Top 1% Of U.S. Households Hold 15 Times More Wealth Than Bottom 50% Combined

Topline

New data available from the U.S. Federal Reserve shows that the wealth gap in America has widened and economic inequality increased in 2020 amidst a coronavirus pandemic that has disproportionately impacted low-wage service workers and people of color, which coincides with a report published earlier this week showing that global billionaire wealth has concurrently skyrocketed at an unprecedented rate.

Tesla head Elon Musk talks to the press as he arrives to to have a look at the construction site of … [+] the new Tesla Gigafactory near Berlin on September 3, 2020.

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Key Facts

According to the latest Fed data, the top 1% of Americans have a combined net worth of $34.2 trillion (or 30.4% of all household wealth in the U.S.), while the bottom 50% of the population holds just $2.1 trillion combined (or 1.9% of all wealth).

A study published earlier this week by Swiss bank UBS and accounting firm PwC found that the total wealth of the world’s 2,189 billionaires soared to a record-setting high of $10.2 trillion in late July, obliterating the previous record of $8.9 trillion recorded at the end of 2017.

American billionaires have grown significantly richer during the pandemic, led by Elon Musk, who crossed the $100 billion benchmark in August to become the world’s fifth centibillionaire, and saw his wealth increase by 242% over the first eight months of 2020 (Jeff Bezos has added $65 billion to his net worth this year).

A critical factor in the explosion of wealth among a particular segment of the U.S. population has been access and exposure to the stock market.

The Fed estimates that the wealthiest 10% of Americans hold more than 88% of all available equity in corporations and mutual fund shares (with just the top 1% controlling more than twice as much equity as the bottom 50% of all Americans combined).

Key Background:

The numbers have been trending in this direction for a long time. The data provided by the Federal Reserve tracks back to 1989, and it shows that over the past three decades, the top 10% of U.S. households have seen their wealth rise by almost ten percentage points (from less than 61% of all wealth to 69%), while the total wealth controlled by the bottom 50% has been cut nearly in half (from 3.6% to 1.9%). While many middle- and upper-middle-class Americans have been able to work from home and reap the rewards of a robust stock market via their retirement accounts, those near the bottom of the economic ladder have been battered by the Covid-19 pandemic, which has claimed the lives of more than 210,000 Americans and served to exacerbate financial inequalities. Last week, 840,000 people filed new unemployment claims. It’s the sixth consecutive week that new claims have exceeded 800,000. A total of 25.5 million are currently receiving some form of government unemployment benefit.

Tangent:

The wealth gap between races in the U.S. has also continued to expand. According to the latest Fed data, white Americans hold nearly 85% of the nation’s wealth, versus just 4.1% for Black households.

Big Number:

$17,150. That was the median net worth of black households in 2016, according to the Federal Reserve’s Survey of Consumer Finances. The median net worth of a white family in 2016 was $171,000.

Critical Quote:

“If we don’t support people who have lost their jobs, then they can’t pay their bills, and then it ripples through the economy, and the downturn is much worse than it needs to be,” Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, said on Wednesday.