The wealth gap between rich and poor has increased significantly over the past 50 years thanks to the economy, according to a new report from the Economic Policy Institute.The one percent, in terms of wealth, currently have 288 times the net worth of the median household.
Gap Between Rich and Poor Over 50 Years
The gap between rich and poor, or the difference between money earned by the richest Americans and the typical family, has more than doubled since 1962 when the one percent had more than 125 times the net worth of the median household.
Net worth accounts for all assets including real estate holdings, minus debt.
Most Americans who are considered middle class have suffered a significant decline in wealth in recent decades. The median household experienced a net worth drop to $57,000 in 2010, which is down from $73,000 in 1983.
What’s shocking is that had wealth grown equally across American households as it should have, the median household would have seen a net worth in the ballpark of $119,000 in 2010.
The One Percent Continues to Grow
While the median American household continues to show declines in net worth, the one percent are having no problem growing their wealth. This group of individuals saw its net worth soar to $16.4 million, up from $9.6 million in 1983.
The reason for the gap between rich and poor is the growing income inequality divide where middle class incomes remain the same, while the one percent see substantial growth. Also, the sharp rise in the value of stocks over the report’s 50 year period.
But the biggest reason for the gap in recent years is the Great Recession and struggling economy. Median family income was reportedly 6 percent lower in 2010 than a decade earlier.
Unfortunately, with unemployment still at a high level, and the housing market struggling to recover, middle-class and lower-income families will have a difficult time bridging the gap between rich and poor, especially in trying to keep pace with the one percent.