I stumbled across a bit of data on wealth concentration which I thought worth sharing. Previously I've reported data from the 2007 Survey of Consumer Finances, which was published just about a year ago. The data on Net Worth as reported shows top 1%, next 4%, next 5%, next 40% and bottom 50%:
| Top 1%: | 33.8% | |
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| Next 4%: | 26.6% | Top 5%: | 60.4% | |||
| Next 5%: | 11.1% | Top 10%: | 71.5% | |||
| Next 40%: | 26.0% | Top 50%: | 97.5% | |||
| Bottom 50%: | 2.5% |
Ed Wolff, of NYU, is quoted here as reporting this distribution of Net Worth for 2007:
- Top 1%: 34.6%
- Next 19%: 50.5%
- Bottom 80%: 15.0%
Since the source is a working paper not yet published online, I don't know the underlying data source, but I'm guessing that Wolff might be working with the SCF 2007 data and following up on the statement in Arthur Kennickell's Ponds & Streams, the Federal Reserve Board paper which published the 2007 SCF, that the wealth holdings of the Forbes 400 are omitted from the SCF data, and that Wolff is adding that data both to the top 1% and the aggregate to come up with these data. (If I'm wrong, I'd welcome correction!) If I'm correct, his 50.5% for the "next 19%" indicates that the distribution of Net Worth is roughly as follows:
- Top 1%: 34.6%
- Next 4%: 26.4% Top 5%: 61.0%
- Next 5%: 10.8% Top 10%: 71.8%
- Next 10%: 13.3% Top 20%: 85.1%
- Next 30%: 12.4% Top 50%: 97.5%
- Bottom 50%: 2.5%
Those figures include housing wealth.
The same table which reported that Net Worth data also reports Wolff's findings for Financial Wealth, which he defines as Net Worth minus the [gross] value of one's home:
- Top 1%: 42.7%
- Next 19%: 50.3%
- Bottom 80%: 7.0%
The same article reports some useful measurements of stock ownership -- that is, ownership of shares in publicly held companies, whether directly, through retirement accounts or mutual funds.
- Top 1% own 38.3% of the stocks
- Next 19% own 52.8% of the stocks
- Bottom 80% own 8.9% of the stocks
and
- 48.1% of us owned no stocks in 2007
- 51.9% of us owned some amount of stocks in 2007
- 17.5% of us owned stocks worth less than $10,000 in total
- 31.6% of us owned stocks worth more than $10,000
What do you conclude from this data?
Do you conclude that the bottom 80% of us are simply shiftless folks who must not be working very hard, or stupid folks who don't work very well, or invest what little we save very well, or do you think there might be something else going on? What is it that the bottom 80% of us lack?
Does it seem to you that if only we shift some more of our wealth
to the top 1%, benefits will somehow begin to trickle down to the rest of us, perhaps in the form of job creation by wealthy benefactors?
Does it seem to you that increasing homeownership is (or was ever) the solution to these problems, or do you think we might need to dig deeper to find the root of the problem?
We have permitted a wealth-concentrating machine to be created, sustained and, within the adulthood of the boomer generation, strengthened.
Few understand this machine, but I submit that the first step to understanding it is to read a 130 year old bestseller.
Progress & Poverty begins with the questions "why, despite awesome technological progress which has the potential to wipe out poverty, do we still have poverty?" and "why is wealth so concentrated?" It examines the standard answers to those questions (you'll recognize them all) and finds them wanting. It then sets out to find a more satisfactory answer, and to examine its implications. It proposes a remedy -- the remedy -- and explores what that remedy means for the individual and a society with America's ideals.
If you've never read Progress & Poverty or your acquaintance with it goes back a decade or two, take a look at it in light of these issues. You can read a modern abridgment at http://progressandpoverty.org/, listen to it at http://hgchicago.org/audio/, or get more information at http://www.wealthandwant.com/George_P&P.html
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