Wealth Gap in USA
While United States of America is among the more affluent and wealthy nations of contemporary world, historical trends in income and wealth distribution shows that most of the wealth has been concentrated with a very small percentage of people (Keister , and Moller, 2000). Where just 1 percent of population held more than 30 percent of total domestic household wealth in early 1920’s and 30’s, their holding increased to more than 40 percent by 1980s and 90s, notwithstanding all the welfare and socio-economic equality policies of government.
Moreover, the same elite group also experiences highest percentage increase in personal wealth, and has claims to more than 50 percent of total financial assets (Keister , and Moller, 2000). Although at times of depression or economic bubble burst, the wealth gap gets reduced, there has never been a scenario in United States when income and wealth distribution has been in the proximity of uniformity. Wealth mobility has always taken an upward curve to get congregated in the hands of those who are already possessor of its largest chunk.
In fact, United States society has maximum degree of wealth inequality among all the developed countries of world. This paper studies causes of unequal income and wealth distribution, the factors influencing these causes, the pattern of income and wealth distribution and consequences from the unequal distribution of wealth. The paper studies wealth distribution in United States for two periods 1. 1960-1989. and 2. 1989-2001. Historical Trends in Wealth Distribution
Although the issues underlying causes of wealth gap and income inequality are very complex, the simple fact that emerges even from the preliminary analysis points towards a wealth gap that is so wide that it appears an impossible task to even marginally rationalize it. According to data available with Bureau of Economic Affairs, the top 8 percent of wealth owners hold around 70 percent of total family wealth in U. S, while lowest 40 percent clinging to a mere 8 percent of the wealth.
While these statistics are merely grossly indicative, they show a very skewed and imbalanced economic perspective of US society. Keister , and Moller, (2000) have shown cited studies from Survey of Income and Program Participation, Panel Study of Income Dynamics along with Survey of Consumer Finances to empirically determine historical trends in wealth inequality. The wealth distribution is determined on following components/criteria 1. Regular Income
2. Tax records 3. Fixed assets 4. Stocks and Investments Analysis of data collected from these sources has led researches to conclusively establish the fact of huge wealth gap existing in US society along with establishing the trends in the wealth distribution over almost past 80 years. Studies indicate that in the period 1915-1925, though the wealth gap was large per se, it was more equally distributed than the gap existing in European nations.
Wealth inequality, thereafter, continued to rise from 1930s to 1960s, until reaching its peak in 1962 when top 1 percent of wealth owners owned nearly 35 percent of the total wealth and top 5 percent wealth owner had control over more than 80 percent of the total wealth. Further research suggests that where the total wealth of all the Americans has rom 1960 to 1990s, the gap between mean and median wealth has also increased considerably, indicating towards widening inequality in wealth.
The gap appeared to decrease through rest of 60s and 70s due to various social welfare and income generation programs launched by government. In this period the share of top 1 percent of wealth owners declined to 19 percent from previous high of 30 percent. However, by 1980 it again started to climb, reaching to peak in 1990s when the former sharp inequality was restored. Research from Danziger et al 1989, Wolff 1993 and many other economists and social scientists show that from 1983 to 1989, share of top 0.
5 percent of wealth holders increased by 5 percent. This rise becomes especially conspicuous in the face of corresponding decline in wealth of poorest 80 percent of population by 2 percentage point in the same period. Further, the bulk of growth in net wealth for the period from 1983 to 1989 took place in top 10 percent of wealth owners, strengthening the idiom that ‘Rich gets richer and poor get poorer’. By 1990s, wealth distribution in US had become much more skewed and in favor of the elite group than European nations.
Meanwhile the advent of Information Technology and a dot-com revolution created class of neo-riches that further skewed the wealth map of United states. Wealth distribution from 1989-2001 Implementation of new technology, globalization, and Internet revolution created new set of Internet multi-millionaires, while taking the stock of many existing corporations over many fold. The new model of income generation also had significant on wealth distribution in American society. Following table indicates family wealth generation and distribution for period from 1989-2001.Sample Essay of EssayTigers.com