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The richest 10% of households now represent 70% of all U.S. wealth
- bfrog 7y agoWhen was the last time wealth accumulated so greatly in so few hands, the dark ages? It would be really interesting to know what history can tell us about what this potentially means for our future.
- mikeash 7y agoThe late 1920s. Fortunately, nothing bad happened after that.
- itsaidpens 7y agoYou get it.
- andy_ppp 7y agoYou’d have to think we live in some kind of simulation if this happens with such invariability...
- mikepurvis 7y agoProbably best to wait a decade or two before commenting with such confidence about what you think the outcome of today's events and circumstances will be.
- shakyshakyshaky 7y agoif only someone could have predicted this http://content.csbs.utah.edu/~ehrbar/cap1.pdf http://content.csbs.utah.edu/~ehrbar/cap1.pdf
- htk 7y agoMaybe it is the opposite of what you're implying. ex: The creation of value is so high that the discrepancies increase, but everyone is reaping the benefits, just in different proportions.
- itsaidpens 7y agoTell that to someone making 35K/year.
- Consultant32452 7y agoDoesn't matter. If you could choose when to be born, but not know your race, sex, gender, sexual preference, general health, or family income.... There is no doubt it's better to be born in 2019 than 1919.
- mikeash 7y agoHow about 1999 or 1989?
- Consultant32452 7y ago1999 for sure, especially if you don't get to choose where you're born across the world.
- mikeash 7y agoAgreed if we're looking at the whole world, but I thought we were looking at the US specifically.
- Consultant32452 7y agoThe difference across a decade is somewhat negligible. But just in the last few years we've gotten gay marriage, marijuana is getting legalized, crime reform, HIV treatment is becoming widely available... Humans have a tendency to focus on the one or two things that might be worse for them, but over all life is better in almost every way you can think of. Every year is better than the last.
- maxxxxx 7y agoI thought this has been the course of history for a long time. Elites take more and more for themselves until they push things too far and they get overthrown. Then the cycle starts again with a different elite.
- phkahler 7y agoI'm not sure the word "overthrown" is good - nobody is going to do that today. "Until things fall apart" is more general and entirely possible today. See Venezuela for example. Still no overthrow, but it has fallen apart and the leadership would probably prefer that hadn't happened - though I could be wrong about that.
- maxxxxx 7y agoWith overthrown I guess I also meant things like antitrust regulation in the early 1900s or the union movement which was reduced power of the robber barons. This doesn’t always have to be violent. Not sure what better word could be used instead of overthrown.
- shakyshakyshaky 7y agoNow I don't like the terminology "elites" as it lends itself to populism, but in this framework it's useful. Soon enough, the elites will not be overthrowable. The advantage that the many have over the few is the retraction of their consent; without housekeepers, farmers, maintenance workers, the rich have historically been forced to capitulate because they couldn't maintain their standard of living without the workers. With the rising tide of automation, I can see a very near future where the workers are simply obsolete, and the division between classes will become so wide as to be completely un-transversable. Those in control of the farmland and the machines that tend it will have no use for the lower classes any more. That's why we need to work on decentralized production, with households owning a production factor of their own which will keep them producing value. Think decentralized factories.
- bigredhdl 7y agoThe linked fed report is a good read. https://www.federalreserve.gov/econres/feds/files/2019017pap.pdf https://www.federalreserve.gov/econres/feds/files/2019017pap...
- deogeo 7y agoMy comment from when this was posted a few days ago: "In other terms, top 1% owns 32%, leaving 38% for the 9% below that."
- padobson 7y agoAny chance the next 10% after that owns exactly 10%? Have we reached a perfect pareto distribution?
- necovek 7y agoThe most interesting bit is that out of that 10 percentage points growth (60% to 70%) for the 10% wealthiest, 9 percentage points are attributed to the top 1% (23% to 32%)! So, the rest of the top 10% have remained basically at the same level of (relative) wealth (37% to 38%), and the wealth from the poorest has moved to the top 1%! So, looking at the top 10% here paints a less bleak picture of where the wealth is being accumulated/moved. IOW, it's not even the rich getting richer, it's just the super rich!
- mont 7y agoHow do you interpret less people owning a greater percentage of overall wealth as a less bleak picture?
- necovek 7y agoPerhaps you misread what I said: looking at the top 10% rather than top 1% implies that more people are getting proportionally wealthier, when it's only the 1% that is getting wealthier. The former implication is "less bleak" than the latter reality.
