The poor getting power in U.S. - typical household is now worth a third less
By Catholic Online (NEWS CONSORTIUM)
7/27/2014 (2 years ago)
Catholic Online (www.catholic.org)
The rich get richer - and the poor have children. But seriously, folks, the poor is getting even poorer in the United States. Recovery from the last big recession in 2007, hasn't really taken off as of yet. Recent studies show that the average American households is now worth a third less than it used to be - talk about economic inequity!
The old saw goes that when only a few people are winning and more than half the population is losing, surely something is amiss.
LOS ANGELES, CA (Catholic Online) - A recent study found that inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, a substantial 36 percent decline. According to a study financed by the Russell Sage Foundation, these figures are for households at the median point in the wealth distribution, which is the level at which there are an equal number of households whose worth is higher and lower. But the rich did indeed get richer -- during this same period, the net worth of wealthy households increased substantially.
The Russell Sage study also examined net worth at the 95th percentile. For households at that level, 94 percent of the population had less wealth and 4 percent had more.
The study found that for this well-do-do slice of the population, household net worth increased 14 percent over the same 10 years. Economists like Edward Wolff at New York University, has shown even greater gains in wealth for the richest one percent of households.
Therefore, households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007.
Previously, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier.
"The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001," Fabian T. Pfeffer, the University of Michigan professor says. Pfeffer was the lead author of the Russell Sage Foundation study.
The reasons for these declines are complex and controversial. The old saw goes that when only a few people are winning and more than half the population is losing, surely something is amiss.
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