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93% of U.S. households' stock market wealth is held by the top 10%
- Bostonian 3y agoThis statistic ignores the stocks owned by pension funds on behalf of workers. Many government workers are still entitled to pensions.
- alephnan 3y agoPensions have been on the decline
- lapcat 3y agohttps://en.wikipedia.org/wiki/Pensions_crisis https://en.wikipedia.org/wiki/Pensions_crisis
- ruined 3y agoyeah, just like all the money in the bank isn't actually the bank's money. the bank still has the money
- jampekka 3y agoExcept for the money you owe to the bank that created it by pressing a button.
- rthkljlkrj 3y ago[dead]
- FooBarBizBazz 3y agoIndeed, and if you divide that pension cashflow by, say, 4%, you arrive at equivalent wealth figures that can be very significant. Say somebody retires from the military as a low-ranking officer. You don't think of them as particularly wealthy, but once you value their cashflow, you realize they're loaded.
- wolverine876 3y agoThe value is money/time. $1M over 40 years is only $25,000/yr, minus inflation and tax. Wherever that person lives, I don't suppose they feel 'loaded'.
- dwallin 3y agoIt ignores it, but not in favor of the bottom 90%, it looks like the numbers for % of pension entitlements have dropped significantly for the bottom 90% and went up only for the top decile. 50-90% https://fred.stlouisfed.org/series/WFRBSN40178 https://fred.stlouisfed.org/series/WFRBSN40178 1-50% https://fred.stlouisfed.org/series/WFRBSB50205 https://fred.stlouisfed.org/series/WFRBSB50205 90-99% https://fred.stlouisfed.org/series/WFRBSN09151 https://fred.stlouisfed.org/series/WFRBSN09151
- hospitalJail 3y ago[flagged]
- 2big2fail_47 3y agowhat are you talking about
- Supermancho 3y agoI interpret it to combine the 2 ideas: No matter who is in charge, the world is going to be messed up in various ways. Upsetting the economic pyramid will naturally form a new pyramid, with concentrations of wealth at the top. Pereto + Solow–Swan...eg In communist(ish) countries, the concentration incidentally ends up in the hands of the highest political positions and a few private individuals.
- lumost 3y agoThe pertinent takeaway is that a professional career would yield a much higher percentage of total equity ownership in prior decades. I worked at a shop where the pay scale worked out like the following. - Eng2: 140k - Eng Manager: 180k - Eng Director: 250-500k depending - C suite: 20 MM per year (direct payment) - Founder: > 200 MM per year (ownership stake/cap gains). I suspect that such scales are more common than we know.
- engineer_22 3y agoYes but I think the outrage isn't about wealthy engineers and merchants, but that there is not a suitable protection to prevent wealthy children from joining the rentier class and subsequent failure to contribute to society. For arguments sake, I don't think it's outrageous to guarantee someone who has created great value that their children will live comfortably throughout their lives. But there may be a class of people who consume a disproportionate amount of goods and services who have not personally contributed to our society, but by fortune of birth are allowed to continue an extravagant lifestyle.
- toomuchtodo 3y ago
- blakesterz 3y agoThe source from the FT has some interesting other numbers: https://archive.is/emsQK https://archive.is/emsQK But the dirty secret behind this myth is that, while access to equities is widespread, ownership is becoming more concentrated. Two decades ago, the wealthiest 10 per cent of Americans held 77 per cent of corporate equities and mutual funds, according to calculations by Lyn Alden, a strategist. The poorest 50 per cent held just 1 per cent, leaving the middle-to-upper cohort with 12 per cent. Today, however, the wealthiest 10 per cent own 92.5 per cent of the market — a “record high concentration”, Alden notes. And while the richest 1 per cent owned just 40 per cent two decades ago, their share stood at 54 per cent in the most recent data from 2022.
- foobarian 3y agoSo the million dollar question... when to sell off to beat the boomer exit? :-D
- pydry 3y agoWhen inheritance taxes become punitive. So, on the 2nd of never, two thousand and not gonna happen.
