How net wealth widens the gap
It's one thing to be in the 1 percenter club for your income, but it's a whole different ball game to qualify by net worth.
The Pulse is down today on the revelation that if you look at the chasm between the rich and the rest from a different vantage point, it grows -- exponentially.
When we talk about the wealthiest 1 percent, we’re usually talking about income. You need to pull down about $380,000 a year -- or eight times the average American -- to get into that elite club. The New York Times did an excellent piece over the weekend about income 1 percenters.
On Tuesday, the Times' Economix blog continued the conversation by unearthing a 2007 Fed survey of the net worth of Americans -- that’s the total value of our homes, cars, investments, and the like –- and found that to qualify for the top 1 percent of net worth in America, you have to be worth at least $8.4 million, or about 82 times the average of $121,000. (Sure, the study is nearly five years old, but when you consider that the wealth gap has grown substantially in the wake of the Great Recession, the numbers become all the scarier.)
Some highlights from the Fed's survey:
— The wealthiest 1 percent took in about 16 percent of overall income — 8 percent of the money earned from salaries and wages, but 36 percent of the income earned from self-employment.
— They controlled nearly a third of the nation’s financial assets (investment holdings) and about 28 percent of nonfinancial assets (the value of property, cars, jewelry, etc.). These measures will be particularly interesting to revisit when the new, post-recession data arrives.
— Money may not buy happiness, but the Fed survey suggests it buys good health. About 90 percent of the 1 percenters describe themselves as being in excellent or good health, compared with 75 percent of everybody else. About 85 percent expect to live into their 80s, compared with 68 percent of everybody else.
— Nearly half of the 1 percenters own two or more pieces of real estate. That was true for just 5 percent of the rest of the population.
— Nearly a third of 1 percenters own a vehicle besides a car, compared with 14 percent of other households. And not just in the driveway. While the rest of us are slightly more likely to own a mobile home, 1 in 5 of the wealthiest Americans say they have a boat, plane or helicopter, compared with 1 in 22 in other households.
— About three-quarters of the wealthy said they spent less than they earned in the previous year, compared with about 44 percent of everybody else. This is also a category that will be fascinating to track in the post-recession data.
The survey also found 80 percent of wealth 1 percenters feel “lucky” when it comes to matters of the wallet. Go figure.