The good people at Too Much, the online newsletter of Inequality.org have another sobering but powerful article this week. The rather amazing and disturbing finding: the wealth of the average American family is up over the last 25 years, but the wealth of the median family has actually dropped. If this finding leaves you scratching your head, it boils down to the fact that the rich have become so rich that they’re dragging up the overall average even though typical families are faring worse. This is from the article:
The growing wealth of these affluent, the new Fed data show, is driving up America’s average family net worth. But straight averages can mislead — and even deceive. If nine people each have zero net worth and a tenth person holds a fortune worth $10 million, the average person in that 10-person group will be a millionaire.Medians, by contrast, tell us more about how everyday people are truly faring. At the median point, half the people in any distribution have more, half less. In 1989, the new Fed Survey of Consumer Finances details, the median — most typical — U.S. family held $84,800 in net worth, after adjusting for inflation.
In 2013, America’s most typical families held only $81,200, 4 percent less.
In other words, the typical American family is moving economically in reverse, losing wealth. And if we drill down into specific income brackets, the losses in family net worth become even more pronounced.
Families in America’s statistical middle class — the nation’s middle 20 percent of income earners — held a median net worth of $75,300 in 1989. This middle’s median net worth in 2013: $61,700, an 18 percent dropoff.
Up at the nation’s income summit, a different story. America’s top 10 percent of income earners — families that pulled in over $154,600 in 2013 — saw their median household net worth rise 61 percent, to $1,130,700, in the quarter-century that ended last year.
Read the entire article by clicking here.