard line.

Anyway - this article is saying that we're getting closer to the 100%/0% direction than ever before. At least in terms of stock ownership. Whether this is a good or bad thing is up to your own interpretation.

tzs• 5 years ago

I've found pretty much every article about wealth inequity useless because they never say anything about what the right level of wealth inequity should be. Without that I have no idea if what the article is reporting is something I should be concerned about, and if it is whether I should be concerned because it is too high or because it is too low.

In any distribution other than one where everyone has equal wealth there must be inequity--that is mathematically unescapable. If there are at least two people who do not have the same wealth, then necessarily the top N% will control M% of the wealth for all M, N with M > N.

svachalek2• 5 years ago

Current levels are basically a fact, subject to gaming like all statistics. But the "right" or ideal level of inequity is a matter of opinion. Personally I think there should be enough inequity to give people an incentive to work harder and take some risks -- but in my experience that doesn't take much at all. If you let the top people have 2X the bottom people, there would still be LOTS of people fighting to be at the top. The other argument for inequity is "fairness", perhaps the people at the top have earned the right to have 10X, 1000X, 1000000X what everyone else has. That's up to you to decide what you think is fair.

GaryTang2• 5 years ago

Love me some top 0.1% propaganda to pin the lower classes against each other. The top 10% have more in common with the median individual than this article makes out. It’s the top 0.1% that are out of control and need to be reigned in.

https://review.chicagobooth.edu/economics/2017/article/never...

yepguy• 5 years ago

Yes, CNBC obviously seized on the number 10% to make it sound like a small number of people, but the top 10% of Americans includes over 25 million people.

If we can't address inequality without inflaming envy then we're better off not addressing it at all. We'll just end up creating more tyranny in the pursuit of ending tyranny.

alexpetralia• 5 years ago

If the wealthiest 10% of Americans own 89% of all U.S. stocks, that means "everyone else" owns the other 11%. That may include other Americans, but what about foreign investors (sovereigns, institutions, etc.)? Surely they own a bunch of U.S. equity? Perhaps the article uses the denominator not of "all U.S. equity" but "all U.S. equity owned by American individuals and institutions".

stevev• 5 years ago

Were they wealthy before owning that much or became wealthy as a result of owning it?

chmod60010• 5 years ago

Maybe 10% of americans are close to retirement age, and have been saving all their life in something called a 401k, which happens to be stock.

That would be ... not very outragous.

Sure, you can say 89% of stocks is too much and there must be other factors at work. But I refuse to be outraged until we control for the non-outragous factors, and see what remains.

Thrymr• 5 years ago

The median 55-64 year old has <70k balance in their 401k, and that is of people who even have a 401k (many don't).

Source: https://www.personalcapital.com/blog/retirement-planning/ave...

chmod60010• 5 years ago

Thank you for providing numbers.

But it takes a bit more effort to combine this number with what the article offers into a coherent point.

If the top 10% has a lot of older workers-and-savers in it, then it's not very outragous.

Your numbers don't answer that very clearly. Are those people who have worked for 40 years? Does it include spouses who may have worked for less time? And how does the median (50th percentile) translate into the 10th percentile, and what's the wealth cutoff for the 10th percentile?

2Xheadpalm• 5 years ago

Nothing to see here, it's working as intended.

cryptica• 5 years ago

The part that concerns me the most is the fact that inequality is the result of a global money-printing ponzi scheme. As most people learn what has happened, the level of bitterness and division is going to be intolerable. What we're seeing now is nothing because most people still don't know what has happened. Even 90% of people on HN don't realize what has happened.

Also, now the system will be forced into hyper-drive. Those who have benefited from the scheme so far will benefit even more; the crony system will need to incentivize its proponents into an increasingly deep trance as the fraudulent nature of the scheme becomes increasingly difficult to ignore. Those who have been harmed by the system will be harmed even more. There will be a tiny percentage of the population living a blissful life of ignorance while resentment grows within the majority of the population. The narratives around everything; politics, the economy and society are going to fall apart. We might actually end up with some kind of anarchy.

kazen442• 5 years ago

also, the inaction on climate change is a catalyst as well. people have been pushed to more extreme political views, because cooperating and sharing the wealth is not in the interest of the wealthy minority.

aerosmile• 5 years ago

How does this metric compare to other countries? Certain European countries I am familiar with don't have a strong emphasis on stocks as a wealth builder (as wrong as I personally think that is), and instead overindex on real estate.

zacherates• 5 years ago

Isn't that because normal people are heavily encouraged to put all their money into buying a house? Culturally ("rent is just throwing money away" / "the stock market is a casino"), with financial incentives (mortgage interest deduction, SALT deduction, Fannie/Freddy insured 30 year mortgages), and quality of life (school districting/social services or lack thereof), we get people to put every dollar they can into buying a house. Or more than one (apparently everyone aspires to be an amateur landlord). Consequently, you need to have a lot of money before you've bought enough house to move onto buying stocks.