- superhumanuser 3y agoWho cares of they do or don't have to pay taxes. Taxes shouldn't be punishment. We should strive to all pay less. The government wastes our money frivolously. We should be advocating for better appropriation and spending, not advocating to give them more just because you think the rich are an enemy.
- exabrial 3y agoQuite an interesting fact. I'm sure some people see this as a bad thing.
- windowshopping 3y agoDid you have a way of seeing this as a good thing?
- somedude895 3y agoThere's also a way of seeing it as just a thing.
- breadbreadbread 3y agoonly if you are content with the way the US economy works, which requires wearing some pretty large blinders
- breadbreadbread 3y agoactually no, I don't think anyone should look at the wealth spread in the US and think that it's normal or good. It's objectively dangerous and undemocratic. If someone can earn millions a day from passive investment but someone who actually provides meaningful goods and services day-to-day barely makes 50k a year, I think we have totally misunderstood as a society what to value and how to distribute resources
- exabrial 3y agoThere are plenty of people on earth living less than $1usd a day and would trade their situation gladly for a very comfortable $50kusd/year.
- breadbreadbread 3y agoimagine if i told you that i think everyone deserves to make a wage that allows them to thrive and have stability. Also consider that A) things are more expensive here and B) our economy is debt based and many people with homes and cars in the US have negative income after expenses, just because aesthetically our poverty looks different, it doesn't mean that it's good. It's not comparable.
- J_Shelby_J 3y agoRelated to the classic: https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/ https://www.theatlantic.com/magazine/archive/2018/06/the-bir...
- carlosjobim 3y agoWhat are the statistics by age group?
- ilikeitdark 3y ago[flagged]
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- danielmarkbruce 3y agoEquities went up 5x over that time period. Of course it exacerbated the difference in equity holdings. Had equities gone down 50% over that time period, we'd have seen the opposite.
- bmitc 3y agoThat doesn't follow.
- danielmarkbruce 3y agoIt does when you consider a good chunk of people have 0 at the start... and new people come in but less people "leave" when the market is going up rapidly. Households is not a static pool. If that doesn't compute... look at the chart in the article. Is it just a strange occurrence that the chart almost perfectly follows the stock market itself? That magical dip in 2008... ? This is basic math. The article is bs.
- lifestyleguru 3y agoI can feel it when reviewing my stock portfolio. I pet it the best I can but it's a feeble miserable creature.
- wnevets 3y agoobviously that means 90% of American households aren't about that hustle & grind life and need to work harder.
- swagasaurus-rex 3y agoHustle and grind life is for the plebs. True wealth comes from asset ownership. Source - that one book author thats billions in debt.
- pi-e-sigma 3y agoAlso true wealth is inherited. People making it big thanks to their merits are as rare as lottery winners. Probably even rarer.
- aa1234556 3y ago[dead]
- TriangleEdge 3y agoTo me, this reads the same as "90% of emails are processed by a couple hundred servers at Google". I buy ETFs because I don't want to directly handle investments.
- lottin 3y ago> according to calculations by Lyn Alden But what "calculations" is she doing exactly? The source that she's quoting says 53.7% not 93.0% [1]. [1] https://fred.stlouisfed.org/series/WFRBST01122 https://fred.stlouisfed.org/series/WFRBST01122
- mahogany 3y agoThat is a link to the top 1%. Add the 39.2% from the rest of the top 10%: https://fred.stlouisfed.org/series/WFRBSN09149 https://fred.stlouisfed.org/series/WFRBSN09149
- Dig1t 3y agoI would be very interested to see how this compares to land. What percentage of the top X % owns all the land. I think it’s probably a more equitable mix as I know a lot of Americans who’s generational wealth is tied up in land and not the stock market.
- bmitc 3y agoWell Bill Gates is the biggest private landowner in the U.S., so it likely correlates highly.
