What is the Net Worth of the Bottom 50% ?

The President’s remarks at the recent State of the Union aroused my curiosity:

Since my election, the net worth of the bottom half of wage earners has increased by 47 percent — three times faster than the increase for the top 1 percent.

Questions:

This prompted the following questions:

  1. So, what is the average net worth of the bottom 50% of Americans?
  2. How has the average net worth of the bottom 50% changed over time, adjusted for inflation, starting around 1970?
  3. For extra bonus points, can you compare that to data on the top 1%?

Follow-up:

This sounds like it would make a good story for  The Indicator from Planet Money.

Distribution of Household Wealth in the U.S. since 1989

 

Distribution of Household Wealth in the U.S. since 1989

Units
 

Wealth by wealth percentile group

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Date Top 1%
(US$ Trillions)
90-99%
(US$ Trillions)
50-90%
(US$ Trillions)
Bottom 50%
(US$ Trillions)
1989:Q3 4.88 7.56 7.23 0.76
1989:Q4 5.03 7.68 7.30 0.80
1990:Q1 5.02 7.68 7.47 0.79
1990:Q2 5.09 7.80 7.48 0.81
1990:Q3 4.91 7.77 7.54 0.81
1990:Q4 5.15 7.83 7.66 0.82
1991:Q1 5.44 7.90 7.77 0.91
1991:Q2 5.39 7.92 7.80 0.94
1991:Q3 5.49 7.91 8.00 0.92
1991:Q4 5.77 8.06 8.12 0.98
1992:Q1 5.72 8.10 8.24 0.97
1992:Q2 5.69 8.16 8.32 0.95
1992:Q3 5.74 8.28 8.46 1.00
1992:Q4 6.06 8.37 8.69 0.95
1993:Q1 6.27 8.46 8.69 0.97
1993:Q2 6.38 8.46 8.83 0.97
1993:Q3 6.55 8.52 8.97 0.98
1993:Q4 6.77 8.59 9.07 0.99
1994:Q1 6.80 8.74 8.99 1.04
1994:Q2 6.83 8.83 9.03 1.03
1994:Q3 6.97 8.89 9.18 1.01
1994:Q4 7.09 8.97 9.24 0.94
1995:Q1 7.36 9.09 9.34 0.97
1995:Q2 7.62 9.16 9.46 1.04
1995:Q3 8.00 9.22 9.60 1.06
1995:Q4 8.17 9.53 9.71 1.13
1996:Q1 8.26 9.79 9.83 1.22
1996:Q2 8.32 9.97 10.04 1.19
1996:Q3 8.30 10.09 10.23 1.17
1996:Q4 8.56 10.38 10.38 1.23
1997:Q1 8.53 10.51 10.47 1.26
1997:Q2 9.08 10.94 10.81 1.28
1997:Q3 9.48 11.27 11.09 1.31
1997:Q4 9.60 11.48 11.19 1.34
1998:Q1 10.29 11.98 11.60 1.36
1998:Q2 10.47 12.22 11.86 1.32
1998:Q3 9.96 11.95 12.03 1.26
1998:Q4 10.85 12.67 12.41 1.33
1999:Q1 10.86 12.89 12.55 1.37
1999:Q2 11.23 13.32 12.71 1.42
1999:Q3 10.99 13.28 12.83 1.43
1999:Q4 12.18 14.04 13.49 1.44
2000:Q1 12.59 14.56 13.86 1.45
2000:Q2 12.19 14.59 13.97 1.43
2000:Q3 12.34 14.77 14.32 1.41
2000:Q4 11.79 14.72 14.37 1.43
