The census bureau is out with some mind-blowing new data on household wealth. Median wealth decreased by just over $5,000, a 6.8% drop between 2000 and 2011. But we already knew that household incomes at stagnated in the 2000s and then plummeted during the recession. The truly horrifying revelation is how badly the bottom half of the wealth distribution has fared over the past decade.
For those at the 30th percentile of wealth (the middle of the 2nd quintile), net wealth has been cut almost in half from a little over $14,000 to just over $7,000. The 10th percentile started 2000 $905 dollars in the hole. By 2011, the hole was six times deeper, a debt of over $6,000.
Meanwhile, the 70th percentile and the 90th percentile had increases of 10% and 11% respectively. In other words, our economy is now able to increase the wealth of the already wealthy, but for everyone else it’s stagnation or decline.
Part of the story is that wages have failed to keep up with worker productivity, meaning that although workers are producing more, they aren’t seeing the benefits in increased wages. (Including fringe benefits like healthcare narrows the gap, but doesn’t close it. In addition, workers at the bottom of the distribution don’t usually receive much in benefits).
These kinds of changes in wealth indicate just how badly broken our economy is. The social safety net – or what’s left of it – can alleviate some of the suffering caused by our broken economy, but it’s past time to rethink an economy that’s decreasing net wealth for the bottom 60 percent, and absolutely devastating the bottom third of the wealth distribution.