- ppseafield 7y agoBecause it's not that the top 10% have roughly comparable amounts of wealth: instead it's that the 1.1%-10% have roughly the same amount while the top 1% has concentrated their power even further. I think "less bleak" is a bit tongue in cheek, but at least it could appear to be less concentrated if just just looking at the top 10%.
- duxup 7y agoSo we have a trend going up. In the past what has driven this trend downward?
- jtr1 7y agoThe Labor movement. Social democratic policies enacted out of a fear of communism.
- NeedMoreTea 7y agoThe post war consensus, or the long boom as I think it was called in the US. A period of sustained growth that saw full employment, adult vocational education - in the US in part from the GI Bill, healthy and rising welfare, rising wages, good pension provision and an unprecedented growth of the middle classes. High income taxes, sometimes extremely high, from both sides of politics saw greater opportunities for infrastructure and redistribution. It started to fall apart with the 73 oil crisis, that in good part marched us into neo-liberalism and Thatcherism/Reaganism.
- bryanlarsen 7y agoThe real estate bubble popping. To a first approximation the bottom 9.9% of the top 10% in wealth are older upper-middle class folks who have their mortgage paid off and some retirement savings. (Wealth and income distributions have significant differences)
- cabaalis 7y agoIs this elaborated on anywhere to break down by age/etc? Because "9.9% of that 10% of households are actually just your parents/grandparents who've made good choices over the course of their life rather than a bunch of bankers" doesn't trigger people as much.
- tonyedgecombe 7y agoWW2?
- shoo 7y ago
- itsaidpens 7y agoI'm telling you - and I mean this completely without hyperbole, lower your conspicuous consumption. Get rid of your luxury car, don't project your wealth. To be honest, if you live anywhere on the peninsula (looking at you Atherton) and even areas of San Francisco - a reckoning is coming. Neighborhoods will burn. "There's a storm coming, Mr. Wayne. You and your friends better batten down the hatches, because when it hits, you're all gonna wonder how you ever thought you could live so large and leave so little for the rest of us."
- paulryanrogers 7y agoIs this predicting or threatening violence? If so I don't see how that's constructive.
- itsaidpens 7y agoPredicting. And threatening.
- padobson 7y agoThe article points out that record low interest rates have pushed easy money into the hands of the already-wealthy, exacerbating wealth inequality. I see that as only half the story. While 0% loans were filling the coffers of Bank of America and Sallie Mae and Chase and Wells Fargo, those same banks were turning around and loaning the money out for consumption at 25% or for assets that rapidly depreciate like cars and TVs at 5-25%, or purchases of questionable value like college tuition at more variable rates. r > g is still something of an open question in my mind, but the economic weaponization of debt and the inability of consumers to shield themselves from its adverse effects seems to be the reason for the wealth gap and why the increase in capital returns has payed better than overall economic growth, effectively transfering the future wealth of the poor to the present assets of the rich. It could probably be solved in a generation with stricter regulations on consumer lending and the conversion of social security into a mandatory 401k, similar to Australia's "Super" program. The fix for capitalism is to force everyone to be capitalists.
- sandmite 7y agoThere is no fix. The wealthy are growing wealthier due to demographics. Collective IQ is declining right now, due to the relative demographics of the developed vs. developing worlds. There is nothing you can do to stop unintelligent people from giving their money to the intelligent. We are just going to have to wait it out, which will probably take 200+ years.
- corinroyal 7y agoElizabeth Warren would beg to differ with you. https://www.vox.com/policy-and-politics/2019/1/24/18196275/elizabeth-warren-wealth-tax https://www.vox.com/policy-and-politics/2019/1/24/18196275/e...
- refurb 7y agoTop 10%? That would include a lot of HN folks reading this article. And I'm sure the housing crash of 2008 didn't help. Real estate is often a key financial investment for the middle class. Housing has recovered (and more!), but a lot of middle class lost/sold their homes and didn't benefit from the appreciation.
- kasey_junk 7y agoJust to put some numbers on it 2017 you'd need a net worth of about 1.1 million dollars to be in the top 10%. https://dqydj.com/net-worth-brackets-wealth-brackets-one-percent/ https://dqydj.com/net-worth-brackets-wealth-brackets-one-per...
- djsumdog 7y agoWhat would annual income requirements be? I remember a few years ago when I looked it up, the 1% of top income earners was somewhere around $350~$400k/year minimum (depending on which stat you used). Think about that. Less than 1% of Americans ear over $350k/yr ... and most of them earn far far more than than (several million). I assume the average senior developer here in a mid-range city probably makes around $120k ~ $160k. Where does that fall into national averages on just income (and yes, I realize this article is talking about overall wealth and not necessarily income).
