What's driving the gap between the richest and poorest Americans
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What's driving the gap between the richest and poorest Americans
Economic inequality between the richest and poorest Americans is continuing to widen, boosted by the fallout of the coronavirus pandemic.
According to data from the Federal Reserve, household wealth among the top 1% of Americans grew from $17.08 trillion in Q3 2010 to $35.3 trillion in Q3 2020, and currently sits at $42.13 trillion. (Wealth is defined as the value of all assets of worth owned by a person or entity, while income is the money that the person or entity received in exchange for labor or products, according to Investopedia.)
On the bottom end, however, "modest gains have been largely temporary," Sarah Anderson, the global economy project director at the Institute for Policy Studies and co-editor of Inequality.org, told Yahoo Finance. She noted that the bottom 50% of households, which is nearly half of the U.S. population, owns only 2% of the nation's wealth, as of 2019.
For the top 0.1% of earners (the multi-millionaires and billionaires), both household income and earnings have soared over the past decade as part of an ongoing trend. As of 2018, the concentration of income among the top earners is almost equal to levels seen just prior to the Great Depression in the 1930s. The U.S. also saw similarly high levels of income concentration ahead of the financial crisis in 2008.
“At the top end, U.S. billionaires have enjoyed explosive growth in their combined wealth, in part driven by taxpayer-funded stimulus spending and record corporate profits in 2021," Anderson said.
Companies that suffered major corporate losses during the height of the pandemic recovered mightily in 2021 with corporate profits growing by 22.6% that year, according to the Bureau of Economic Analysis (BEA). Meanwhile, compensation for the chief executives of large U.S. corporations boomed in the past decade while worker wages remained flat, according to Inequality.org. In 1980, the ratio between CEO pay and worker pay was around 42 to 1. Last year, it was 324 to 1, Anderson said.
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