The wealthy have gotten wealthier. The rest of America hasn’t.
From 2009 to 2011, the wealthiest 7% of American households (which amounts to around 8 million households) saw their average net worth climb 30%…from $2.5 to $3.2 million. At the same time, the remaining 93% of Americans saw their average wealth fall -4% to $134,000 (according to a Pew Research Center analysis of new Census Bureau data).
And by the end of 2011, the top 7% commanded 63% of the nation’s wealth – up from 56% in 2009.
Those numbers would lead some to say the system is flawed. Or that the rich aren’t taxed enough. But the answer for the widening gap in wealth equality is simpler than that: it’s the stock market and the housing market.
Affluent households typically have more of their assets in the financial markets, while less affluent households tend to have their wealth in the value of their home. High-net worth households derive 65% of their wealth from their investments – and lower-net worth households have 50% of their wealth in their property.
The bull market in stocks and the sluggishness of the housing recovery account for basically all the divergence between the wealthiest 7% and the remaining 93%. Stocks have more than recovered, but housing hasn’t. The widening wealth gap comes down to one simple fact: over the past few years it paid more to be stock-wealthy than it did to be house-rich.