The wealth gap between the highest income group and everyone else has reached record high levels since the economic recovery from the downturn of 2007-09, with a clear trajectory of increasing wealth for the upper-income families and no wealth growth for the middle- and lower-income families, according to Pew Research Center.
The study defines wealth as "the difference between the value of a family's assets - such as financial assets as well as home, car and businesses - and debts. It's an important dimension of household well-being because it's a measure of a family's nest egg and can be used to sustain consumption during emergencies (for example, job layoffs) as well as provide income during retirement."
"In 2013, the median wealth of the nations upper-income families ($639,400) was nearly seven times the median wealth of middle-income families ($96,500), the widest wealth gap seen in 30 years when the Federal Reserve began collecting these data," according to an article on the study from Rakesh Kochhar, associate director for research at the Pew Research Center and Richard Fry, senior research associate at the Pew Research Center's Hispanic Trends Project. "In addition, Americas upper-income families have a median net worth that is nearly 70 times that of the countrys lower-income families, also the widest wealth gap between these families in 30 years."
The analysis from Federal Reserve data show upper-income families have started to see wealth return, but middle-income families have not. The median wealth among upper-income families increased from $595,300 in 2010 to $639,400 in 2013, they said, while the wealth of middle-income families remained at about $96,500 during the same time period, resulting in an increase in the wealth gap.
"The latest data reinforces the larger story of Americas middle-class household wealth stagnation over the past three decades, according to Fry and Kochhar. "The Great Recession destroyed a significant amount of middle-income and lower-income families' wealth, and the economic recovery has yet to be felt for them. Without any palpable increase in their wealth since 2010, middle- and lower-income families wealth levels in 2013 are comparable to where they were in the early 1990s."
Overall, the rise in the wealth gap could define why most people are not experiencing a change during the economic recovery even though jobs, the stock market and housing prices are improving.
"In October [2014], just one-in-five Americans rated the countrys economic conditions as "excellent" or "good," an improvement from the 8% who said that four years ago, but far from a cheery assessment," Kochhar and Fry said. "While most American families remain financially stuck, upper-income families have seen their median wealth double from $318,100 in 1983 to $639,400 in 2013. The typical wealth level of these families increased each decade over the past 30 years. The Great Recession did set back the median wealth of upper-income families, but over the past three years these families have recouped some of their losses."
