The wealth disparity between upper and middle income Americans has hit a record high, according to a new Pew Research Center Report. On average, today’s upper-income families are almost seven times wealthier than middle-income ones, compared to 3.4 times wealthier in 1984. When compared to lower income family wealth, upper income family wealth is 70 times larger.
It has come to the point where only the top 10 percent of Americans are seeing their wealth grow while the bottom 90 get less and less of the pie each year. The driving force of this wealth chasm are the top 0.1 percent, who have seen their share of the nation’s wealth grow the most over the past decades, from 7 percent in 1979 to 22 percent today. In fact, the top 0.1 percent are now worth more than the entire bottom 90 percent of the U.S. population, according to the report, which adjusts for the shrinking size of the American family so as to enable comparisons across time periods.
The study also assesses what effect the 2008 financial crisis had on wealth distribution. Although the crisis wreaked havoc across all income levels, its effects have been much more enduring for those on the lower end of the economic spectrum. Those at the top have managed to recoup their wealth, while middle and lower income families have not made any gains, according to the Pew report. The stock market, on the other hand, has bounced back, surpassing pre-crisis levels, and Wall Street is doing better than ever.
The magnitude of wealth inequality in the U.S. reflects a broader trend towards increasingly uneven distribution across the developed world. A recent report by Oxfam shows that the top 1 percent in much of the developed world have also seen their share of national wealth grow significantly over the past 30 years.
Although polls show that people are concerned about rising inequality, they also show that people tend to massively underestimate the gravity of the problem. Respondents to a survey conducted in Canada this month believed the wealthiest fifth of Canadians owned 55.5 percent of the wealth. In reality, the richest Canadians own 67.4 percent of national wealth.
Respondents said that in an ideal world, the top fifth would own only 30 percent of the wealth, less than half of what they actually own. In the same vein, a survey conducted here in the U.S. showed that Americans drastically underestimate the CEO-to-worker pay gap. Respondents guessed the average CEO made 30 times as much as the average unskilled worker. In actual fact the CEO-to-worker pay ratio is 354-to-one. Ideally, respondents said, CEOs would make 6.7 times as much as workers.
It seems even if people underestimate the extent of wealth inequality, they still believe that wealth should be more evenly distributed. Two thirds of Americans are dissatisfied with the current configuration of wealth distribution, and roughly the same number of people believe the federal government should play a role in guiding the transition towards a more equitable society.