page_title: Wealth inequality in the United States
section_title: Causes of wealth inequality
hierarchical_section_title: Wealth inequality in the United States / Causes of wealth inequality
caption_attribution_description: English: U.S. median family net worth peaked in 2007, declined due to the Great Recession until 2013, and only partially recovered by 2016.
context_page_description: Wealth inequality in the United States, also known as the wealth gap, is the unequal distribution of assets among residents of the United States. Wealth commonly includes the values of any homes, automobiles, personal valuables, businesses, savings, and investments, as well as any associated debts. The net worth of U.S. households and non-profit organizations was $107 trillion in the third quarter of 2019, a record level both in nominal terms and purchasing power parity. As of Q3 2019, the bottom 50% of households had $1.67 trillion, or 1.6% of the net worth, versus $74.5 trillion, or 70% for the top 10%. From an international perspective, the difference in US median and mean wealth per adult is over 600%.
  Just prior to President Barack Obama’s 2014 State of the Union Address, media reported that the wealthiest 1% of Americans possess 40% of the nation's wealth; the bottom 80% own 7%. The gap between the wealth of the top 10% and that of the middle class is over 1,000%; that increases another 1,000% for the top 1%. The average employee "needs to work more than a month to earn what the CEO earns in one hour."
  Although different from income inequality, the two are related.
context_section_description: Essentially, the wealthy possess greater financial opportunities that allow their money to make more money. Earnings from the stock market or mutual funds are reinvested to produce a larger return. Over time, the sum that is invested becomes progressively more substantial. Those who are not wealthy, however, do not have the resources to enhance their opportunities and improve their economic position. Rather, "after debt payments, poor families are constrained to spend the remaining income on items that will not produce wealth and will depreciate over time." Scholar David B. Grusky notes that "62 percent of households headed by single parents are without savings or other financial assets." Net indebtedness generally prevents the poor from having any opportunity to accumulate wealth and thereby better their conditions.
  Economic inequality is a result of difference in income. Factors that contribute to this gap in wages are things such as level of education, labor market demand and supply, gender differences, growth in technology, and personal abilities. The quality and level of education that a person has often corresponds to their skill level, which is justified by their income. Wages are also determined by the "market price of a skill" at that current time. Although gender inequality is a separate social issue, it plays a role in economic inequality. According to the U.S. Census Report, in America the median full-time salary for women is 77 percent of that for men. Also contributing to the wealth inequality in the U.S., both unskilled and skilled workers are being replaced by machinery. The Seven Pillars Institute for Global Finance and Ethics argues that because of this "technological advance", the income gap between workers and owners has widened.
  Income inequality contributes to wealth inequality. For example, economist Emmanuel Saez wrote in June 2016 that the top 1% of families captured 52% of the total real income (GDP) growth per family from 2009-2015. From 2009 to 2012, the top 1% captured 91% of the income gains.
  Notably, for both the wealthy and not-wealthy, the process of accumulation or debt is cyclical. The rich use their money to earn larger returns and the poor have no savings with which to produce returns or eliminate debt. Unlike income, both facets are generational. Wealthy families pass down their assets allowing future generations to develop even more wealth. The poor, on the other hand, are less able to leave inheritances to their children leaving the latter with little or no wealth on which to build...This is another reason why wealth inequality is so important. Its accumulation has direct implications for economic inequality among the children of today's families.
  Corresponding to financial resources, the wealthy strategically organize their money so that it will produce profit. Affluent people are more likely to allocate their money to financial assets such as stocks, bonds, and other investments which hold the possibility of capital appreciation. Those who are not wealthy are more likely to have their money in savings accounts and home ownership. This difference comprises the largest reason for the continuation of wealth inequality in America: the rich are accumulating more assets while the middle and working classes are just getting by. As of 2007, the richest 1% held about 38% of all privately held wealth in the United States. while the bottom 90% held 73.2% of all debt. According to The New York Times, the richest 1 percent in the United States now own more wealth than the bottom 90 percent.
  However, other studies argue that higher average savings rate will contribute to the reduction of the share of wealth owned by the rich. The reason is that the rich in wealth are not necessarily the individuals with the highest income. Therefore, the relative wealth share of poorer quintiles of the population would increase if the savings rate of income is very large, although the absolute difference from the wealthiest will increase.
  The nature of tax policies in America has been suggested by economists a
caption: U.S. median family net worth peaked in 2007, declined due to the Great Recession until 2013, and only partially recovered by 2016.[64]
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