American families worse off financially than in 1998 Working class has seen net worth drop 34 percent over last two decades
Quote:
Incomes are up, the stock market is soaring, and home prices have largely recovered from the mortgage meltdown. But Americans still haven't regained all the wealth they lost and, on the whole, are worse off than in 1998.
The Federal Reserve's just-released Survey of Consumer Finances, done every three years, tells a stubbornly grim tale. Median net worth for all families, measured in 2016 dollars, dropped 8 percent since 1998. (The survey's definition of families includes single people and childless couples and is equivalent to how other government surveys define households.) In addition:
• The lowest income families — the bottom fifth — saw their net worth fall 22 percent.
• Hardest hit is the working class, the second-lowest income tier, whose net worth declined 34 percent.
• Families in the middle, with incomes from $43,501 to $69,500, treaded water, up just 3.5 percent.
• For the top 10 percent, net worth rose 146 percent since 1998. In 2013, the last time the survey was done, net worth for the top 10 percent had risen about 75 percent since 1998.
Net worth is what people own — their houses, cars, retirement and savings accounts — minus what they owe in mortgages, student loans, credit cards and car loans. An analysis of the 2016 data shows that people in the lowest two income bands are getting squeezed from both ends.
Median debt for all families increased by 25 percent since 1998 but rose much more sharply for the lower and working classes. Debt was up 57 percent for those with incomes below $25,300 and up 58 percent for those with incomes between $25,301 and $43,500. By contrast, debt for the middle class — households with incomes from $43,501 to $69,500 — rose 12.5 percent.
The top 10 percent, those with incomes above $177,100, saw a surge in debt as well. The median amount they owed rose 61 percent — but the value of their assets more than doubled. Contrast that with the lower class, who saw the median value of their assets slide by 47 percent, and the working class, whose asset value declined 27 percent.
Homeownership dropped in all income categories but most steeply in the bottom three. The homeownership rate fell 11 percent for the lower class, 7 percent for the working class and 5 percent for the middle class. Among the highest-earning families, the decline was less than 2 percent. The The value of their homes, though, rose 66 percent, compared with 25 percent overall.
The decline in wealth actually started long before the recession, says sociologist Fabian Pfeffer, research assistant professor at the University of Michigan's Institute for Social Research. The housing bubble, which peaked in 2007, obscured the fact that many Americans had been losing ground since the 1980s, he says.
Economists can debate precisely why so many people have taken it in the teeth in recent decades, but it's clear that years of stagnant or dropping incomes have taken a toll on their ability to get ahead.
The Fed survey shows the median family income before taxes peaked in 2004; by 2013, it had fallen more than 12 percent. Incomes have since recovered somewhat but are still 4 percent lower than that high-water mark.
Rant:
So all the bitching about the working class deterioration is real and not the result of the complainers making it up to cover up their racism, or their stubbornness about catching up with times. True Obama inherited a really bad situation but the recovery he engineered only benefited a minority of America, most likely in part those who from their in their well off bubbles shame
those in flyover America or need to shop at Walmart.
So Trump is bragging about the low employment rate on twitter today. His stock market boom is great for those in the bubble and any employment is better then none. But part time and contract work is just is not the same as a full time job/solid career with a guaranteed nice pension at the end.
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