Concentration of Wealth is not only in the 1% but mainly in the top 0.01%. There’s a common theme that paints income disparity and wealth disparity as a struggle between the 99% and the 1%. New research from Emmanual Saez and Gabriel Zucman shows that that split is different from what most see: It’s not the 99% and the 1%. It’s the 99.9% and the 0.01%.
Source: Emmanuel Saez (UC Berkeley) & Gabriel Zucman (LSE and UC Berkeley). The Distribution of US Wealth, Capital Income and Returns since 1913
To see how stark the income disparity is in dollars and cents, this graphic, courtesy of World Top Incomes Database, shows different demographic slices of the American wealthy and their average household income. Household income isn’t wealth per se – it’s the rate of return on both work done and on capital assets.
What’s the source of this income? It’s the rate of return on the stock market. By and large, the stock market has recovered from its 8000 point low of the bear market of 2007 to 2009, and is now at around 16,000. This, coupled with an economic recovery that’s been built more on increases in productivity rather than an increase in manufacturing volume, means that the rate of return on holding capital has exceeded the rate of return on direct investing in business by a considerable margin: it is probably not sustainable but mainly cyclical.
This means that top executives CEOs and large business owners (the 0.01%) have made a lot of money, but the average Wall Street trader or your local doctor (the 1%) haven’t had the same rate of growth – in terms of shares of the national wealth, they’re about equal, as seen in the first graph. Just remember that the number of people in the red line is one tenth the number of people in the blue line. The remaining 0.9% of the top 1% have more or less held steady, but the doubling in value of the stock market has largely left them (and the tens of millions of Americans who’ve invested their retirement funds) behind. For a more equitable, or at least ethical, wealth distribution, we know where to start.