2001:Q1 11.35 14.69 14.67 1.41
2001:Q2 11.71 15.19 14.97 1.43
2001:Q3 11.03 14.86 15.05 1.32
2001:Q4 11.73 15.35 15.34 1.44
2002:Q1 11.91 15.61 15.58 1.40
2002:Q2 11.47 15.67 15.38 1.37
2002:Q3 10.79 15.40 15.25 1.40
2002:Q4 11.28 15.73 15.63 1.38
2003:Q1 11.26 15.89 15.68 1.36
2003:Q2 12.17 16.49 16.08 1.29
2003:Q3 12.54 16.75 16.47 1.17
2003:Q4 13.33 17.48 16.83 1.33
2004:Q1 14.32 18.29 17.48 1.25
2004:Q2 14.55 18.48 17.90 1.16
2004:Q3 14.87 19.01 18.08 1.30
2004:Q4 15.83 19.78 18.83 1.24
2005:Q1 15.93 20.38 18.89 1.35
2005:Q2 16.36 21.07 19.12 1.45
2005:Q3 16.90 21.70 19.56 1.46
2005:Q4 17.36 22.22 20.14 1.41
2006:Q1 18.23 23.16 20.03 1.45
2006:Q2 18.08 23.30 20.10 1.35
2006:Q3 18.47 23.59 20.40 1.29
2006:Q4 19.11 24.06 20.64 1.37
2007:Q1 19.49 24.68 20.50 1.40
2007:Q2 19.79 24.96 20.47 1.38
2007:Q3 20.07 25.21 20.61 1.26
2007:Q4 19.83 24.99 20.40 1.21
2008:Q1 18.99 24.60 19.73 1.17
2008:Q2 18.46 24.28 19.70 0.84
2008:Q3 17.59 23.76 19.09 0.65
2008:Q4 15.88 22.90 18.56 0.72
2009:Q1 14.96 23.14 17.79 0.94
2009:Q2 15.57 23.20 18.23 0.71
2009:Q3 16.50 23.84 18.48 0.54
2009:Q4 16.93 23.41 18.83 0.52
2010:Q1 17.27 24.14 18.93 0.40
2010:Q2 16.99 23.96 18.87 0.22
2010:Q3 17.93 24.56 19.15 0.35
2010:Q4 18.79 24.82 19.58 0.47
2011:Q1 19.28 25.33 19.78 0.29
2011:Q2 19.53 25.49 19.94 0.22
2011:Q3 18.30 25.16 19.65 0.27
2011:Q4 18.89 25.39 20.00 0.43
2012:Q1 19.80 26.23 20.27 0.39
2012:Q2 19.63 26.35 20.37 0.29
2012:Q3 20.41 26.89 20.78 0.44
2012:Q4 20.75 27.14 21.20 0.40
2013:Q1 21.84 28.14 21.60 0.64
2013:Q2 22.05 28.65 21.92 0.66
2013:Q3 23.03 29.19 22.80 0.67
2013:Q4 24.08 29.76 23.44 0.70
2014:Q1 24.67 30.45 23.64 0.72
2014:Q2 25.43 30.97 24.00 0.80
2014:Q3 25.45 31.30 24.03 0.81
2014:Q4 26.36 31.73 24.42 0.83
2015:Q1 27.07 32.47 24.67 0.91
2015:Q2 27.09 32.74 24.73 0.96
2015:Q3 26.32 32.56 24.68 0.92
2015:Q4 27.10 32.72 25.30 0.92
2016:Q1 27.27 33.29 25.43 1.00
2016:Q2 27.70 33.98 25.53 1.12
2016:Q3 28.58 34.57 26.01 1.13
2016:Q4 29.18 34.59 26.53 1.08
2017:Q1 29.96 35.31 27.14 1.07
2017:Q2 30.51 35.84 27.49 1.21
2017:Q3 31.34 36.44 28.05 1.23
2017:Q4 32.51 37.05 28.78 1.19
2018:Q1 32.46 37.52 28.97 1.28
2018:Q2 32.99 38.13 29.35 1.41
2018:Q3 33.80 38.93 29.82 1.46
2018:Q4 31.54 37.73 29.54 1.34
2019:Q1 33.80 39.29 30.60 1.43
2019:Q2 34.47 39.93 30.75 1.63
2019:Q3 34.53 40.12 30.90 1.67

