US Inequality Widened During Economic Recovery

Income inequality surged during the first two years of the economic recovery as the top 7 percent of Americans saw their average net worth increase by 28 percent between 2009 and 2011, while the wealth of the remaining 93 percent of the population steadily declined during the same period, according to a study by the Pew Research Centre.

Income inequality surged during the first two years of the economic recovery as the top 7 percent of Americans saw their average net worth increase by 28 percent between 2009 and 2011, while the wealth of the remaining 93 percent of the population steadily declined during the same period, according to a study by the Pew Research Centre.

Since the economy officially emerged from the recession in mid-2009, the wealthiest 7 percent of American households saw their aggregate wealth rise by an estimated $5.6 trillion, while the remaining 93 percent saw their overall wealth fall by an estimated $0.6 trillion, said a Pew report, which analysed U.S. census data released last month.

From 2009 to 2011, the average net worth of the nation’s 8 million most-affluent households jumped from an estimated $2.5 million to $3.2 million, while the mean wealth of the bottom 111 million households fell 4 percent from $140,000 to $133,000.

Overall, the amount of wealth held by American households increased 14 percent between 2009 and 2011, going from $298,000 to $339,000, the report said. Yet the study also revealed that only the 13 percent of households with a net worth of $500,000 or more saw their wealth increase. Every other income group in the U.S. saw their net worth decline.

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Paul Taylor, executive vice-president of the Pew Research Centre and co-author of the report, said:

[quote] It has been a very good recovery for those at the upper end of the wealth distribution. But there has been no recovery for the lower 93, which is nearly everybody. [/quote]

Pew’s report throws a spotlight on a decades-long trend of increasing wealth disparity across the U.S., despite rising popular and political awareness of the issue.

The issue of inequality leapt to prominence in late 2011, when the Occupy Wall Street movement spread from Washington to elsewhere, rallying global support against corporate greed and excess while drawing attention to the growing financial chasm between the wealthiest one percent of Americans and the rest.

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Pew says the main reason for the widening gap is that the wealthiest households have their assets concentrated in stocks and other financial instruments, while the others have their wealth stored in the value of their homes.

Both stock and home values were pummelled during the recession. But in the recovery, stock values have rebounded and reached new highs this month. Housing values, however, have stayed mostly flat, although there have been some stirrings of a recovery in the past year.

“The results are entirely sensible, but depressing,” said Richard Fry, co-author of the Pew study. “It’s a stark story of two Americas.”