Recent figures released by the Federal Reserve Board once again verify the shameful growing wealth inequality in the United States.
Below is a table derived from the Federal Reserve Board figures showing the share of the country’s total net wealth (value of assets minus liabilities) held by the wealthiest 1%, the wealthiest 10%, the poorest 90%, and the poorest 50% of the population. The figures are for the first quarter and last quarter of each president since 1989. For W. Bush, the last quarter of 2007 is included to show the impact of the recession.
As can be seen in the table, policies during both Republican and Democrat administrations resulted in increases in the share of the nation’s total wealth held by the wealthiest 1% with a tiny gain so far under Trump [see discussion below.]
The wealthiest 1% held 23.3% of the nation’s total wealth in 1989. That amount grew to 31.1% as of the first quarter of 2019. The share of the wealthiest 10% that includes the top 1% went from 60.8% to 70.1% meaning that over 80% of the increase in the share of the top 10%’s net wealth ended up in the pockets of the top 1% with most presumably going to the wealthiest among the top 1%.
These figures also indicate that the poorest 90% of the U.S. population share of the country’s net wealth declined during this period from 39.2% to 29.9% for a drop of almost 25%. Furthermore, starting during the Obama administration in 2014, for the first time since 1989 (see Fed figures,) the share of the wealth held by the richest 1% exceeded the amount held by the poorest 90% of the U.S. population.
The part of the 90% who make up the poorest 50% from 1989 until the first quarter of 2019 experienced an even greater drop in their share of the country’s net wealth as it went from 3.6% to 1.3%, a drop of over 63%.
Strikingly, during the entire period from 2010 through 2012, the share of net wealth held by the poorest 50% was at times negative and never exceeded
one-tenth of one percent, and fell to as low as minus .2% in the second quarter in 2010. This meant that at that time, had the poorest 50% been able to sell all of their assets and used the proceeds to pay off their debts, using the fed’s figures, they would have still owed $140 billion. What must have been the key factor accounting for this situation was that the value of their real estate (for most, their homes,) was at $2.63 trillion while their home mortgages were $3.68 trillion—meaning their real estate holdings in 2010 were over one trillion dollars underwater.
By the first quarter of 2019, the poorest 50% held real estate valued at $3.6 trillion while their home mortgages stood at $3.13 trillion for a net value of $.47 trillion. That is a turn-around in the net value of real estate of about $1.5 trillion that helped to bring their overall net positive wealth to $1.3 trillion.
To show the net wealth differences between the richest and the poorest people in the U.S., here are the holdings of different parts of the population as of the first quarter of 2019, and the average held by each individual member using 330 million as the U.S. population:
This shows that the average person in the top 1% holds net wealth that is worth 1,200 times the net wealth of an average person among the poorest 50% of the U.S. population.
Wealth Inequality From Obama Through the First Part of the Trump Regime
Using the current figures, during Obama’s eight years, the share of net wealth held by the top 1% went from 26.4% in Obama’s first quarter to 30.8% in the last quarter of his time as president. These figures showed such a large increase [4.4%] presumably due to the recession continuing during the start of Obama’s presidency and later “recovery” that was favorable towards the rich.
The height of the holdings of the 1% during the Bush regime stood at 29.4% in 2007. Perhaps, a fairer figure to use to show the increase in the share of the 1%’s wealth during Obama’s time would be to use the highest Bush figure compared to the ending Obama figure which shows an increase of 1.4% [30.8-29.4] instead of 4.4% [30.8-26.4.]
By contrast, the share of the net wealth held by the wealthiest 1% during Trump’s time in office, from the first quarter of 2017 until the first quarter of 2019, went up a minimal percent from 31% to 31.1%. (It was as high as 31.6% during two quarters in this period.)
Why Such a Small Increase During Trump
This small increase does not appear reasonable since so much of what has been happening during Trump’s time, such as growth in the value of stocks and the new tax law, has largely benefitted the rich.