If renting and investing were more normalized and encouraged, I'd expect a different ratio of real estate : financial asset ownership.

gandalfian• 5 years ago

So 40% of US stocks are owned by foreigners. 30% by pensions funds? And now 89% owned by the top 10% of Americans making 159% ???

I would guess the correct headline is something like "of the shares held directly by private American individuals the brokerage accounts of the top 10% hold 89% of those shares". Which sounds perfectly plausible.

Does the article writer understand this or are they confused as to the meaning? Is this artical and discussion just gibberish all the way down or is it me whose not understanding?

nathias• 5 years ago

this is how a stale meta looks like

defaultprimate• 5 years ago

The overwhelming majority of adult Americans will spend at least a year in the top quintile.

https://www.aei.org/carpe-diem/evidence-shows-significant-in...

betwixthewires3• 5 years ago

Who says inflation hurts the rich more than the poor? I've been seeing that narrative lately. But the rich have access to hedges, and the poor have politicians who raise the minimum wage only when they have to.

imtringued17• 5 years ago

Inflation encourages people to spend their money on consumption and investments. At 0% inflation the rich just get to keep their money in bank accounts and do nothing with it which helps nobody. Consumer spending and investment creates the need for labor which creates jobs which creates incomes which can then be spent again.

The poor already spend most of their money so they barely lose out but they benefit from the employment opportunities that inflation gives them. Inflation raises the price level for basically everything including wages. This means you need to keep changing jobs frequently but this is mostly because nobody is joining unions to bargain collectively.

If the rich buy stocks and it turns out those companies did a good job at providing goods and services then you didn't lose out at all as a poor person while the rich merely did their job of supporting companies with their money. This is because inflation increases the value of future income streams and good companies tend to have reliable future income streams. If the companies are overvalued and their valuation grew much faster than inflation that just means that there will be a correction and the value of the stock will vanish with that correction. I don't see anything unfair about this.

The real problem is that extracting economic rents distorts economies and drives inequality because the other party cannot refuse. Real estate is a common example. People speculate on the value of the land and sometimes even keep it vacant because they know they get to rip off a future buyer because that buyer needs to live where the jobs are.

betwixthewires3• 5 years ago

So one thing to keep in mind, the pressure to spend due to an inflationary monetary system influences people's behavior; perhaps the poor spend all their money because of inflation. When rent goes up every year and consumer prices increase, of course people who are just making ends meet never get to save.

Perhaps in a disinflationary environment more poor people would save money and there would be more upward mobility. Of course, rich people would use hedges to make more money rather than just hedge against inflation, so that investment wouldn't go away. People that hoard currency lose out in all but a deflationary environment.

Either way the idea that a class of people who take their dollars and put them in deflationary or disinflationary hedge investments lose while a class who keep cash in their mattress (if they're lucky enough to have savings after prices rise) win in an inflationary environment is missing a lot of economic behavior and dynamic and IMO is oversimplified and wrong.

drdec3• 5 years ago

I think that's a proxy for inflation hurts lenders and helps people with debt.

betwixthewires3• 5 years ago

Yes, this is true, but I think the effect is overstated, and an environment where people could save money without it devaluing would have more of a positive effect on those people because they wouldn't need so much debt in the first place. That's my view on this anyway.

jpn• 5 years ago

The rich get richer because their wealth grows exponentially.

throw8383833jj• 5 years ago

Keep in mind, that this statistic doesn't necessarily mean that the top 10% own a lot of wealth. if the bottom 89% owns a total of 10$ worth of wealth then the top 10% isn't doing any better. take all that wealth and calculate what it would be if it was divided by 300 million people and then divide that number by the number of years it takes to acquire that wealth and you'll find, it's not very much wealth at all.

michaelterryio• 5 years ago

The seems very reasonable?

The wealthiest 10% of Americans own a record 89% of all U.S. stocks

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