Median family wealth fell 36% in a decade
If I had to pick one number that the 2014-midterm elections ought to be about, it would be 36 percent. That is how much the
If I had to pick one number that the 2014-midterm elections ought to be about, it would be 36 percent.
That is how much the wealth of the median family shrunk during the Great Recession. One-third.
The number that has symbolized the Great Recession, of course, is the “one percent.” In the early 2000’s, the top one percent of earners acquired about 20 percent of all income in the country, the highest slice since the Roaring Twenties.
Occupy Wall Street and other populists grabbed on to that as their slogan. It’s a troubling icon of inequality, which President Barack Obama said in December is “the defining challenge of our time.”
But the swelled blessings of the one percent actually don’t have great workaday relevance to mere mortals down the financial food chain.
But 36 percent does.
New research by the Russell Sage Foundation and the Stanford Center on Poverty and Inequality looks at how the Great Recession affected wealth in this country – and the inequality of wealth. In some ways, wealth is a more significant measure than income, because wealth has more to do with how future generations will fare.
In 2003, the median family wealth was $87,992. It rose to $98,872 in 2009. In 2013, median family wealth was $56,335 – a decline of 36 percent in a decade.
By contrast, for those in the 95th percentile, incomes grew by 14 percent, from $1,192,639 in 2003 to $1,364, 834 in 2013.
Economic inequality, of course, increased greatly in that period.
Families in the top five percent held 13.6 times more wealth than the median household. That ratio swelled to 24.2 by 2013.
More worrisome, the trends go beyond the recession.
This new study found that median family wealth declined about 20 percent from 1984 to 2013. Families in the 25th percentile lost 60 percent of family wealth in that period.
Families in the 95th percentile saw their wealth nearly double.
‘The American economy has experienced rising income and wealth inequality for several decades, and there is little evidence that these trends are likely to reverse in the near term,” according to the study.
Economic inequality presents different moral and policy challenges and declining financial conditions for average families.
Libertarians and staunch conservatives argue that government has no business trying to tinker with the distribution of wealth and income. An efficient, unshackled free market coupled with a minimalist safety net yield the optimal distribution.
Liberals and those on their left, call them progressives or populists, see gross inequality as immoral and as a source of political instability.
No one defends the decline in economic conditions of families outside of the elite, however.
But despite lots of vague rhetoric from both parties about the declining middle class, there isn’t much debate about practical responses.
Philosophically, conservatives think the answer is freer markets, less regulation and less taxation
Liberals would boost access to education, training and affordable health care and housing.
But in this election season, the debate remains purely philosophical. When families in the middle have lost a third of their wealth in a decade, that is more of a scandal than the ones politicians are busy arguing about.