by DAVID F. RUCCI
It should come as no surprise, then, that the net worth (excluding real estate assets and mortgage liabilities) of the bottom 50 percent of Americans is tiny ($1.1 trillion) compared to that of the the top 1 percent (more than $30 trillion).
The question is, why is the net worth of the bottom 50 percent of American households so low? As is obvious from the chart above, they don’t own much in the way of assets and their debt is much greater than that of those in the top 1 percent.
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Still, Elon Musk’s new Cybertruck would appear to be the perfect design for America’s contemporary dystopia. Its bullet-proof stainless steel alloy panels and transparent metal glass are tailor-made to keep its elite occupants safely guarded from attack. And even though the windows obviously need considerable improvement before production begins, and “despite ‘no advertising & no paid endorsement’,” Tesla has already received almost 150 thousand orders for the truck.
Clearly, there’s a lot of surplus available—in cash and loans—to the small group at the top of the U.S. wealth pyramid to purchase such vehicles.
In fact, as we can see from the chart above, auto loans comprise more than 50 percent of the installment loan debt of the top 10 percent of American households (as of 2016, the last year for which data are available). Not so for those in the bottom 50 percent, for whom loans for vehicles make up a little more than a quarter of their installment loans. For them, the largest portion—almost two-thirds—goes to finance higher education.
Consider what this means for the Americans in the bottom 50 percent. According to the latest Survey of Current Finances by the Federal Reserve, 31 percent carry student loans and their average outstanding education debt is $34 thousand. (For those in the bottom 25 percent, it’s even worse: 40 percent of families have student debt, and their average is $43 thousand.) Just student debt is considerably more than the $23,250 average annual pre-tax income of those in the bottom 50 percent.
The only Tesla pickup they’ll be buying is the one with the shattered windows.
The disparities in the United States are even starker when comparing the assets and liabilities of the bottom 50 percent and the top 1 percent in 2019. As can be seen in the chart above, families in the bottom half own only 6.1 of total assets but are liable for more than one-third of total debts, while the situation of those in the top 1 percent is almost exactly opposite: they have 29 percent of assets but only 4.7 percent of the liabilities.
It should come as no surprise, then, that the net worth (excluding real estate assets and mortgage liabilities) of the bottom 50 percent of Americans is tiny ($1.1 trillion) compared to that of the the top 1 percent (more than $30 trillion).
The question is, why is the net worth of the bottom 50 percent of American households so low? As is obvious from the chart above, they don’t own much in the way of assets and their debt is much greater than that of those in the top 1 percent.
That fundamental inequality in the distribution of wealth in the United States stems from one key factor: American workers’ wages have been stagnant for the past four decades. The average (median) real hourly wage for workers in the private sector is currently $14.99, virtually unchanged (rising only $0.62 or 4 percent) since 1979.*
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