Fed: Gap between wealthy and average Americans widening

The gap between the nation’s wealthiest and the rest of Americans has expanded in recent years, according to the Federal Reserve.

A new study released Thursday by the Federal Reserve found that gains in income have been “far from uniform” over the last few years, with those making the most doing significantly better than everyone else.


Those at the bottom of the scale continued to see their real incomes shrink from 2010-2013, while those in the middle of the pack saw little change, meaning their paychecks still fell behind where they were before the financial crisis.

Meanwhile, the nation’s wealthiest saw broad income gains. While their income still lags behind where it was in 2007, the Fed’s report found that, in the last several years, the economic comeback was far kinder to the wealthy than anyone else.

“Data from the 2013 [survey] confirm that the shares of income and wealth held by affluent families are at modern historically high levels,” the Fed wrote.

The survey comes as Democrats are gearing up for a final populist push ahead of the midterm elections, after making income inequality a major theme for much of the year.

Specifically, the Fed’s survey of consumer finances found that the top 3 percent of all earners enjoyed a sizeable comeback over the last few years and now command nearly a third of all income in the country. In 2013, the top three percent received 30.5 percent of all income, near the 31.4 percent seen in 2007 and up significantly from the downturn to 27.7 percent seen in 2010.

Overall, the top 10 percent of U.S. earners end up dominating the amount of income received. The lower 90 percent of U.S. earners receive just 52.7 percent of all income.

The picture is even starker when it comes to wealth. There, the top 3 percent control 54.4 percent of all wealth, up from 51.8 percent in 2007. In 1989, the top 3 percent controlled 44.8 percent of the wealth.

Now, the top 3 percent actually control more wealth than the bottom 90 percent, which controlled just 24.7 percent of wealth in 2013, down from 33.2 percent in 1989.

According to the Fed, part of the reason incomes for average Americans have grown so much less quickly than those at the top is because of where each group typically enjoys income gains. For many middle-class Americans, their home is their strongest asset, but in the last several years, home price increases have basically kept up with inflation at 2 percent.

Meanwhile, corporate stock holdings, predominantly held by the rich, grew 10 percent during that time. Furthermore, while the value of stock increased, the share of people actually owning it fell.

And there are signs that middle and lower-class Americans are still struggling to climb back. Homeownership rates fell during the time of the Fed survey, as did participation in retirement plans.

The amount of debt Americans held also fell from 2010-2013, primarily thanks to a decline in Americans with a mortgage or other home-secured debt — that fell from 47 percent to 42.9 percent.