The richest 3 million Americans have a combined wealth of more than 291 million
America’s current economic woes draw comparisons to the 1980s—another era of skyrocketing inflation, rising interest rates, and jittery financial markets, not to mention a taste for eye makeup.
But most Americans are far worse off financially today than they were three decades ago, according to a new analysis from the Congressional Budget Office.
In 1989, the year The Simpsons first aired, the bottom 50% of Americans held 4% of the country’s total wealth. Thirty years later, their share of wealth has fallen to 2%, the CBO found. As for the middle and upper class – households between 50% and 90% of the income distribution – their share of the pie has fallen from a third three decades ago to 26% in 2019.
In contrast, the top 10% earners have increased their intake and now hold two-thirds of total wealth in the United States, with most of the gains concentrated among the top 1%.
Another way to look at it: the 3 million people who make up the top 1% of Americans are collectively worth more than the 291 million who make up the bottom 90%. The disparity would be even starker if the report only counted marketable wealth and ignored the benefits of defined-benefit payments, such as pensions or Social Security, the CBO noted.
The report was commissioned by Sen. Bernie Sanders, a Vermont independent who has made rising inequality the centerpiece of his two presidential campaigns.
“We live in a society where the people at the top, the billionaire class, are doing phenomenally well, and the workers are falling further and further behind,” Sanders told CBS Mornings.
“There has been a massive redistribution of wealth over the past 50 years,” he added. “We’re talking about billions of dollars going to 1% as the working class and the middle class become poor.”
The country’s changing financial fortunes underscore the deep structural changes in the economy since the United States eased trade, largely eliminated pensions, cut funding for higher education and saw union membership plummet to historically low levels.
Home equity, long a stepping stone for working-class people to achieve upward mobility, played a relatively small role for the wealthiest, according to the CBO. Instead, the biggest contributor to upper-echelon wealth was business capital, investment property, financial securities and inheritance trusts, the CBO found.
For Americans at the 51st to 90th percentile by income, retirement funds such as 401(k) plans or IRAs have grown steadily as a share of wealth since 1989.
For the poorer half, meanwhile, wealth stagnated between 1989 and 2007 and fell during the Great Recession, which wiped out trillions in equity. Since the housing crash, the bottom 25% have also taken on more debt. Today, the bottom 30 million families are each worth less than $18,000, with most having negative net worth, meaning they owe more debt than they have assets.
Largest form of debt: student loans
Thirty years ago, the debt of most of the poorest Americans consisted of mortgages and car loans. Since 2016, however, student loans have become their main source of debt.
Certainly, the nation’s overall wealth has quintupled since the late 1980s. In terms of raw numbers, the poorest half have more than the year the Berlin Wall fell.
But this increase has not translated into a higher standard of living for America’s poorest. Analysis published Wednesday by the Financial Times reveals that while the United States and the United Kingdom have extremely wealthy people, the poorest Americans are worse off than their European counterparts, with a lower standard of living than their counterparts. peers in Belgium, Denmark, France, Ireland or Germany.
“The wealthy in the US are exceptionally wealthy – the top 10% have the highest top decile disposable incomes in the world,” the FT wrote. “But the bottom decile manages with a lower standard of living than the poorest in 14 European countries, including Slovenia.”
“Essentially the US and the UK are poor societies with very rich people,” the FT said.