State of US Household Wealth...

[LARS]

Interesting research on the current state of US Wealth. A lot of interesting data for those that wonder how the Joneses are doing.

In 2009, Top 1% avg. is (in millions) $14.0; next 4% is $2.7; next 5% is $1.2.

http://epi.3cdn.net/002c5fc0fda0ae9cce_aem6idhp5.pdf

 

[obgyn65]

Thank you for sharing LARS. Interesting paper. Will read in more detail tomorrow.

 

[Independent]

Interesting research on the current state of US Wealth. A lot of interesting data for those that wonder how the Joneses are doing.

In 2009, Top 1% avg. is (in millions) $14.0; next 4% is $2.7; next 5% is $1.2.

http://epi.3cdn.net/002c5fc0fda0ae9cce_aem6idhp5.pdf

Note that our last net worth poll said that the median for people who post here is between $1 and $2 million. http://www.early-retirement.org/forums/f28/net-worth-poll-55244-10.html

I noticed that none of the statistics in the article were split out by age. I think that's a pretty important variable once you get below the top 5%.

 

[KingB]

Note that our last net worth poll said that the median for people who post here is between $1 and $2 million. http://www.early-retirement.org/forums/f28/net-worth-poll-55244-10.html

In this article, they defined what networth is and excludes pension plans and Social Security. Wasn't there an argument on our poll if these items should be included or not.

 

[samclem]

I'm fairly sure the goal of the report is to influence rather than simply to inform, so readers should bear that in mind.

From (pdf) page 3 :

Net worth excludes assets in defined-benefit pension plans because workers do not legally own the
assets held in these plans and thus do not necessarily benefit or suffer from gains or losses in the value of assets used to
pay the defined benefits.2 For similar reasons, this analysis also excludes Social Security and Medicare from net worth
calculations.

I wonder if inclusion of the net present value of Social Security payments would have closed the gap between rich and poor a little bit.

The report says blacks and lower net worth individuals were most severely hit by the recent economic downturn, but it does not go on to show if race, in itself, was a significant factor in reduction of net worth. Blacks are disproportionately poor, so when the report says "Net worth: Drop during the Great Recession hits less wealthy and black households hardest" the reference to blacks is meaningless unless they show some indication that blacks, independent of their "poorness," got hit harder. The report doesn't do this.

Like many such reports on the changing gap between rich and poor, this report doesn't address "class mobility." People often move up and down the ladder over the course of their lives.

 

[LARS]

The report says blacks and lower net worth individuals were most severely hit by the recent economic downturn

I suspect this has to do with the fact that the lower net worth individuals have far more of their net worth tied up in the primary residences.

 

[chinaco]

Watch this documentary..

YouTube - The One Percent

Apparently it really p!ssed off the extremely wealthy. They don't like it when an insider provides an expose' .

[Shhhhhhhhhhhh... don't tell everybody! The masses might think actually stop focusing on gun debate, or communist rhetoric, or abortion and realize how we keep them distracted! It is int their best interest that we get a pass! Besides, they wouldn't know what to do with it. We are the ones keeping everything in great shape!]

It must have hit a little too close to home! It suggests that the extremely wealthy (through inheritance) create dynasties and are very successful at hiring very smart people to win all the marbles!

There was one @$$hole that made a comment about SS... "don't believe we should pay for it" Of course they took the big tax breaks and their partners in the caper (our legislature) kept spending (and issued those SS trust bonds).

The rest of us (middle class and working class) will be stuck with the tax bill.

I am not one who is shedding tears for the obscenely wealthy? [sarcasm] They really got the shaft didn't they!

 

[traineeinvestor]

In this article, they defined what networth is and excludes pension plans and Social Security. Wasn't there an argument on our poll if these items should be included or not.

Er...yes.

If the point of the question raised is:

1. to compare the monetary value which a household can realise by selling up its assets today, pension plans, SS and paid for health plans should be excluded because they cannot be cashed up (in general - not always);

2. to compare the economic condition of households, then they should be included as they are highly material to the financial positions of many households.

IMHO, the paper posted attempts to do both - exclude pension plans etc and then claim its wealth comparison is a valid comparison of economic condition ( weakly attempting to brush the issue aside as it does at the bottom of page 2).

That said, there was some interesting data in the paper - in particular the rise of the "next 4 percent", the importance of stock ownership and the data in table 10 and figure K about the rise in total debt.