- kasey_junk 7y agohttps://www.investopedia.com/personal-finance/how-much-income-puts-you-top-1-5-10/ https://www.investopedia.com/personal-finance/how-much-incom... $118,400
- scarface74 7y agoThe Don’t Quit Your Day Job site linked above, also has that info. https://dqydj.com/household-income-percentile-calculator/ https://dqydj.com/household-income-percentile-calculator/
- bfrog 7y ago
- douglaswlance 7y agoWow. The bottom 90% should find ways to contribute more.
- mtgx 7y agoI'm not sure if sarcasm or not, but do you believe that what would be "fair" would be for the bottom 90% to pay for 90% of the budget in taxes? Maybe in an ideal world that could be true, but it would also require for the bottom 90% to get 90% of the total income received in an given year. As we can see, that's nowhere near the case. So of course the single digit percentage of the population that makes the lion's share of total income also has to pay the lion's share in taxes.
- douglaswlance 7y agoThe bottom 90% should contribute 90% of the value to the world, instead they're only contributing 30%; while the 10% most successful contributors generate 70% of the value. That means 90% of people are not contributing as much as they could to society.
- mensetmanusman 7y agoThe interesting thing about today is that the rich don’t have access to better technology than anyone else due to massive scale. Also, they have no leisure time...
- mikepurvis 7y agoI think it depends which rich you're talking about. Certainly some of them seem to have plenty of time on their hands: https://www.instagram.com/rkoi/ https://www.instagram.com/rkoi/
- aaronarduino 7y agoI wonder how many of those kids rent cars, clothes, etc. to look rich. I mean it is Instagram after all.
- mikepurvis 7y agoProbably some, but the point is just that there's a difference between the working rich and the idle rich. Obviously it's not a black and white thing, but someone who becomes a millionaire after working their butt off for years as an entrepreneur and selling their company is having a very different experience of life from someone who inherits everything and whose only experience of business is as a figurehead— there are lots of examples of this, but current populist premier of Ontario Doug Ford is a good one. Jared and Ivanka are probably in this bucket too, though perhaps to lesser degrees.
- learc83 7y agoThere is a leisure class, but it's more like the top 0.1%.
- frgtpsswrdlame 7y agoOkay everyone agrees that absolute position matters -> less deprivation is better. But I'm interested in HN's perspective on relative position. It seems that there are people for who relative position shouldn't matter at all and people for whom relative position matters quite a bit, why?
- mooreds 7y agoI looked through the paper for the wealth level that qualifies you as a 1%er or 10%er but didn't find anything. Anyone have any numbers for that?
- sithadmin 7y agoBased on 2018 figures, being a 1%'er in the US requires an approximate annual household income of ~$434,454 USD.
- brianwawok 7y agoIt is usually by FAMILY income, so include both earners in a two income family https://www.cnbc.com/2018/07/27/how-much-you-have-to-earn-to-be-in-the-top-1percent-in-every-us-state.html https://www.cnbc.com/2018/07/27/how-much-you-have-to-earn-to... > To be among the top 1 percent of U.S. earners, a family needs an income of $421,926 For top 10%, you have $178,793.00 per https://dqydj.com/household-income-percentile-calculator/ https://dqydj.com/household-income-percentile-calculator/
- bryanlarsen 7y agoThat's income, not wealth. Big difference. @casey_junk found the wealth numbers: (https://news.ycombinator.com/item?id=20051782 https://news.ycombinator.com/item?id=20051782) > Just to put some numbers on it 2017 you'd need a net worth of about 1.1 million dollars to be in the top 10%. > https://dqydj.com/net-worth-brackets-wealth-brackets-one-per.. https://dqydj.com/net-worth-brackets-wealth-brackets-one-per....
- brianwawok 7y agoIncome is actually a lot more useful metric though. Most (much?) "wealth" for those in the > 0 but < millions is "house equity in a hot market".
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- effnorwood 7y agoWhat is pareto distribution
- whb07 7y agoThis of course is a big side effect of quantitative easing aka printing money. Those who held on to securities and other advanced financial instruments saw prices being pulled upward due to the massive flood of hot off the press money. Guess what people don’t own large number of those types of assets? So before everyone does the typical “we should get government involved” rabble rousing, be aware that it is because the government got involved that this is happening.
- necovek 7y agoI am not from US, but I remember loud complaints about how Federal Reserve was bailing out banks and the rich vs the non-wealthy folks. My memory of govt reasoning was that they need to help the economy survive to avoid unfamiliar consequences (if they bankrupted the banks for giving bad loans and let home buyers keep their not fully paid homes, the argument was that crediting would stop in the future, which would be a bigger detriment to the not-wealthy). IOW, government got involved on behalf of the rich claiming to also benefit non-wealthy in the long run. This is all a bit simplified, and coming from someone only affected transitively (so without full focus on the developments).
