America's top 10% controls 60% of the wealth. The bottom half holds 6%.
The top 10% of wealthy Americans now control 60% of the nation’s wealth, while the poorer half of the country holds only 6%, according to a report from the Congressional Budget Office.
Left-leaning think tanks produce regular updates on growing wealth inequality in America. This analysis, though, comes from a nonpartisan federal agency, one whose findings regularly inconvenience both Democrats and Republicans.
The new report, released this month, illustrates the role of Social Security in shoring up the wealth of middle-class and working-class Americans. If you subtract Social Security from the equation, the top 10% control nearly 70% of the nation’s wealth, and the bottom half holds only 3%.
“For 90% of households, Social Security is the most important thing in their portfolio,” said Monique Morrissey, senior economist at the left-leaning Economic Policy Institute. “And any cuts to Social Security, therefore, would have a huge impact.”
Trump, Harris pledge to protect imperiled Social Security
The Social Security fund is projected to run short in about 10 years. Both leading presidential candidates have pledged to protect it.
Democrats in Congress accuse Republicans of seeking to cut Social Security benefits by raising the retirement age. Republicans counter that President Joe Biden has imperiled the program with reckless overspending.
Sen. Sheldon Whitehouse, the Rhode Island Democrat, said he requested the budget office analysis to highlight wealth disparities, and to show how much Social Security matters to lower-income Americans. Whitehouse chairs the Senate Budget Committee.
"As this CBO report shows, the top 1% of families now control more than four times the wealth of the entire bottom half," Whitehouse said in a statement to Paste BN.
Presidential candidate Kamala Harris proposes to protect Social Security “by making millionaires and billionaires pay their fair share in taxes,” according to campaign documents.
Democrats propose to reap new revenue by raising tax rates on the wealthiest Americans and corporations, and by going after wealthy tax cheats.
The Republican platform for 2024 includes a pledge to “fight for and protect Social Security and Medicare with no cuts, including no changes to the retirement age.” Candidate Donald Trump has reasoned that economic growth and job creation would naturally boost payroll tax revenue and support Social Security.
American wealth quadrupled from 1989 to 2022
The new report finds that the overall wealth held by American households nearly quadrupled from 1989 to 2022, from $52 trillion to $199 trillion, after adjusting for inflation. The figures come from the federal Survey of Consumer Finances.
The budget office has calculated wealth disparities before, but the new report is the first to include projected Social Security benefits.
All told, Social Security accounts for about 20% of America’s wealth, the report found. But the benefits are much more important to lower-income households.
Social Security benefits account for roughly half of the wealth of Americans in the bottom 25%, the analysis found, but for only 8% of the wealth of the top 10%.
The report found wealth inequality on the rise, even when you factor in Social Security:
- The top 10% of Americans held 60% of all wealth in 2022, up from 56% in 1989.
- The top 1% held 27% of all wealth in 2022, up from 23% in 1989.
- Families in the bottom half held only 6% of wealth in 1989 and in 2022.
The analysis “is stating the obvious, that wealth in the United States is concentrated, and getting more so,” said Mark Zandi, chief economist at Moody’s Analytics. “This has been in the makings, really, for two generations, maybe three. And the trend lines are disconcerting.”
Wealth is rising for rich and poor alike
Yet, the budget office report also shows that the poorest Americans have grown wealthier along with the wealthiest.
In fact, family wealth increased most rapidly from 1989 to 2022 among some of the least affluent households.
Family wealth rose by 232% in those years for Americans at the 25th percentile, meaning that three-quarters of households were wealthier. In the same span, family wealth grew by 148% for households at the 90th percentile.
“The question, fundamentally, is, are living standards improving over time? And the answer is yes,” said Kyle Pomerleau, a senior fellow at the right-leaning American Enterprise Institute.
The wealth analysis draws from the 2022 Survey of Consumer Finance, which found that household wealth in America swelled at a record pace during the pandemic. From 2019 to 2022, the median net worth of U.S. families grew 37% to $192,900, after inflation, the largest rise in the history of the survey. Wealth rose at all income levels.
“Widespread economic growth that is shared broadly in the population is a good thing,” said Owen Zidar, a Princeton University economist.
More: In striking reversal, low-paid workers saw biggest wage growth during pandemic years
Most Americans decry income inequality
Most Americans believe there is too much economic inequality in America, according to a 2020 report from Pew Research. More than half of Americans also believe rich people and corporations don’t pay their fair share of taxes.
But the concentration of wealth is also the story of successful entrepreneurship in America, the rise of prosperous companies and innovative products, Pomerleau said, “and that’s something that we should foster in the United States.”
Whitehouse, the senator who requested the report, is using the findings to argue for higher tax rates on the wealthiest Americans, echoing the Harris platform.
In 2017, then-President Trump signed legislation that lowered taxes across all income groups, with wealthier taxpayers benefiting the most, according to the nonprofit PolitiFact. Those cuts are set to expire at the end of 2025.
"Our corrupted tax code has helped enable a few ultra-rich individuals to capture for themselves more than a quarter of our nation’s wealth, undermining the American middle class and hollowing out local communities," Whitehouse said.
Trump has said he will extend the cuts if voters reelect him. Harris has pledged to extend most of the cuts but to raise tax rates on the very wealthiest Americans and on wealthy corporations.
Some economists have urged both parties to consider even steeper taxes. In one recent analysis, researchers found that the government could raise $1.8 trillion over a decade by restoring the higher tax rates of 1997.
“It would raise trillions and bring the tax code back to an era of fiscal responsibility and strong economic growth,” said Zidar, who joined in the research.
Pomerleau, at the American Enterprise Institute, concurs that taxing the wealthy could raise money and shore up Social Security – to a point.
“There’s only so much money you can get from high-income households,” he said.