- boeingUH60 3y ago*Largest farmland owner. The largest landowner is John Malone, the telecoms mogul, or the Emmerson lumber baron family if you're counting shared ownership. https://www.landgate.com/news/largest-landowners-in-the-united-states-2023 https://www.landgate.com/news/largest-landowners-in-the-unit...
- scottyah 3y agoHe's the biggest private farmland owner, at 270,000 acres. The largest private landowner (from a google search, I didn't vet much) is the Emmerson family with 2.411 acres. Farmland-wise, he owns a drop in the bucket- there's an estimated 900 million total farm acres.
- bmitc 3y agoThanks for the correction.
- legitster 3y ago> Editor's note: This story and chart were corrected to reflect that it is 93% of U.S. households' stock market wealth (not 93% of the stock market) that is held by the wealthiest 10% of those households. This is actually kind of an important distinction. If you add back in things like pension funds that distributes things a lot more generously. Also, I am not sure if 1 in 10 people I know even own stock directly. 1/10th of the population is still a lot of people and it almost surely skews more by age than any other metric.
- Retric 3y agoPensions don’t increase their payouts when the market is booming and you can’t include them in a will. So is it’s really not stock ownership as you just get the downsides without the upside.
- loeg 3y agoIs the goal financial security in retirement, or perfectly uniform stock market ownership distribution? Annuities suffer from similar problems but like, if the retiree has sufficient income, at the end of the day, who cares if they personally own part of the stock market? People see these power law distributions and are surprised? But like, do you actually want enforced uniform wealth (communism)?
- pfannkuchen 3y agoCommunism is more like “off the books” wealth in a lot of ways. In capitalism the people who control sections of the economy “own” them in the same way one owns a shoe. In communism people still control sections of the economy, it just isn’t shown on paper. They do extract personal benefit from that control, it’s just in the form of a weird and inefficient black market barter system.
- charred_patina 3y agoI think the issue is more that power laws distributions have a lot of negative externalities. Inequality is correlated with a lot of societal problems. > People see these power law distributions and are surprised? But like, do you actually want enforced uniform wealth (communism)? This is a really all-or-nothing take. A handful of people are arguing for enforced uniform wealth, most people are just pointing out that our current economic system is marginalizing a growing number of people each year, while enriching a handful of giga-wealthy individuals.
- chasing 3y agoIt's cool that capital gains taxes are so low versus income taxes. /s
- hateful 3y agoI think what's more important is that we used to get interest on our savings accounts, and now we have to gamble with corporations to make any returns.
- IAmGraydon 3y agoI'm making 5.3% on a savings account and have been making at least 4% for over a year. When the overnight rates go up, move cash into FDIC insured high yield accounts. If you're still getting no interest on your savings, you're being robbed.
- jandrewrogers 3y agoI wonder to what extent the distribution is influenced by the significant number of people that plow their savings into paying down their mortgage even when it makes no financial sense (e.g. their mortgage interest rate is 3%). I know many people that do this and don't have any stock market investments beyond their retirement account. People at different percentiles of net worth do not have the same asset distribution.
- claudiulodro 3y agoIt does make financial sense for many though, because risk exists. In a big downturn would you rather be laid off with a paid-for house or laid off with a mortgage and a bunch of stocks that just plummeted in value?
- deleted 3y ago[deleted]
- jandrewrogers 3y agoI would much rather prefer the latter actually because the risk is lower. People tend to seriously discount the risk of non-liquidity in these situations, which is the scenario the former sets up. I know multiple people that discovered this the hard way. Houses without mortgages aren't anywhere close to free to live in and they can have very little liquidity in a big downturn.
- RhysU 3y agoAlso, it's easy to sell X% of a stock portfolio for 0 <= X =< 100 but difficult to do the same for a house. (This is possible with stocks for some X outside those bounds too!)
- danaris 3y ago...So can we please stop talking about measures that improve the stock market like they're meaningfully helping average Americans, rather than the very wealthy?
