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Wealth Gap
About This Indicator
What Is the Wealth Gap?
The richest 1%'s share of household net worth minus the poorer half's, in percentage points, from the Fed since 1989. It leaves out Social Security, worth more than all else many bottom-half households own.
Why a Difference and Not a Ratio?
With the bottom half's share near 0.4% in 2010, a rounding difference could swing a ratio by nearly twenty. A difference has no denominator to blow up.
What It Says
In 1990 the top 1% held about 23%, the bottom half about 3.5%. Debt magnifies a price fall: a 20% drop wipes out the equity of an owner who put 20% down, which is how the bottom half's share collapsed in the housing crash.
Can Politics Influence It?
Capital gains and estate taxes reach it, but quarter to quarter, share and house prices move it far more.
Key Idea
The top 1% hold mostly stocks and businesses, the bottom half mostly homes and cars. When stocks fell from 2000 to 2002, the gap narrowed only because the top lost ground; the bottom half's share did not rise.
Not Scored
Source: Computed here. The Top 1% share less the Bottom 50% share, from the series above.
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