- partiallypro 7y agoThis is basically the Pareto principle in action, and isn't surprising. Most of the top tier wealth is driven by investments and in the wake of globalization (and "easy" money from CBs,) stocks and other asset classes have risen drastically. Given that the lower rungs in the world all have little to no investments compared to the "upper class" it's just basic math than people with investments will out perform those with none. There will undoubtedly be a mean reversion on asset prices at some point in the future, which will lower the wealth gap as prices fall...but that might not be a good thing. What we really need, if we want to bridge the gap, imo, is teaching people to invest their money...and I mean in more than just a 401K and a house. If you look at actual living standards, even the middle and lower classes are in much better shape than they were in every previous decade. So we're making strides there. So we need to improve our education system (specifically for the lower class) and teach everyone to invest in the economy as a whole.
- refurb 7y agoAnd age is strongly correlated with wealth, with people nearing or in retirement often having the highest level of wealth. When the value of equities goes up, they benefit the most.
- idlewords 7y agoThe thing about poor people is, they don't have money to invest. Teaching the poor to invest is like teaching the starving to cook. Moreover, you are simply not correct to say that living standards are improving for everyone. Life expectancy in the United States has gone down for the third year running (the first time that's happened since WWI) due in large part to crises that disproportionately affect poor people.
- partiallypro 7y agoLife expectancy has gone down because of the Opioid crisis and suicides. That certainly does effect poor people, but it is not -because- they are poor. And poor people usually do have money to invest, I grew up very poor. My grand mother had no plumbing, no A/C or central heating (and this is the US,) so I know what true poverty is. You will not find that virtually anywhere in the US now.
- idlewords 7y agoThe better headline here is that 1% own a third of the wealth.
- xtiansimon 7y agoBetter than 2% own 90% in banana republics.
- b_tterc_p 7y agoI’ve been thinking that an exponentially progressive estate tax setup could help here.
- Expez 7y agoThere's so much talk about the growing inequality that I tried to find out what would happen if the rich were mobbed and all the money redistributed. According to [0] there were 73,110 ultra wealthy US citizens in 2017, i.e. individuals with more than $30m in net worth. The same article says that the average net worth in this group is $120m. In aggregate this group thus controls 120m * 77 110 = 9.3 trillion dollars. Since there are around 330m people living in the US this would amount to only a little over 28k per person when redistributed. [0] http://money.com/money/4833875/ultra-wealthy-americans-millionaire-billionaire/ http://money.com/money/4833875/ultra-wealthy-americans-milli...
- mcphage 7y agoSo you're saying, by redistributing wealth from only 73k people, everybody in the country would get almost $30,000? That's... that's a lot. And that's only from the top 0.02%.
- defective 7y agoOr roughly $72,000-73,000 per household, assuming 127 million households and working with the numbers in your comment. If we stole all the money from every 10%er household, who control 70% of aggregate household wealth, we'd have 70% of $93 trillion (2016 value) or $65.1T. Spreading that across 90% of 127M households nets about $564,500 per.
- bin0 7y agoSome one quoted a number that you need about $1mm in income to be in the top 1%. You know what's perverse? "Qualified investor" mark is at $1mm net worth. The best way to make money is to invest what you have, and this blocks people out. From what I understand, it might be possible to set up a partnership which does investments, and pool money from about 50 partners. That would allow a decent angel investment group with a few-thousand-dollar buy in. Why don't more people do this? It's very doable to learn about how to read a business plan, read financials, etc. Though it's a risk, it might be helpful to allow the middle class to make informed investments to grow wealth.
- scarface74 7y agoIn the grand scheme of things, not that I think it would make that much of a difference, but how would the wealth of the middle class that are close to retirement be different if you counted the present value of annuities such as pension plans and even maybe social security? I know my parents could afford to have a lot less “wealth” and be comfortable thanks to my mom’s pension as a public school employee. On the other hand, how much worse off is the middle class now that private pensions are rapidly disappearing?
- RickJWagner 7y agoAccording to this inflation-adjusted accounting, today's billionares aren't in the same ballpark as the rich of yesteryear. It's why 'The rich get richer, the poor get poorer' is an old expression, I guess. https://www.celebritynetworth.com/articles/billionaire-news/25-richest-people-ever-lived-inflation-adjusted-2017/ https://www.celebritynetworth.com/articles/billionaire-news/...