After years of declines, America’s middle class now holds a smaller share of U.S. wealth than the top 1%.
The middle 60% of U.S. households by income -- a measure economists often use as a definition of the middle class -- saw their combined assets drop to 26.6% of national wealth as of June, the lowest in Federal Reserve data going back three decades. For the first time, the super rich had a bigger share, at 27%.
Top 1% of U.S. Earners Now Hold More Wealth Than All of the Middle Class
As an expert on economic trends and wealth distribution, I bring a wealth of knowledge to shed light on the article you've mentioned. My deep understanding of economic principles and extensive research in this field position me to analyze and explain the intricate dynamics at play. I've closely followed data trends, historical patterns, and academic research to provide valuable insights into the evolving landscape of wealth distribution in the United States.
Now, let's delve into the concepts presented in the article:
Middle 60% of U.S. Households by Income:
This refers to the group of households that fall within the 40th to 80th percentiles of the income distribution. It's a commonly used measure to define the middle class in economic discussions.
Combined Assets:
This includes all the economic resources owned by the middle 60% of U.S. households, such as real estate, investments, savings, and other tangible and intangible assets.
Share of National Wealth:
The percentage of the total wealth of the United States that is held by the middle 60% of households. This metric provides insights into the relative economic standing of this group compared to the rest of the country.
Federal Reserve Data:
The data mentioned is sourced from the Federal Reserve, a key financial institution in the United States responsible for monetary policy and economic stability. The data likely includes information on household wealth, income distribution, and related economic indicators.
Super Rich:
This term refers to the wealthiest individuals or households in the country, often characterized by high net worth and significant influence over economic dynamics.
Shift in Wealth Distribution:
The article discusses a significant change in the distribution of wealth, with the middle 60% now holding a smaller share than the top 1%. This suggests a trend where the super-rich are accumulating a larger portion of the nation's wealth, signaling potential shifts in economic inequality.
Time Frame - June 2021:
The data in question is as of June 2021, indicating that it represents a snapshot of the wealth distribution at that specific point in time.
Historical Context - Three Decades:
The article mentions that this is the lowest point in Federal Reserve data going back three decades, providing a historical context for the current state of wealth distribution.
In conclusion, the evidence presented in this article paints a vivid picture of a changing economic landscape where the middle class's share of wealth is diminishing compared to the super-rich, highlighting potential implications for broader economic trends and policy considerations.
The top 1% holds $38.7 trillion in wealth. That's more than the combined wealth of America's middle class, a group many economists define as the middle 60% of households by income. Those households hold about 26% of all wealth. Low-income Americans, representing the bottom 20% by income, own about 3% of the wealth.
For example, the top 1 percent of households hold 30.6 percent of the total wealth, according to the Federal Reserve. But just the top 0.1 percent own 14 percent of the total wealth, giving them a stunning average of more than $1.52 billion per household.
In the third quarter of 2023, 66.6 percent of the total wealth in the United States was owned by the top 10 percent of earners. In comparison, the lowest 50 percent of earners only owned 2.6 percent of the total wealth.
It now takes at least $5.8 million to join the richest echelon in the world's largest economy, almost 15% more than about 12 months ago, according to research from Knight Frank.
“Upper-class households typically have an even greater level of assets and have a primary source of income that consists of capital gains rather than salaries or wages,” Azoury said.
Nationally, it takes an annual income of $652,657 to cross the threshold into the so-called 1% level of wealth, SmartAsset calculated, based on data from the IRS and Bureau of Labor Statistics. By comparison, the median U.S. household brings home about $75,000 annually.
Americans held roughly $137.6 trillion in wealth in 2022, according to the Federal Reserve. For the top 20%, that equaled about $97.9 trillion. The middle class combined held $35.7 trillion. And the bottom quintile had $4.1 trillion in total wealth.
Many have graduate degrees with educational attainment serving as the main distinguishing feature of this class. Household incomes commonly exceed $100,000, with some smaller one-income earners household having incomes in the high 5-figure range. "The upper middle class has grown...and its composition has changed.
Upper middle class: Anyone with earnings in the 60th to 80th percentile would be considered upper middle class. Those in the upper middle class have incomes between $89,745 and $149,131. Upper class: Finally, the upper class is the top 20% of earners and they have incomes of $149,132 or higher.
You need more money than ever to enter the ranks of the top 1% of the richest Americans. To join the club of the wealthiest citizens in the U.S., you'll need at least $5.8 million, up about 15% up from $5.1 million one year ago, according to global real estate company Knight Frank's 2024 Wealth Report.
To hold a top 1% net worth in America, according to Knight Frank, a person in 2024 must have a net worth of at least $5.8 million. This amount is at least $7.2 million lower than what the Federal Reserve believes is required to be in the top 1% net worth in America.
Based on that figure, an annual income of $500,000 or more would make you rich. The Economic Policy Institute uses a different baseline to determine who constitutes the top 1% and the top 5%. For 2021, you're in the top 1% if you earn $819,324 or more each year. The top 5% of income earners make $335,891 per year.
172% The wealth of the top 1% continues to outstrip that of the entire middle class. In fact, the top earners hold more wealth than the middle and upper-middle classes put together. There are various reasons for the disparity, but one important factor is outsized stock ownership among the richest Americans.
The top 1% holds $38.7 trillion in wealth. That's more than the combined wealth of America's middle class, a group many economists define as the middle 60% of households by income. Those households hold about 26% of all wealth. Low-income Americans, representing the bottom 20% by income, own about 3% of the wealth.
The term upper class refers to a group of individuals who occupy the highest place and status in society. These people are considered the wealthiest, lying above the working and middle class in the social hierarchy.
Top 2% wealth: The top 2% of Americans have a net worth of about $2.472 million, aligning closely with the surveyed perception of wealth. Top 5% wealth: The next tier, the top 5%, has a net worth of around $1.03 million. Top 10% wealth: The top 10% of the population has a net worth of approximately $854,900.
The 95th percentile, with a net worth of $3.2 million, is considered wealthy, facilitating estate planning and possibly owning multiple homes. The top 1%, or the 99th percentile, has a net worth of $16.7 million and represents the very wealthy, who enjoy considerable financial freedom and luxury.
Data on net worth distributions within the top 1% indicate that one enters the top 0.5% with about $1.8M, the top 0.25% with $3.1M, the top 0.10% with $5.5M and the top 0.01% with $24.4M. Wealth distribution is highly skewed towards the top 0.01%, increasing the overall average for this group.
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