Raphael ThysThe top 1 percent isn’t doing as well as you think.
Although there’s lots of noise about the growing wealth gap between the rich and poor, that isn’t the fastest-growing money rift in America. It’s between those who are merely rich and the super rich.
I know, break out the violins.
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From an economic perspective, the most dramatic wealth gap is between middling millionaires, who have seen only modest gains, and the booming billionaires, who now seem to defy economic gravity. It’s between the guy making $300,000, who still feels poor, and the man who made $37 million a day for a year. Both are lumped together by politicians, the media and even economists as “the rich” or “the 1 percent,” who are gaining at the expense of everyone else.
But a new study by a top economist gives us the clearest picture to date of the wealth gap among the wealthy. Emmanuel Saez, an economics professor at the University of California, Berkeley, who is a leading expert on top incomes, and Gabriel Zucman, assistant professor at the London School of Economics and a visiting scholar at UC Berkeley, found that the top 1 percent is really two groups.
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First, there are those at the bottom of the 1 percent. Those are folks who are worth single-digit millions, around $7 million or so as of the latest Fed survey. The people between the top 1 to 0.5 percent have seen their share of national wealth remain flat for the past 20 years.
Their share of the wealth pie is the essentially the same as it was in 1995.
Even those who are between the top 0.5 percent to the top 0.1 percent have barely seen any increase in their share of wealth.
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The big winners are those in the top 0.01 percent. These folks, who have a net worth of more than $100 million, have seen their share of wealth more than double since 1995, from around 5 percent to just under 12 percent. Over the past half century, they have nearly quadrupled their share of wealth.
In other words, the 0.01 percent is leaving the 1 percent in the dust.
How are they doing it? The top 0.01 percent are stock-market winners—CEOs, bankers, entrepreneurs—who are riding financial markets to outsize gains. The rest of the top 1 percent are often mere wage earners.
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A similar pattern is emerging with incomes—though it’s not as dramatic. The share of income going to those between the top 0.1 percent to the top 0.01 percent has tripled since 1980. But the income share for those between the top 1 percent and the top 0.5 percent is up a far more moderate 50 percent.
Wealth and income are both becoming highly concentrated among the very tiny slice of the super, super rich.
We shouldn’t feel sorry for this “lower upper class.” But we also shouldn’t lump all “1 percenters” in the same bucket, especially when it comes to setting policy or debating wealth in the media.
Mark Zuckerberg and his accountant may both be “1 percenters.” But financially, they are as different as the 1 percent and the middle class.