Thanks for posting.

 

[ERD50]

Watch this documentary..

Sure - I'll bet that's about as balanced as some 'documentary' about a welfare queen, and then bemoaning that it would really PO a lot of poor people.

-ERD50

 

[donheff]

In 2009, Top 1% avg. is (in millions) $14.0; next 4% is $2.7; next 5% is $1.2.

http://epi.3cdn.net/002c5fc0fda0ae9cce_aem6idhp5.pdf

Note that our last net worth poll said that the median for people who post here is between $1 and $2 million. http://www.early-retirement.org/forums/f28/net-worth-poll-55244-10.html

With all the back and forth arguments about net worth around here I suspect the numbers for this forum are artifically low compared to this paper. Most of the posters excluded their home equity since they don't consider that part of their ER income sources. But this wealth survey uses the standard definition of net worth which includes all assets (i.e. what would the total pot be if I kicked today). We are a relatively rich bunch.

 

[M Paquette]

Sure - I'll bet that's about as balanced as some 'documentary' about a welfare queen, and then bemoaning that it would really PO a lot of poor people.

-ERD50

Dontcha just hate it when some namby-pamby richie-rich kid goes to some liberal arts college, gets these socialist ideas in his head, and makes some sellout commie sympathizer movie? Next thing you know he'll be out there advocating gun control.

Hmmm. Come to think of it, gun control for that lower 90% might be handy. The top one percent, having well regulated militias, won't be affected...

"What good is money if you can't use it to strike fear into the hearts of men."​

 

[haha]

I especially liked the guy who said "I certainly would not rule out the possibility of armed rebellion in this country." I'll go you one better bucko- I will not rule out the possbility of invasion by itty-bitty bright red Venutians!

Ha

 

[teejayevans]

If I read Table 3 correctly, anybody with a NW of 1Mil is in the top 5%. For a long time that was the rule of thumb to FI.
TJ

 

[beowulf]

As students of history, it would behoove all of us to remember that no country or form of government lasts forever. The greater the disparity between the relatively small number at the top and the masses beneath them, the more chance there is of an event that will trigger a massive change in government. At this point we are one of the longest lasting democracies there has ever been and we are showing all the signs of this aging. I have no idea what will happen or when, but the next 15 to 20 years will be critical, in many ways, to our ability to remain a democracy.

All it takes is one extremely eloquent and charismatic leader to put an end to our current freedoms - whether he or she is from the left or the right. Vast inequalities, crushing debt and a weakening currency do not bode well for this country. I have no solutions - not a politician, just a very worried citizen.

 

[chinaco]

Sure - I'll bet that's about as balanced as some 'documentary' about a welfare queen, and then bemoaning that it would really PO a lot of poor people.

-ERD50

No... not really.

It does interview some poor people. green card immigrants from Jamaica that got here on a migrant worker visa to harvest sugar cane for our domestic sugar industry which has huge price supports and is not viable on its own merit (at a big cost to tax payer). Even former govt officials say it is an absurd situation. But the company was called on not paying min wage to those workers... then they mechanized the harvest. That price support should stop! It can be purchased on the open market at 1/3 of the support price.

Other than that... it mainly focus on the obscene level of wealth that has been amassed and how there is a focused effort to avoid of taxes. Yep that is it! The film maker was a J&J heir.

 

[ERD50]

That price support should stop! It can be purchased on the open market at 1/3 of the support price.

We agree on that! - ERD50

 

[RetiredGypsy]

Other than that... it mainly focus on the obscene level of wealth that has been amassed and how there is a focused effort to avoid of taxes. Yep that is it! The film maker was a J&J heir.

Do they talk about how much of that money is given away or spent, or just that it's a shame it isn't going to the tax collectors?

 

[LARS]

As students of history, it would behoove all of us to remember that no country or form of government lasts forever. The greater the disparity between the relatively small number at the top and the masses beneath them, the more chance there is of an event that will trigger a massive change in government. At this point we are one of the longest lasting democracies there has ever been and we are showing all the signs of this aging. I have no idea what will happen or when, but the next 15 to 20 years will be critical, in many ways, to our ability to remain a democracy.

All it takes is one extremely eloquent and charismatic leader to put an end to our current freedoms - whether he or she is from the left or the right. Vast inequalities, crushing debt and a weakening currency do not bode well for this country. I have no solutions - not a politician, just a very worried citizen.