Note: Distributions by generation are defined by birth year as follows: Silent and Earlier=born before 1946, Baby Boomer=born 1946-1964, Gen X=born 1965-1980, and Millennial=born 1981-1996.

 

Blue collar boom? College grads, baby boomers big winners in Trump’s economy

WASHINGTON (Reuters) – U.S. President Donald Trump rolled out an eye-catching statistic in his State of the Union address Tuesday: the wealth held by the poorest half of American households increased three times as fast as the wealth held by the “1%” since he became president.

That’s true, according to Federal Reserve data.

On average, Americans have seen a 17% jump in household wealth since Trump’s election, while wealth at the bottom half has increased 54%.

“This is a blue collar boom,” Trump also said Tuesday. That’s less apparent. The biggest winners on a dollar basis were a familiar group – whites, college graduates, and people born during the “baby boom” between 1946 and 1964.

Since December 2016, President Barack Obama’s last full month in office, aggregate household wealth has increased by $15.8 trillion, but the vast majority went to groups that have tended to accumulate wealth in the past.

Even with a 54% increase in their household wealth under Trump, the poorest half of American households, around 64 million families, still have just 1.6% of household “net worth.”

HALF OF AMERICA

Net worth combines the value of assets like real estate and stocks and subtracts liabilities like mortgage loans and credit card balances.

Because America’s bottom 50% are starting from such a small base, given the enormous disparities in wealth in the United States, even large moves in their fortunes do little to dent the overall distribution. In dollar terms as of the end of September 2019, that latest data available from the Fed, the combined net worth of the poorest half of families was $1.67 trillion out of total U.S. household wealth of $107 trillion.

Here is what the Fed’s Distributional Financial Accounts have to say:

Historically, 17% growth in household wealth over 11 three-month “quarters,” or nearly three years, is pretty standard. There have been 110 such periods since the Fed’s data series begins in mid-1989, and the most recent ranks 55th, squarely in the middle.

On a quarterly basis, compound growth in household wealth since 1989 has averaged 1.39%. Under Trump it is slightly less, at 1.34%.

The bottom half of households saw their net worth rise by 54% under Trump, from $1.08 trillion to $1.67 trillion. That’s compared to an 18% rise for the top 1%, who control roughly a third of the total household wealth in America, or around $34.5 trillion.

Even after those gains, that works out to average net worth of around $26,000 for the bottom half of households versus around $27 million for the ones at the top.

Much of that increase among the bottom half was due to increases in real estate, not stocks, after a resurgence in home ownership rates that began in 2016.

Wages for lower-skilled jobs have of late been rising faster than those for higher-skilled occupations. January non-farm payrolls data show a bigger-than-expected jump in overall employment, bolstered by an increase in construction jobs.

But it takes time for income to be saved and translate into wealth. Since Trump took office, households headed by a college graduate captured 75% of the net worth gains, or around $11.88 trillion.

They represent about a third of all households, according to the Fed survey on which the data series is based.

Overall, households headed by a high school graduate, a group on the front lines of Trump’s pledge to restore blue collar fortunes, lost $0.4 trillion in net worth during his time in office. Those households represent about a fourth of the total.

A BABY BOOMER BOOM

Generationally, households with a head born from 1946 to 1964 did not get fooled again, as the 1971 rock anthem pledged. The title of Trump’s speech was “The Great American Comeback.” It could just as easily have been “OK Boomer, What About the Rest of Us?”

Baby boomers under Trump, himself a member of that generation, captured around $10 trillion of recent wealth gains, or about two-thirds of the total.

The Fed survey’s demographic estimates are as of 2016, and the population would have changed slightly since then. In 2016 about 36% of household heads (in the case of mixed-sex couples the Fed considers the man to be the head, in same-sex couples it is the oldest of the two) were headed by a member of the baby boom.

Wealth accumulates with time, and older people would tend to have a larger base to start with. But for millennials, those born between 1981 and 1996, the last three years of booming markets have meant an extra half trillion dollars only, spread across about 20.6% of households. GenX’ers, born between 1965 and 1980, got about 21% of the gains, and made up roughly 26% of households. The pre-baby boom “Silent Generation” got 16% of the gains, roughly in line with that group’s share of households.

Analyzed by race, the data told a familiar story of inequality. About 84% of recent wealth gains accrued to the 64% of households that self-identified to the Fed as white.

About 4.6% of wealth gains went to the 14.5% of households that identified as black, and 3.8% to the 10.1% of households that identified as Hispanic.

(Graphic: Household wealth under trump, here)

(Graphic: A boom or the norm? here)

Reuters Graphic

Reporting by Howard Schneider; Editing by Heather Timmons, Andrea Ricci and Chizu Nomiyama

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Can the Racial Wealth Gap Be Closed Without Speaking of Race?

Political momentum on the left for such an effort must face the reality of legal obstacles, particularly from the Supreme Court.

Proponents concerned about the wealth gap instead must come up with policies that have the effect of disproportionately building wealth for African-Americans, without singling them out.

“There are ways that you can craft legislation that essentially gets at this effect,” Ms. Baradaran said. “Look at how much legislation we have that gets at the opposite effect.”

