Wealth and wage inequality touches on many of my favorite topics: Saving and Investing, wealth & salary, real estate & expenditures, behavioral finance & Cognitive error. People often make wrong assumptions about wealth and/or wage inequality data – they think it is bad, but a lot Worse than they thought (see image to the right).This is mainly (but not completely) American issues; Europe For example, income and wealth inequality is less than we have here.

Most importantly, it provides an opportunity to think about complex issues, including financial, psychological, behavioral, policy, and even time, from a vantage point.That’s why I’m always keen to check any new analysis tools This gives us a new way to analyze relevant data.

The latest such tool comes from the economic trio of Thomas Blanchet, Emmanuel Saez and Gabriel Zucman at the University of California, Berkeley. They introduced a very interesting new tool: real-time inequality. (HT Poly K pass through unbeatable; method here)

Let’s use this tool to do some wage and wealth inequality analysis in real time:

Confirm my prior, real-time inequality Data sets and graphs showing how uneven wealth in the US actually is; sure, the top 10% and top 1% have increased substantially over the past 40 years, but that’s almost modest compared to the top 0.1% and 0.01% . The wealth of those at the top of the pyramid has soared disproportionately since the 1980s.

We all know that the richer you are, the better you have performed during the pandemic, since the global financial crisis, or during the bull market of the 1980s and 1990s. But most people don’t know how uneven those gains are. Consider the top 1% and different tiers of income: The top 1% saw an average increase of $1.2 million, while the top 10% saw an increase of $230,000, and the next 40% saw an increase of $33,000. But those numbers are rounding errors compared to revenue growth of $5.8 million in the top 0.1% and $28 million in the top 0.01%.

Income Tier Comparison

Income tier comparison, including top 0.1% and 0.01%

This is even more evident when we compare wealth (often public stocks and bonds, real estate, alternative investments and private businesses). During this period, the top 1% added $16 million to their wealth, while the top 10% added $2.9 million and the next 40% added $240,000. Again, we see that these numbers pale in comparison to the wealth achieved by the top 0.1% of $89 million and the top 0.01% of $500 million.

The average wealth increase of the top 0.01% by 1 billion is a staggering number:

wealth class comparison

Wealth grade comparison, including top 0.1% and 0.01%

Comparing wealth growth at different economic levels since 1981:

Bottom half = $48,000
Middle 40% = $240,000
Top 10% = $2.9 million
Top 1% = $16 million
Top 0.1% = $89 million
Top 0.01% = $500 million

This is pretty amazing.

These are complex issues that can be emotional, political, and easily misunderstood. But here’s the bottom line: Compared to this new super-rich category, the top 1% or 10% are relatively close to the bottom half of the country. This has implications for society as a whole, whether people believe the country is on the right track or not, and how policymakers might respond.

source:
real-time inequality
Thomas Blanchett, Emmanuel Seth, Gabriel Zuckerman
Department of Economics | UC Berkeley
https://realtimeinequality.org/

Before:
Wealth Distribution Analysis (July 18, 2019)

Wealth Composition Difference: Middle Class to Top 1% (June 5, 2019)

John D. Rockefeller was richer than you – richer than you… (22 February 2016)

Is the poor better than King Louis XIV? January 16, 2015

The gap between rich and poor widens (November 13, 2019)

salaries in the US (2013-2021)

Understanding Wealth Comparisons (2004-2020)