No, that wasnâ€™t Elizabeth Warren, or the editor of the Nation, or Paul Krugman (or even me) banging on about how the rich are getting richer and most everybody else is struggling to keep up. It was Janet Yellen, the chairwoman of the Federal Reserve, addressing a conference in Boston on Friday morning. Itâ€™s not unheard of for a Fed chief to discuss rising inequality: Ben Bernanke addressed it in a 2007 speech. But Yellenâ€™s speech is surely the first time a Fed chief has pointed out that rising inequality threatens Americaâ€™s sense of itself.
Here is what she said.
Since the top five per cent of households own almost two-thirds of the wealth, it stands to reason that most American households donâ€™t own very much at all. But the figures that Yellen presented are still shocking. In 1989, the bottom half of the distribution owned just three per cent of all wealth. By 2013, that figure had fallen to one per cent. No, thatâ€™s not a typo: half the country owns one per cent of its wealth.
These numbers confirm an old but rarely stated truth. Many, if not most, individual American households possess next to nothing. In 2013, the average net worth of the sixty-two million households in the bottom half of the distribution was eleven thousand dollars. (To get net worth, you add up the value of all the assets a family owns and subtract its debts, including mortgage debts.)
And itâ€™s not just that most households donâ€™t have much wealth. According to this measure, anyway, they have been getting poorerâ€”a point that is often vigorously contested. In 1989, the average net worth of families in the bottom fifty per cent was twenty-two thousand dollars. Twenty-four years later, the average net worth had fallen by half. (These figures are adjusted for inflation.) At the top of the distribution, of course, history has proceeded along very different lines. In 1989, the average net worth of families in the top five per cent was $3.6 million. By 2013, that figure had risen to $6.8 million.