A Great Time to Be Rich
The richest 10 percent of families held more than three-quarters of America’s wealth in 2013, according to a new report by the Congressional Budget Office (CBO). The entire bottom half, on the other hand, held just one percent.
More simply, the rich continue to get richer, while the poor drown in debt.
Wealth inequality, like income inequality, is a marker of economic health—or ill health. Greater inequality is directly tied to higher rates of poverty, disparate educational outcomes, and lower social mobility—the ability for someone who is born into poverty to earn enough to leave it.
This obviously hurts the people who struggle every day just to make ends meet, but it also leaves the entire economy more unstable and vulnerable to financial crises like the Great Recession.
Household wealth is calculated by totaling assets like real estate, stocks and bank deposits and then subtracting non-mortgage debt like credit card balances, auto loans, and student loans.
Total wealth in the United States doubled between 1989 and 2013, but nearly all the gains went to the people in the top 10 percent, according to the CBO report.
Wealth for the median American family, the family on the very middle of the scale, barely moved, and those at the bottom actually saw their wealth drop, with people in the bottom quarter actually owing an average of $13,000.
While education plays a big role in how much wealth a family has, student loans are among the most significant contributing factors to increasing indebtedness of American families, according to the CBO.
There are many simple ways to address this problem. More progressive taxation, particularly on inheritances and capital gains would help level the playing field and finance a stronger social safety net.
A higher minimum wage—especially a true living wage—would ensure that low income workers get a real share in the wealth that they are helping to create.
And finally, making higher education more affordable would help young people get training for better jobs, breaking the cycle of poverty without asking families to take on a lifetime of student loan debt.
Unchecked inequality is bad for business, hurts working families and imperils the entire economy. It also threatens America’s social contract that says anyone who works hard can achieve the American dream.
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