As mentioned in the NY Times and Huffington Post, a new analysis has been presented on US wealth distributions, but they did not report much of the data or results that were obtained. I have looked at the report by Emmanuel Saez (UC Berkeley) and Gabriel Zucman (LSE and UC Berkeley) to present more results.
The authors give household wealth based on looking at income sources, and using rates of return for each income category. This is called the capitalization method, and was evaluated for each year since 1913, a century ago. Their method agrees with the Survey of Consumer Finances by the Federal Reserve Board at the top 1% level , which is only done every three years. However, their method is more comprehensive and accurate at incomes above the top 1%.
The Saez-Zucman report slide presentation is 62 slides with many multiple graphs, and here we only report some of the main results. First, if you think the report is about you or me, it isn’t. It is mainly focused on the top 0.1% (1 in a 1,000) which starts at $20 million today. It also concerns the top 0.01% (1 in 10,000) which starts at $100 million today. The top 1% starts at $4 million.
The increase in wealth share has not occurred for income classes below the top 0.1%.
For the top 0.1% (too bad they didn’t give names to these classes. In California, we would call them “gated community residents”). Back to the top 0.1%, after spending the 1940′s to 1980′s at only 10% of US wealth, they are now back to having 22% of US wealth. That’s where they were in the Roaring Twenties.
The top 1% to 0.5% bracket own 7% of total wealth, which has remained fixed. The top 0.5% to 0.1% bracket own 11% of US wealth. The top 0.1% to 0.01% bracket own 10% of US wealth. The top 0.01% have risen from only 6% to 11% now. Adding up the brackets starting at 1% gives 7+11+10+11 = 39% of US wealth. (A single graph shows it as 40%.)
Since it has been said elsewhere that the top 1% pay 37% of US taxes, we see that per unit of wealth, they pay no greater a rate than the other 99% (didn’t that 99% have something to do with a march on Wall Street.)
Household wealth is now about 4.3 times national income. The largest wealth sector is in pensions. The other three leading sectors of about equal amounts are currency-deposits-bonds, equities, and housing.
Yield on private wealth is about 7%, and total return is 8% (decadal averages).
The top 10% have about 75% of the wealth, meaning the other 90% have 25% of the wealth. If I understand the slides correctly, the top 10% starts at $500,000 in wealth. Around 1930, the top 10% had 80% of the wealth, and in 1986 they had a low of 64% of the wealth. The top 10% to 1% bracket has 35% of the wealth.
The wealth of the 90% has 25% in pension funds, and less than 10% in business assets, equities and fixed claims, and housing.
The current savings rate of the 90% is about 2%. It was negative from 1997 to 2007. It was over 10% in the early 1980s.
The savings rate of the top 1% is back to 40%. The savings rate of the top 10% to 1% bracket is 10%.
Their figures compare well to the Forbes 400, which is the top 0.00025%, and which has 3.2% of the wealth.