By Sylvia Allegretto, The Berkeley Blog
[With select ions from original comment thread ]
Much of the current political and popular discourse has focused on inequalities that exist in the U.S. In particular the Occupy movement has brought the huge disparities in wealth to the forefront. There are a few questions floating around about wealth. First, how skewed is the distribution? Second, it is true that the rich have gotten much richer over time? —a statement I often heard my Grandma make.
Well, there is a plethora of statistics (e.g. here, here, & here) out there but here are two. The share of wealth held by the top fifth is about 87.2 percent while the bottom four-fifths share the remaining 12.8 percent of wealth—so the Occupiers are correct in their assessment. And, the riches of those in the top 1 percent are about 225 times greater than that held by the typical family—it was 125 times in 1962—so, Grandma was correct too.
But, let’s look a bit further. The triennial Survey of Consumer Finances (SCF) is one of the best sources for data on wealth in the U.S. And, of course the Forbes 400 estimates the worth of the wealthiest amongst us—all 400 wouldn’t be captured in the SCF. If we look at both the SCF and the Forbes 400 we can glean some interesting insights.
In 2007 (the most recent SCF) the cumulative wealth of the Forbes 400 was $1.54 trillion or roughly the same amount of wealth held by the entire bottom fifty percent of American families. This is a stunning statistic to be sure.
Upon closer inspection, the Forbes list reveals that six Waltons—all children (one daughter-in-law) of Sam or James “Bud” Walton the founders of Wal-Mart—were on the list. The combined worth of the Walton six was $69.7 billion in 2007—which equated to the total wealth of the entire bottom thirty percent!
BTW the new 2011 Forbes 400 has the inherited worth of these six Waltons at $93 billion. The 2010 SCF data that is slated for release spring of 2012 will almost certainly show a further widening of the wealth gap given that corporate profits, stocks and CEO pay have all recovered while housing values & equity (the lion’s share of wealth for average American’s), wages and family incomes have yet to turn around.
These revelations renewed my interest in the inheritance and estate tax debates. Also, didn’t I just read somewhere that Wal-Mart is substantially rolling back health care coverage for part-time workers and significantly raising premiums for many full-time staff?
We’ve got to get serious about reversing the long term trend of the ever increasing concentration of income and wealth into the hands of a few at the expense of the many. At stake is nothing less than our economy and our democracy.
ABOUT THE AUTHOR
Sylvia Allegretto is a labor economist and deputy chair of the Center on Wage and Employment Dynamics, which is housed at UC Berkeley’s Institute for Research on Labor and Employment. She received her Ph.D. in economics from the University of Colorado, Boulder, and is also a research associate at the Economic Policy Institute in Washington, DC. Allegretto has co-authored several editions of The State of Working America and most recently authored The State of Working America’s Wealth, 2011.
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Select Comments to “The few, the proud, the very rich”:
- Defund the Empire
December 21, 2011, 11:09 pm
I don’t think America can be saved because we are already so far gone into pre-fascist mode and only Obama’s signature is the required finishing touch. Once he signs the new security law we can all be sent to Guantanamo for committing a ” belligerent act ” . How vague is that ?
Does freedom of speech fit the definition of a ” belligerent act “?
Will all public political events require a permit from Homeland Security ? - Robert Roth
December 21, 2011, 6:16 pm
klevine: I never shop at Wal-Mart, and wouldn’t.
guest: It is a myth — that is, false — that half of Americans pay no taxes. See the website of Citizens for Tax Justice and their recent report on corporate taxes. All facts, all true numbers, based on verifiable sources.
All: For the Hanukkah/Xmas Season, I explore the issue of foreclosure, obscene wealth, and the Occupy movement, at healingjustice.wordpress.com.
Thanks, Sylvia, for a great short piece focusing on the essentials. I had heard most of it before but this is a nice presentation. - Henry Tucker
December 21, 2011, 2:34 pm
Interesting to see the Walton family of Walmart on the list; Walmart just reduced healthcare benefits for full time employees and cut them entirely for part time empoyees! Meanwhile they enjoy thir billions! - Ron
December 21, 2011, 12:48 pm
Every time I see the word “wealth” in articles like this, I ask myself, what are they talking about? Dollars, that artificial thing created by the FED? Or are they talking about food, shelter, energy (at its most basic level) values? Likely, they are talking money. So convert all this “wealth” to “food, shelter and energy values” and then you’re comparing apples to apples (after you remove “taxes and government fees” for both categories). Until you do this, you are just propagandizing, like it or not.
And, at most basic levels, if one person has enough food, housing and energy value for a hundred thousand years, and the other person has food, housing and evergy value for not a single day, eventually (even if it takes a thousand years) the one with much will face the one with nothing and the battle will begin without intermediaries.
Finally, inheritances were created precisely to give one’s progeny an advantage over others’ progeny, but history has proven that inheritances merely weaken the progeny and strenghtens the fraudulent class (yes, it exists directly below the inheritance group). Man still struggles with this and will struggle with it for a while longer, but because this planet is now limited in its expansionist capability regarding progeny, the struggle will no last too much longer.
Technology is evenning the scales of economics–no one believes in the “magic” of knowledge any more, so the scales of slavery are falling as we speak. Yes, it still exists, but its strength as a socially acceptable form is falling apart around the globe. Hunger is omnipotent. Thirst is omnipotent. Shelter (and warmth) are omnipotent. Money is not. - David Lathrop
December 21, 2011, 11:15 am · Reply
This article does a great disservice by equating “net worth” with “wealth”. It implies that someone with $10 in their pocket is “wealthy,” just “less wealthy” than others. This is exactly the same as saying “some men are just more equal than others.”
Most people have a paycheck with some “assets” that allow them to survive (hopefully) until the next paycheck. This income is subject to payroll and other taxes and withholdings. The “assets” are usually the basics for survival, food, clothing and shelter, and really are cost centers, liabilities and family infrastructure in disguise; they cannot be easily or practically liquidated without distrupting the family that owns them. A natural disaster, traffic accident, medical condition or work place accident can wipe out these families. In fact, anything that disrupts the cycle of steady paychecks may bankrupt the family. This is not “wealth;” it’s just a low net worth.
True wealth is having real assests that produce diversified income so you don’t have to work, or worry about your standard of living being compromised by individual incidents or local economic conditions. The Walton’s have wealth. They don’t eat or sleep in a Wal-Mart store–these provide their income. And if an individual store burns to the ground, is hit with a flood or tornado, or the city it’s in turns into a ghost town, it will hardly merit a footnote in the family’s financial statements. The family could sell half their stores and still maintain their standard of living.
So don’t equate “the total wealth of the entire bottom thirty percent” of Americans with the “the combined worth of the Walton six.” This is worse than apples and oranges, its a figment versus an understated quantity.
The real disparity is the inability of someone in the bottom thirty percent to transition into the “wealthy” catagory. This requires having or generating enough discretionary income to be able to convert some of their paychecks into investments. If you have to work two jobs just to make ends meet, you don’t have time, energy or money to invest in anything. If you’re out on the street looking for any kind of work you can find you can’t invest in the future.
I would be more interested in seeing a comparison of disposable income between the bottom 70% versus the Waltons. That would be more meaningful.
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