Agreed, especially with the "very worried citizen" part. The current situation has all the hallmarks of past the graveyard.

 

[MasterBlaster]

Note that our last net worth poll said that the median for people who post here is between $1 and $2 million. http://www.early-retirement.org/forums/f28/net-worth-poll-55244-10.html

I noticed that none of the statistics in the article were split out by age. I think that's a pretty important variable once you get below the top 5%.

The quoted 2009 numbers should be somewhat depressed compared to any recent comparison datapoint. The great recesssion had takes a pretty big bite out of many peoples net worth.

What should be compared is some measure of net worth in 2009 versus the benchmarks quoted in the OP's post.

 

[engprodigy]

The greater the disparity between the relatively small number at the top and the masses beneath them, the more chance there is of an event that will trigger a massive change in government.

Well I think there is more to it than that. I see no problem with the wealth distribution in our country because I don't think that is the true measure that can be used to discern the potential for revolution.

85% of our population has cell phones.
78% of our population has internet access.
85% of our population has access to an automobile.

I think if a very large portion of the population were living in terrible conditions than the wealth distribution would matter. When even the lower end of the spectrum enjoys the same types of lifestyle than I don't think just because a few million are really well off matters at all.

I lead a much cheaper lifestyle than people that probably have half the income...

I don't see a very large portion of the population suffering while the top 5% plot and scheme to impoverish them.

 

[samclem]

I think if a very large portion of the population were living in terrible conditions than the wealth distribution would matter. . . .
I don't see a very large portion of the population suffering while the top 5% plot and scheme to impoverish them.

Which is more important:
- The objective level of comfort experienced by the poor, or their perception of their condition as compared to the wealthy?
- The actual reasons that the poor are poor, or their perception of the reasons?

There are a growing number of newly unemployed authoritarian rulers who would take exception to your observation that wide distribution of cell phones and internet-linked computers will reduce the likelihood of unrest.

I'm not sure that wealth distribution is a key factor in civil harmony. It's likely more important that people believe they have a real chance to improve their situation ("I can get ahead in this world if I make good decisions and work") and a perception that they've got something to lose if things get ugly.

 

[engprodigy]

I'm not sure that wealth distribution is a key factor in civil harmony. It's likely more important that people believe they have a real chance to improve their situation ("I can get ahead in this world if I make good decisions and work") and a perception that they've got something to lose if things get ugly.

True perception plays a part.

And I believe there are plenty of people trying to create the perception that we need to "stick it too the wealthy" so that everyone has a better life...

I don't think that is the reality of what the majority feel or think about the current situation in our country.

 

[LARS]

It's likely more important that people believe they have a real chance to improve their situation ("I can get ahead in this world if I make good decisions and work") and a perception that they've got something to lose if things get ugly.

And I would add that there is the perception the system is not rigged against them in their quest to improve their situations. A fact that lately, many may be questioning...

 

[Letj]

Well I think there is more to it than that. I see no problem with the wealth distribution in our country because I don't think that is the true measure that can be used to discern the potential for revolution.

85% of our population has cell phones.
78% of our population has internet access.
85% of our population has access to an automobile.

I think if a very large portion of the population were living in terrible conditions than the wealth distribution would matter. When even the lower end of the spectrum enjoys the same types of lifestyle than I don't think just because a few million are really well off matters at all.

I lead a much cheaper lifestyle than people that probably have half the income...

I don't see a very large portion of the population suffering while the top 5% plot and scheme to impoverish them.

I have to agree completely. This is not and will not become some banana republic with 99% of its citizens impoverished without even the basic necessities of life. Those are the conditions that breed revolution and riots. I don't ever see that happen here.

 

[Mulligan]

And I would add that there is the perception the system is not rigged against them in their quest to improve their situations. A fact that lately, many may be questioning...

I agree with you,also LARS. I worry this generation that is just starting their adulthood in general won't have it as good as my generation (I'm in my 40's). I hope I'm wrong. I remember in the early 80's kids could work at the local brick plant and make $10 an hour for summer work. Most kids can't get that pay now. Of course the brick factories are long gone, but that's another issue. I certainly, right or wrong, don't blame it on the rich people though. Globalization plays a big role in this, though. I was surprised to read the other day, that manufacturing in the US still produces 40% more in DOLLAR VALUE still than China does. A lot of people would be surprised by that I imagine, I was.