Wealth inequality in the U.S. is even more astounding than previous statistics showed.
By Lynn Stuart Parramore
July 16, 2014
Just when you think you’ve got a handle on how bad wealth inequality is in America’s Second Gilded Age, researchers find it’s even worse than you imagined.
The European Central Bank has crunched the numbers and it looks like wealth inequality in the U.S. is even more astounding than previous statistics have shown. Of the 10 rich countries the researchers analyzed, America’s wealthy have grabbed the largest portion of the country’s wealth. The most affluent 1 percent is sitting on between 35 percent and 37 percent of the nation’s wealth, according to a working paper by ECB senior economist Philip Vermeulen. The Federal Reserve figure that has been previously cited had the 1 percent’s share at 34 percent. But actually it looks like that’s a lowball figure.
Economists studying wealth have been dealing with the fact that when you reach the stratosphere, wealth becomes a sort of dark matter. It’s got a huge gravitational pull, but it’s very hard to trace. It likes to hide, and slip over borders and between bank accounts in the blink of an eye. Vermeulen calls the billionaires whose wealth manages to evade researchers the “missing rich.”
Unfortunately for researchers, rich people don’t tend to respond to surveys that aim to study their wealth; some don’t have the time, but undoubtedly many just don’t want anyone getting their mitts on that sensitive information. So researchers have to figure out other ways to track wealth, including the popular Forbes’ billionaires list, which, while not entirely accurate (it misses a lot of people, like dictators whose money derives from the state), at least makes an attempt to shine a light on the wealth amassed by global tycoons.
Vermeulen warns that even what’s been revealed so far doesn’t give the whole picture. “The results clearly indicate that survey wealth estimates are very likely to underestimate wealth at the top.” You heard that right. Even 37 percent is probably not high enough.
In other countries Vermeulen’s report studied, the 1 percent have also been getting a bigger share of the pie, like the Netherlands, whose rich now hold 17 percent of wealth, up from 9 percent. The French and Spanish wealthy have also increased their share by a couple of points.