Income And Wealth Gaps

Money begets more money.

Income and wealth gaps. Income is earned or received during a limited period. What is the wealth gap. Income is the flow of money obtained from factors of production. Here i ll mention some main themes from two studies one focused on income differentials and one on wealth differentials.

In 1989 the richest 5 of families had 114 times as much wealth as families in the second quintile 2 3 million compared with 20 300. As a result the wealth gap between america s richest and poorer families more than doubled from 1989 to 2016. Black white gaps in income and in wealth have been fearsomely persistent over time. The term income gap refers to the gap in earnings between two groups such as the 1 and the 99 white and black americans or more broadly the haves and the have nots.

Discrimination compounds things and wealth and income gaps are passed on to the next generation even when the inequalities in pay are ironed out it will be some time. As such it is clearly influenced by the income of a household but the two are not perfectly correlated. The central premise of shapiro s book is that inequality is driven not by differing attitudes values and characteristics that promote or hinder achievement among rich middle income and poor populations but rather by income and wealth gaps figure 1 and inequitable public policies structural racism that were designed to advantage one group over another. The racial income gap.

In 2013 the median wealth of the nation s upper income families 639 400 was nearly seven times the median wealth of middle income families 96 500 the widest wealth gap seen in 30 years when the federal reserve began collecting these data. It s important to note that the wealth gap is even wider than the income gap but because incomes are easier to tax the income gap often gets more traction in political discussions. A new pew research center analysis of wealth finds the gap between america s upper income and middle income families has reached its highest level on record. On the other hand wealth is the market price of the stock of asset possessed by an individual or household.

The wealth gap in america has been growing since at least the 1970s as income levels stagnated for lower and middle class households while continuing to grow for households at the top of the. Conversely wealth is accumulated over time i e. The wealth gap on the other hand gets at assets and net worth assets minus debts rather than looking at just income. Wealth is the sum of resources available to a household at a point in time.