The top 1% has owned about 50% of all corporate equities and mutual funds during Trump’s time meaning they can be assumed to reap major gains when the value of these assets increases. The Dow Jones Index was up over 17% and the Nasdaq even higher, 22%, by the end of Trump’s first two years despite being down in 2018. Both stock indexes shot up during the first quarter of 2019 with the Dow Jones Index up over 11% and the Nasdaq by 15% from where they stood at the end of 2018.
Additionally, unlike those with low incomes who use most, if not all, of their income paying for housing and other goods and services, the super-rich invest large shares of their income.
The share of all income going to the top 1% has generally been growing. According to the Fed, it went from 16.48% of all income in 1989 to 23.8% in 2016.
Furthermore, according to a 2017 Fed report covering through 2016:
“The distribution of income and wealth has grown increasingly unequal in recent years…. Data from the 2016 SCF [Survey of Consumer Finances] indicate that the shares of income and wealth held by affluent families have reached historically high levels since the modern SCF began in 1989.”
There is nothing to suggest that the trend of growing wealth and income equality has not continued during the Trump regime.
However, (see following table) in order for the share of total wealth held by the richest 1% to increase, the percent of their share of additional wealth must be higher than their current share of total wealth. From the first quarter of 2017 until the first quarter of 2019, the total measured wealth of the U.S. increased by
$10.81 trillion with the top 1% gaining 32.65% of it. This percent is only 1.65% higher than their share of total wealth in the first quarter of 2017. By contrast are periods when their share of total wealth was expanding. In the third quarter of 1989 their share stood at 23.3%. From then until the first quarter of 2000, total wealth more than doubled increasing by $21.81 trillion with the 1% getting 33.65% of it, much higher than the share of their holdings in 1989, boasting their share of total wealth by more than 5% to 28.7%.
What Could be Done with 10% of the 1%’s wealth, or $3 Trillion?
Just 10%, about $3 trillion, of the wealth currently held by the top 1% being taxed or confiscated could be used to enable many others to have a more decent standard of living. In 2018, the government estimated the number of homeless people at 552,830. $3 trillion comes to over $5.4 million per homeless person, an amount that could provide them with a luxurious lifestyle while having no or little impact on the consumption of the super wealthy.
$3 trillion could provide the roughly 40 million impoverished citizens with $75,000 each. With $3 trillion, student debt could be eliminated and there would still be about $1.5 trillion left over to repair the country’s infrastructure or to build three million units of housing costing $500,000 each. The United States Department of Agriculture estimated that over 40 million people in the United States suffered from food insecurity in 2017. To provide each of these people $15 of food per day would cost less than $219 billion which is less than 8% of $3 trillion.
Elizabeth Warren’s Proposed Tax on the Rich
In her presidential campaign, Elizabeth Warren is calling for implementing a tax on the wealth of the holdings of the rich that are over $50 million. If she is successful, the tax will raise an estimated $2.75 trillion over ten years that will be used for needed social programs including universal childcare and pre-kindergarten, free tuition at public colleges, the elimination of most student debt, and to help pay for Medicare for all. Good that such a wealth tax is being proposed, but it inadequately addresses wealth inequality.
Using recent figures from the Federal Reserve Board, during the previous ten years, the total wealth of the top 1% increased from $14.08 trillion to $31.91 trillion, or by over $17 trillion. If the growth in their wealth continues to rise at this rate, Warren’s tax would come to less than 16% of the increase in their wealth, not touching their current wealth.
If one prefers to put aside the impact of the recession, the highest wealth level of the 1% during the Bush regime stood at $19.08 trillion in the third quarter of 2017. Warren’s tax on the wealth of the superrich comes to less than 22% of the increase in their wealth since then. If current patterns hold, the impact of Warren’s proposed tax on the degree of inequality would presumably be minimal.
