Bad news for bottom 60 percent
What do you know? The rich really do get richer and the poor really do get poorer.
Median net worth increased between 2000 and 2011 for households in the top two quintiles of the net worth distribution (the wealthiest 40 percent of Americans) while declining for those in the lower three quintiles (the bottom 60 percent) according to new statistics released by the U.S. Census Bureau.
The result was a widening wealth gap between those at the top and those in the middle and bottom of the net worth distribution. Each quintile represents 20 percent, or one-fifth, of all households.
“The types of assets that households hold may vary,” Census Bureau economist Alfred Gottschalck said. “Therefore, business cycle changes over time may affect households differently based on their net worth quintile and demographic characteristics.”
The Census Bureau study found that median household net worth dropped by more than $5,000 for households in the first (bottom) net worth quintile and increased by $61,000 (or 11 percent) for those in the highest (top) quintile.
Median net worth of households in the highest quintile was about 40 times higher than the second lowest quintile in 2000, and it rose to 87 times higher in 2011.
The report also details a widening of the wealth gap for households sharing the same demographic characteristics, such as age, race and Hispanic origin, and educational attainment of the householder.
For example, the median net worth for whites in the highest quintile was 22 times higher than for those in the second-lowest quintile in 2000.
By 2011, that had increased to nearly 32 times higher.
For blacks, the ratio increased from 140 to 328, and for Hispanics, the increase was from 158 to 221.
Between 2000 and 2011, the wealth gap also widened between groups with different demographic characteristics.
For example, the ratio of median net worth of whites to that of blacks rose from 10.6 to 17.5 between 2000 and 2011, and the ratio of whites to Hispanics also increased from 8.1 to 14.4.
“However, when looking at the highest quintile for these groups, we see that blacks experienced higher relative increases in median net worth than … whites and Hispanics,” said Census Bureau economist Marina Vornovitsky. Of course, whites had more assets to start with.
For blacks in the highest quintile, median net worth increased by 63 percent to $229,000; for Hispanics in the highest quintile, it climbed by 18 percent to $250,000, and for whites in the highest quintile, it rose by 12 percent to $754,000.