Dow Breaks 10k But Typical Hshld Wealth Down Since '83

Press Release
For Immediate Release - March 29, 1999
Contact:Betsy Leondar-Wright
(617) 423-2148 x13

Dow Breaks 10,000 But Typical Household Wealth Down Since 1983

New report reveals growing wealth gap as top 1% of households reap big gains, average worker real wages still under 1973 levels

Download Shifting Fortunes PDF 284 KB

Behind the hoopla of the booming economy, most Americans have actually lost wealth, reveals Shifting Fortunes: The Perils of the Growing American Wealth Gap, a new report published by United for a Fair Economy. Most households have lower net worth, adjusting for inflation, than they did in 1983, when the Dow was still at 1,000.

From 1983 to 1998, the S&P 500 grew a cumulative 1,336 percent. The wealthiest households reaped most of the gains. Average workers are earning less, adjusting for inflation, than they did when Richard Nixon was president.

Shifting Fortunes features the latest findings of economist Edward Wolff of New York University, a leading authority on wealth distribution. The top 1 percent of households have 40 percent of the wealth. Financial wealth is even more concentrated. The top 1 percent have nearly half of all financial wealth (net worth minus equity in owner-occupied housing).

Shifting Fortunes, by Chuck Collins, Betsy Leondar-Wright and Holly Sklar, with forewords by Juliet Schor and Lester Thurow, provides an up-to-date look at the worsening distribution of wealth and income, homeownership, pensions, savings and debt, and offers recommendations for remedial action.

The report's key findings include:

  • Since the mid-1970s, the top 1 percent of households have doubled their share of the national wealth. The top 1 percent of households now have more wealth than the entire bottom 95 percent.
  • The boom has been a bust for millions of Americans. The inflation-adjusted net worth of the median household fell from $54,600 in 1989 to $49,900 in 1997. Nearly one out of five households have zero or negative net worth (greater debts than assets), an increase from the 1980s.
  • Weekly wages for average workers in 1998 were 12 percent below 1973, adjusting for inflation. Productivity grew nearly 33 percent in the same period.
  • Almost 90 percent of the value of all stocks and mutual funds owned by households is held by the richest 10 percent. An estimated 86 percent of the benefits of the increase in the stock market between 1989 and 1997 went to the top 10 percent of households, with 42 percent going to the richest 1 percent.
  • With mortgage interest rates at low levels, the U.S. homeownership rate hit a record 66 percent in 1998, but for people under age 55, homeownership rates were actually lower in 1998 than in 1982.
  • Families have sunk deeper into debt. Household debt as a percentage of personal income rose from 58 percent in 1973 to an estimated 85 percent in 1997.
  • Between 1983 and 1995 (the last completed Federal Reserve Survey of Consumer Finances), the inflation-adjusted net worth of the top 1 percent swelled by 17 percent. The bottom 40 percent of households lost an astounding 80 percent of net worth. The middle fifth of Americans lost over 11 percent. Only the top 5 percent gained any net worth in this period. The top 5 percent have more than 60 percent of all household wealth.
  • The median black household had a net worth of just $7,400 in 1995-about 12 percent of the $61,000 in median wealth for whites. Median black financial wealth was just $200-a mere 1 percent of the $18,000 in median financial wealth for whites.
  • The median Hispanic household had a net worth of only $5,000 in 1995-just 8 percent of whites. Median Hispanic financial wealth was actually zero.

"We've had over two decades of public policies and corporate practices benefiting affluent asset owners at the expense of wage earners," says Chuck Collins, co-director of United for a Fair Economy. "We need policies that enable low- and middle-income families to earn, save and invest more money for the future."

United for a Fair Economy is a national organization that spotlights increased economic inequality and offers positive solutions for shared prosperity.

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