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When considering the pressing needs of humanity for a clean environment, for food and water, for housing, for medical care and other basic needs, the continuation of a gross level of inequality should be viewed as an ongoing crime against humanity. Shouldn’t a limit be placed on how much wealth one can possess as long as millions of peoples’ endure an inability to obtain what is necessary to fulfill their basic needs?
1) All of the cited figures, unless otherwise noted, can be found at: https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/#quarter:118;series:Liabilities;demographic:networth;population:1,3,5,7;units:levels
Note that this cite provides one with many options. One can choose between distribution, table, or comparison. There is a drop down box in which one can choose wealth, assets or liabilities and additionally more specific details about the latter two categories. One can further choose among two buttons for the amount of money ( level,) or shares percent. ↑
2) One result of downturns in the economy can be a temporary reduction in inequality and the share of the holdings of the wealthiest. ↑
3) There are huge differences in holdings among those in the top 1% with the wealth of Amazon owner Bezos being more than six thousand times greater than one at the bottom of the top 1%. Bezos net worth was recently estimated by Forbes to be $117.8 billion after the transferring of over $36 billion of his wealth to his ex-wife. Even after the transfer, he is estimated to be worth $13 billion more than Microsoft founder Bill Gates.
University of California at Berkeley professors Saez and Zucman analysis of the concentration of wealth : “…shows that the top 0.1% wealth share has increased dramatically from about 7% in the late 1970s to around 20% in recent years.” That means the wealthiest one-tenth of the wealthiest 1% possess anywhere from more than one-half to almost two-thirds of the holdings of the wealthiest 1% depending on which Federal Reserve figures one uses. (see next endnote) In other words, the level of inequality among the richest 1% is comparable to the level of inequality between the 1% and everyone else in the United States. ↑
4) The current Fed figures on inequality show major differences with their previous figures. The previous figures indicated significantly much greater net wealth inequality. Below are the Fed’s previous figures (calculated annually) compared to the latest figures (using the lowest quarter in the particular year.)
For the poorest 50%, the figures in the current Federal Reserve table are also at odds with their previous figures using the highest quarter in the recent figures. Noteworthy is that the recent figures show an even more dramatic decline in the share of net wealth held by the bottom 50%.
5) See Box 3 at https://www.federalreserve.gov/publications/2017-september-changes-in-us-family-finances-from-2013-to-2016-accessible.htm ↑
6) Some claim that to take from the super-wealthy is wrong. How many of them acquired their wealth through their own efforts? Much resulted from the labor of others and the resources taken from others generally allowed under our legal system. A comment attributed to Balzac is that behind every great fortune lies a great crime. Even if only partially true, there has been enough crimes committed by those with great fortunes that one should not lose any sleep over reversing their ability to accumulate more wealth at the expense of others. This “crime” against the superrich will not in the least crimp their lifestyle and is even acceptable to some of them.
From a letter written by 19 of the super-wealthy cited at: https://www.factcheck.org/2019/06/facts-on-warrens-wealth-tax-plan/
“We are writing to call on all candidates for President, whether they are Republicans or Democrats, to support a moderate wealth tax on the fortunes of the richest 1/10 of the richest 1% of Americans — on us,” [the letter reads.] “America has a moral, ethical and economic responsibility to tax our wealth more. A wealth tax could help address the climate crisis, improve the economy, improve health outcomes, fairly create opportunity, and strengthen our democratic freedoms. Instituting a wealth tax is in the interest of our republic.” ↑
7) See https://www.factcheck.org/2019/06/facts-on-warrens-wealth-tax-plan/ quotes from it:
“Under Warren’s wealth tax plan, households would pay an annual 2% tax on all assets — net worth — above $50 million, and a 3% tax on every dollar of net worth above $1 billion.”
“University of California, Berkeley, economists Gabriel Zucman and Emmanuel Saez, who study wealth inequality, say Warren’s tax would fall on about 75,000 U.S. households (less than 0.1%) and would raise around $2.75 trillion over 10 years.”