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Even as Americans got rich, the inequality persisted



American households substantially bore their savings between 2016 and 2019, according to Federal Reserve data released Monday, but wealth inequality remained stubbornly high – and that was before the coronavirus pandemic took hold.

Median net worth has risen 18% over these three years, the Fed’s Consumer Finance Survey showed, as median household income rose 5%. The survey, which began in 1989, is published every three years and is the gold standard for data on the financial situation of households. It offers the most up-to-date and complete snapshot of everything from savings to stock ownership across all demographic groups.

The figures tell a story of improved personal finances fueled by income gains and rising house prices, the legacy of the longest U.S. economic expansion on record, the one that pushed the unemployment rate to a low in the middle. century and claimed wages for those who earn less. Yet many Americans had less savings than before the last recession a decade ago, and staggering gaps persisted: the share of wealth owned by the top 1% of households was still close to the three-decade high.

Almost all of the data from the 2019 survey was collected before the coronavirus started. Economists fear that progress for disadvantaged workers has likely reversed in recent months, as disruptions due to the pandemic have thrown millions of people out of work. The crisis has mainly cost minority and less educated employees, who are more likely to work in highly interactive jobs at restaurants, hotels and entertainment venues. Inequality looks set to increase as lower incomes fare worse.

The coronavirus has erased everything. Her clients no longer wanted strangers to come to their home, which meant Ms. Bernier was out of work. The extra $ 600 weekly in unemployment benefits from the federal government kept her afloat for a while. But that supplement ended in July and she’s not sure how she’ll get along without it. The bill collectors she thought she shook are already haunting her again.

“So here I am again stuck without a job and I struggle, trying to figure out what my next career will be,” she said.

The newly released data suggests that households with lower pre-tax incomes, such as Ms. Bernier, were catching up with their wealthier counterparts between 2016 and 2019. The poorest 90% of the income distribution actually saw its share of the earnings overall increase slightly in 2019 – reversal of a decade-long decline. Even so, a Fed analysis found that the rebound occurred from all-time lows.

And even at a time when tighter labor markets were translating into more widely shared prosperity, divisions in wealth – the savings accumulated over time, rather than the money a family earns in a given year – remained high.

In 1989, the richest 1% of wealth holders held about 30% of the nation’s net worth. This rose to nearly 40% in 2016 and was little changed in the latest poll, Fed economists said.

While wealth grew slightly for those in the bottom half of the distribution, the poorest half of American households holding only about 1% of the nation’s savings in 2019, Fed data and a related report showed.

The survey’s overall wealth measure does not include defined benefit pension plans and social security benefits, which are difficult to assess. An increased measure incorporating pension plans shows that the share of wealth at the top has still increased, but less, according to a Fed report.


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