Wealth Inequality Roughly Doubled From Great Recession
NEW YORK ( TheStreet) -- The hangover from the Great Recession continues to linger, and for millions of Americans it's starting to become more of an illness than just the aftereffects from a long night out on the town.
A revealing report called Wealth Levels, Wealth Inequality, and the Great Recession by the University of Michigan's Fabian T. Pfeffer and Robert F. Schoeni, Russell Sage Foundation president Sheldon Danziger and the foundation itself says less-affluent households continue to bear the brunt of economic pain from he economic collapse of 2007-08.
"While the recession had a major impact on the net worth of families across the socioeconomic spectrum, it disproportionately affected households at the bottom of the wealth distribution," the study says. "These households lost the largest share of their total wealth. As a result, wealth inequality in the U.S. has been significantly exacerbated since the onset of the recession. As of the end of 2013, the authors note that there have been few signs of significant recovery from the downturn."
The study authors describe in great detail the "broad destruction of private wealth," adding that median net worth in the U.S. rose by $86,000 from 2003-07, but declined by $115,000 between 2007 and 2013.
"Through at least 2013, there are very few signs of significant recovery from the losses in wealth experienced by American families during the Great Recession. Declines in net worth from 2007 to 2009 were large, and the declines continued through 2013. These wealth losses, however, were not distributed equally. While large absolute amounts of wealth were destroyed at the top of the wealth distribution, households at the bottom of the wealth distribution lost the largest share of their total wealth."
That decrease has widened the gap between the haves and the have-nots, the study concludes. "As a result, wealth inequality increased significantly from 2003 to 2013," the study notes. "By some measures, wealth inequality roughly doubled."
The stock market provided much of the income that drove household income upward among more affluent U.S. households. The study says the wealthiest 5% of U.S. households had 24 times the wealth of the median household last year -- that's up from 16 times the wealth back in 2007.
As the study notes, 10% of all U.S. households own 80% of stocks.
As middle-class and lower-income Americans are largely shut out of the stock market, with the exception of 401(k) funds, a rising stock market really is making the rich more wealthy, and it's expanding the income gap between the wealthiest and lowest-income Americans and leaving the middle-class behind too.