The State of America’s Children® 2021
Income and Wealth
IN 2019 THE MEDIAN WHITE FAMILY HAD ALMOST
MORE WEALTH THAN THE MEDIAN BLACK FAMILY AND
FIVE TIMES MORE THAN THE MEDIAN HISPANIC FAMILY.
A family’s income is critical to ensuring basic needs are met for a child’s life. Income, which is the revenue a family receives, either from work or return on investment, helps a family put food on the table and keep a roof over their heads. Income inequality is the extent to which income is concentrated among the wealthiest few rather than shared equally among all earners. In the U.S., our economic rules have favored the rich at the expense of our communities’ well-being, especially communities of color. People are working harder than ever, but a powerful and wealthy few CEOs, corporations, and billionaires reap the benefits, raking in record profits off lower-income workers’ production while their families struggle to get by.
On the surface, data tells a rosy story about incomes in America; median household income grew by 4.5 percent between 2018 and 2019 to $65,712, the highest level in history.1 But in recent decades, incomes have grown very quickly for the rich, and relatively slowly for everyone else. Since 1979, incomes for the top 1 percent of earners have grown by 261 percent, compared with only 49 percent for the middle 60 percent of earners.2 These unequal growth rates have produced some astonishing present-day income disparities:
- The top 20 percent of households earn, on average, about 14 times more than households in the bottom 20 percent.3 In 1975, the average household income of the top 20 percent of Americans was 10 times that of the bottom 20 percent.4
- A member of the top 10 percent of income earners makes about 39 times as much as the average earner in the bottom 90 percent; the average member of the richest 0.1 percent of the population earns about 196 times more than an average earner in the bottom 90 percent.5
- In 2019, the share of total income going to the top 10 percent was almost 50 percent and the share going to the top 1 percent was 19 percent (see Figure 1).6
In short, incomes have exploded for the rich, while creeping up slowly for the vast majority of earners, a fact that has corrosive effects on the American Dream. Slow-growing family income means that economic mobility is on the decline and children born into low-income families may grow up to make less money than their parents.7
Income inequality contributes to another runaway economic problem: wealth inequality. Wealth or net worth refers to the total value of a person or family’s money, property, and other assets minus any debt they hold; wealth inequality is the disproportionate concentration of wealth among the richest few. Like income inequality, wealth inequality has increased for decades and reached levels not seen for almost a century. Today, wealth is even more concentrated than income.8
- In 2019, compared to 1989, the share of wealth held by the top one percent of Americans grew from 30 to 37 percent of all wealth and the share held by the bottom 90 percent fell from 33 to 23 percent.9 The top 10 percent of Americans owned more than 75 percent of all wealth in 2019 (see Figure 2).10
- In total, the richest five percent own more than two-thirds of the country’s wealth. The richest one percent own more than half of the stock owned by private Americans, but hold just five percent of the same group’s debt.11
- In 2018, the three richest men in the United States—Jeff Bezos, Bill Gates and Warren Buffet—held as much wealth as the entire bottom half of Americans.12
This is not by chance. For centuries, our nation’s policies have been intentionally constructed in a way that has disproportionately denied families with low incomes, especially families of color, the opportunity to build wealth. Racist housing policies, for example, led to differences in homeownership rates that today account for nearly one-third of the racial wealth gap.13 As a result of such policies, racial income and wealth inequality in our nation is staggering. For example:
- In 2019, the median income of Black ($43,900), Hispanic ($52,300), and American Indian ($48,000) families with children was about half the median income of white families with children ($95,700) (see Table 7).
- For every $1 earned by the median white household in 2019, the median Black household only earned 61 cents and the median Hispanic household, 74 cents.14
- In 2019, the median net worth of white families ($188,200) was almost eight times more than Black families ($24,100) and five times more than Hispanic families ($36,100).15
- Today’s median Black family owns $3,600—just 2 percent of the median white family’s wealth. The median Latino family owns $6,600—only 4 percent of that of the median white family.16
- The 400 richest people in the U.S. hold more wealth than every Black household plus a quarter of Hispanic households combined.17
Inequality is a global phenomenon, but the U.S. does not fare well even when compared with other industrialized countries. In 2019, the U.S. held the largest share of the world’s wealth (nearly 30 percent).18 Studies suggest, however, that the U.S. has the highest level of wealth inequality and one of the highest levels of income inequality among developed countries.19
COVID-19 Made the Rich Even Richer and Widened Inequality
As the COVID-19 pandemic raged and millions of families lost jobs, a familiar pattern accelerated: the rich got richer, while everyone else suffered.
The pandemic, and the corresponding economic recession, hit low-income workers hardest with lost jobs, wages, and livelihoods. Low-income workers experienced the highest job loss rate during the pandemic, but comparatively few of the highest-income workers lost their jobs.20 In all, more than ten percent of workers between the ages of 25 and 54 lost their jobs during the pandemic.21 Over half of families with children experienced a job loss or loss of income during the pandemic, with those losses concentrated at the lower-end of the income distribution.22
While low-income workers were laid off at staggering rates, the wealthiest few saw their fortunes expand dramatically. According to an Institute for Policy Studies analysis, the combined wealth of all U.S. billionaires increased by more than $1 trillion between March and December 2020, from approximately $3 trillion to about $4 trillion.23 Elon Musk’s net worth increased by about $100 billion during the pandemic.24 Jeff Bezos’s fortune grew by about $70 trillion.25 Although the stock market, took an initial hit in the spring, it has since recovered and remains near an all-time high.
Racial inequality has continued to widen during the pandemic as well. Black, Hispanic, and Indigenous communities were more likely to get sick and die from COVID-19 in addition to having greater chances of becoming unemployed during the pandemic, despite being overrepresented among “essential workers.”26 As the economic recovery progressed, job and income losses for white people bounced back much more quickly than for Black or Hispanic people.27