Recovery is relative
The rich are getting richer and the poor are getting poorer.
Surprised to hear this from me? Think I’m a mouthpiece for the rich? Although I do defend the rich when folks want to make them synonymous with all that is evil in the world and wrong in this country, or when folks want the rich to pay for everything the non-rich want, I’m pretty sure I’m not a mouthpiece.
Besides, in this case, I’m just stating the facts as reported in the September 2014 Federal Reserve Bulletin. Facts such as these: the wealthiest 5% of American households owned 63% of all assets in the country as of 2013, up from 54% in 1989; and the bottom 50% of American households owned just 1% of all assets in the country as of 2013, down from 3% in 1989.
The same bulletin also reported that between 2010 and 2013 the average family income went up 4 percent while the median income fell 5 percent. For those of you who don’t remember statistics that would indicate the rich got richer and the poor (relatively) got poorer. This reversed a trend from 2007-2010 where the spread of wealth narrowed.
What I read into this is that the rich have recovered from the financial crisis while the majority of Americans have not. What’s really bad is that during that earlier 2007-2010 period, the poor lost ground when it came to income, and they continue to slide ever more downward in this recent survey.
The trend continues when looking further into other income stats. The middle- and upper-middle classes have seen incomes go nowhere lately. Given that they suffered losses earlier on, they are still behind where they were before the financial crisis. Folks in the upper 10% of incomes saw substantial income gains lately, though they too are below where they were coming into the crisis (albeit, not near as low as all the other groups).
On the investment side of things, stock values were up (pretty sure I didn’t need to read the report to know that), but the numbers of people owning them were down. This was especially prevalent in the lower half of income earners. This means that stocks are less broadly held than before, are starting to concentrate with the upper income folks, and have made them a lot of money. They are the ones who didn’t have to sell their stock holdings to survive and thus were rewarded during the recovery.
They had a better chance of keeping their house as well.
Though there is some recent indication the trend is reversing, this 2010-2013 period saw all income levels decreasing their debt load with more and more paying off their credit cards.
Although the Federal Reserve bulletin was a bit more dry than most, it was worth reading in order to step back and see what’s happening to families in this economic recovery.
This article was published under the title "Trend: rich are, in fact, getting richer" in the Wichita Falls Times Record News on December 7, 2014.