Policies like the mortgage interest deduction, for example, disproportionately benefit white families, who are more likely to own homes. So do tax advantages for the rich, who are more likely to be white. Even federal investments in seemingly race-neutral infrastructure like the Interstate Highway System had this effect by enabling the development of all-white suburbs in an era of legal discrimination.

Wealth-building proposals today are trying to engineer a similar if opposite outcome. That makes the details thorny.

“The first and most efficient approach is targeting relief to the people who were targeted with discrimination,” said Dorothy Brown, a law professor at Emory University. “If we can’t get there, then we have to go to next best.”

Ms. Warren’s strategy, she said, is a clever workaround. Rather than specifying African-Americans, Ms. Warren’s bill would target specific neighborhoods where African-Americans harmed by the legacy of lending discrimination are likely to live.

Other researchers argue that a program based on neighborhoods redlined in the 1930s would be too narrow; most African-Americans who buy homes aren’t purchasing in such neighborhoods today (and in some cities, middle-income whites are).

But the kind of neighborhood criteria Ms. Warren has in mind could be one model. Ms. Brown proposes identifying neighborhoods with the least household wealth and allowing tax breaks associated with homeownership, like the mortgage deduction, only to people who live there.

Mr. Booker’s proposal would give $1,000 in a government savings fund to every newborn in America, for use later in adulthood. But the government would seed more money into that fund each year according to a family’s income, giving the most to children in the poorest families. That money could then be spent in adulthood on education, buying a home or starting a business.

“Ultimately, assets give people agency in their lives,” said Darrick Hamilton, director of the Kirwan Institute for the Study of Race and Ethnicity at Ohio State University. His work on the baby bonds concept informed Mr. Booker’s proposal. “Assets give people the ability to make decisions,” he said, “to have choice and have freedom and self-determination.”

The Student-Debt Crisis Hits Hardest at Historically Black Colleges

Long a path to financial security, traditionally African-American schools are now producing graduates who struggle with disproportionately high debt

Historically black colleges and universities helped lift generations of African-Americans to economic security. Now, attendance has become a financial drag on many of their young graduates, members of a new generation hit particularly hard by the student-debt crisis.

Students of these institutions, known as HBCUs, are leaving with disproportionately high loans compared with their peers at other schools, a Wall Street Journal analysis of Education Department data found, and are less likely to repay those loans than they were a decade ago.

Among key findings of the Journal’s examination of 2017 data, the latest available:

  • HBCU alumni have a median federal-debt load of about $29,000 at graduation—32% above graduates of other public and nonprofit four-year schools.
  • The majority of HBCU grads haven’t paid down even $1 of their original loan balance in the first few years out of school.
  • America’s 82 four-year HBCUs make up 5% of four-year institutions, but more than 50% of the 100 schools with the lowest three-year student-loan repayment rates.

Though HBCUs typically cost less than other public and nonprofit four-year schools, these colleges have long trailed those peers on measures of debt and repayment. Now they are trailing by far greater margins.

Many HBCUs see a mandate in giving opportunity to disadvantaged youth, who often start out with fewer financial resources and a diminished ability to pay.

At Stillman College in Tuscaloosa, Ala., the board until recently included alumni from rural Alabama working as lawyers, doctors and ministers, said its president, Cynthia Warrick. “They’ve told me that no one else would take them but Stillman. I think we have a responsibility to still be that place.”

Graduates of four-year for-profit colleges, which weren’t part of the Journal’s comparisons, have similar overall repayment rates and median debt loads to HBCU alumni, an analysis of federal data shows.

The HBCU debt gap has widened partly because of simple math. Tuition increases have outstripped inflation across America.

  • Black families have the least wealth of the largest U.S. racial groups, Federal Reserve data show.
  • Parents of black college students have lower incomes and are less likely to own homes than those from other racial groups, Education Department data show.

So in coping with tuition increases, black students have fewer resources to draw on than many Americans. Borrowing proportionally more has been the solution for many black students and families.

.. Blacks typically earn less than whites after college, so they have fewer resources to repay. Black college graduates between ages 21 and 24 earned nearly 17% less per hour, on average, than white graduates of the same age range in 2018, according to an analysis of census data by the Economic Policy Institute, a left-leaning think tank.

.. Many HBCUs opened after the Civil War and in the first half of the 20th century when public and private universities often denied admission to African-American students. The schools often started out severely behind their peers financially. Many never caught up, despite government efforts that the schools say have been insufficient.