- al_borland 3y agoAnyone with a 401k is helped by the stock market trending up. The ultra wealthy make a lot, but it raises up all those retirement accounts too. Without the power of compounding in those retirement accounts the average American would be screwed.
- wyre 3y agoThe average American already is skewed. The average 401k is only $129k while the median is a much lower $33k. [1] That’s not even 2 years of rent in most places (and isn’t a lot of money by any definition considering the amount needed for retirement) [1] https://www.businessinsider.com/personal-finance/average-401k-balance?op=1 https://www.businessinsider.com/personal-finance/average-401...
- al_borland 3y agoThat is more of an issue with education around money than anything. Access to investing is more available to the average person than at any point in human history. And if not a 401k, because the employer doesn’t offer one, something else, like a Roth IRA can be used in its place. The information is more available than ever as well, however, there are a lot of people pushing out bad information to line their own pockets, or because they just don’t know better themselves. Sorting through the BS to get to something good can be hard, and can take more work than most people are willing to do. This is rather unfortunate, as a few really basic things can put someone far ahead of the average. I don’t think we should cripple the best option for average people, just because not everyone is using it to its full advantage. We should be looking for ways to get more people to take advantage of compounding. It’s available today and it works. Putting retirement in the hopes of a complete overhaul of society doesn’t seem like a great bet.
- jackcosgrove 3y agoI can't help but think of all the media organs, the WSJ, Bloomberg, FT, Economist, CNBC, Fox Business, et al who cater to this small segment of the population. It must be incredibly alienating to see all this attention paid to well off people when you're on the outside.
- charred_patina 3y ago> I can't help but think of all the media organs, the WSJ, Bloomberg, FT, Economist, CNBC, Fox Business, et al who cater to this small segment of the population. I never thought about how small their audience actually is. That said, I never felt a sense of alienation reading these articles/watching these shows, it really just feels like listening to someone out of touch with reality. I am mostly curious why anyone would bother watching/subscribing to this media, since the amount of information you gain from them is enough to influence you emotionally, but not enough information to gain you a market advantage. I mean wouldn't you be better off just paying someone to manage your wealth for you or owning shares of a mutual fund? It's like these programs are for people with enough wealth to care about the market, but not enough knowledge to invest it effectively. People who are going to be picking stocks successfully are reading 10-Ks and crunching numbers in excel, not listening to Squawk Box.
- msmenardi 3y ago> ... I am mostly curious why anyone would bother watching/subscribing to this media, since the amount of information you gain from them is enough to influence you emotionally, but not enough information to gain you a market advantage. That's the point. They want their audience to be confused. They want them to act on instinct, to spend funds as they choose. It's not about value, it's not about growth - it's about power, first and foremost.
- m3kw9 3y agoI don’t see how this affects the average person, nothing really changes to your personal equations
- tzs 3y agoAlmost all articles of the form "X% of the Y is held by the top Z%" where X > Z leave off one important thing: what % of Y should be held by the top Z%? One's first though might be that in a truly equitable society, we'd have X = Z for all Z. E.g., the top 10% have 10% of Y, the top 20% have 20% of Y, and so on. But upon a few moments more thought one will realize that is only mathematically possible if everyone has the same amount. If Y is stock owned by households, for example, such equitability in ownership can only happen if every household has the same amount of stock. The moment even a single household ends up with either more or less stock than a single other household, then the % held by the top Z% will be >Z%. This is true for anything, not just financial things. E.g., the top 10% of the winners of the Best Album of the Year Grammy Award have won more than 10% of the Best Album Grammy Awards. The top 10% of pimps manage more than 10% of the whores who work for pimps. The top 10% of pizza sellers by sales sell more than 10% of all pizza sold. The top 10% of muggers are responsible for more than 10% of muggings.
- wyre 3y agoI’d say Pareto Distribution is a good goal to start with the top 20% holding 80% of the wealth.
- ericpauley 3y ago80:20 is simply one parameterization of the Pareto distribution; there's nothing fundamental that implies it ought to be.