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Bridges Update, 06-17-10
The impact of the Great Recession on wealth and income distribution is beginning to show up in published research. The time delay is often 2-3 years; after one group of experts gathers the basic data and verifies its accuracy, another group then analyzes it before publishing the results. So we’re just now beginning to see what has happened to people in different economic classes.
Wealth and income have different definitions. Wealth is usually defined as the value of the marketable assets (house, stocks, savings) an individual or family owns, minus any debts (mortgage, credit card debt). Income is what people earn from employment, stock dividends, interest on savings, or rent on properties they might own. Theoretically, people with great wealth might not have high incomes, but in reality, those at the very top of wealth distribution usually also have the most income. As of 2007, the top 1% of households owned 34.6% of all privately held marketable assets; the next 19% of households owned 50.5%. That means that just 20% of American households owned 85% of all wealth, leaving only 15% of the wealth for the bottom 80% of all households.
The first projections are based on the price of housing and stock in July, 2009. The last few years have seen a huge loss in housing wealth for most families, making the gap between the rich and the rest of America even greater, and increasing the number of households with no marketable assets from 18.6% to 24.1%. most Americans have been hit much harder in both wealth and income than the top 1% of American households. In a March, 2010, article, Dr. Edward Wolff of Bard College writes that the median household has experienced an “astounding” 36.1% drop in marketable assets since the 2007 peak of the housing bubble; in contrast, the wealth of the top 1% of households dropped by just 11.1% (http://www.levyinstitute.org/pubs/wp_589.pdf),.
The top 10% of all households own 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate; the top 20% have 84% of all marketable assets. G. William Domhoff, who has researched the relationships between wealth, income, and power, bluntly states, “Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America …the United States is a power pyramid. It’s tough for the bottom 80% - maybe even the bottom 90% - to get organized and exercise much power.” (http://sociology.ucsc.edu/whorulesamerica/power/wealth.html).
Sobering numbers…and a challenge to those of us committed to building bridges across economic class lines – especially those of us who fall in the bottom 80-90%. Perhaps we have been given a gift: the broader context in which people in middle class and people in poverty are in the same boat when it comes to social and economic policy!
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