A Breakdown of Wealth, from Middle Class to the Top 1%
Just as household wealth varies greatly across the population, the composition of that wealth changes as well. Simply put, the person next to you at the grocery store will likely have a much different asset mix than, say, Warren Buffett.
Today’s chart breaks down the differences in the composition of wealth between middle income, upper income, and ultra wealthy (top 1%) of American households to help us better understand the building blocks that make up net worth. Let’s dive in.
Middle Income: Home is Where the Wealth is
It’s no surprise that the principal residence is the cornerstone of net worth for most Americans in the middle class. For households that fall in this wide range ($0 to $471k of net worth) the combination of housing and pension accounts make up nearly 80% of total wealth on average.
Assets like stocks and mutual funds only make up about 4% of wealth in this income bracket, partially mirroring the trend of lower stock market participation in recent years.
As we move up the income ladder, however, this situation changes quite a bit.
Upper Income: A Diversified Portfolio
If a household has a net worth that ranges between $471,000 and $10.2 million, it is considered to fall in the upper income band above. This represents the 20% richest households in the U.S., minus the top 1%, which are put in a separate bracket.
For this group, the principal residence makes up a smaller slice of the wealth pie. Instead, we see a higher mix of financial assets like stocks and mutual funds, as well as business equity and real estate. Almost half of households in this group own real estate in addition to their principal residence.
As households become wealthier, we tend to see a lower share of liquid assets as compared with the other components of net worth.
The Top 1%: The Business Equity Bulge
In the richest 1% of households, the principal residence makes up a mere 7.6% of assets. At this stage, almost half of assets fall under the category of business equity and real estate.
A prime example of this is Jeff Bezos. The lion’s share of the Amazon founder’s net worth is tied to the value of his company. Another example is President Trump, whose sprawling real estate empire comprises two-thirds of his estimated $3.1 billion net worth.
One of the more prominent features of the ultra rich wealth bracket is a much higher level of financial asset ownership. In fact, the top 1% of households own over 40% of stocks.
As well, this tiny group of ultra wealthy households earns 22% of total income, up from 8% in the 1970s.
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“this tiny group of ultra wealthy households earns 22% of total income, up from 8% in the 1970s.”
Just about says it all, doesn’t it?
GP – what has changed since then? Oh, right – manufacturing workforce has dropped from around 40% of all employees to 8%. Manufacturing was THE source of middle class income, and those jobs no longer exist due to automation. So those middle class sorts had to turn to, largely, service type jobs where they are ill-prepared to compete.
The middle IQ band runs from around 90-110. There are billions of people in that band in the world, competing with the US middle class.
The top 1% IQ is somewhere around 135 and up. Those types tend to be well-educated, well skilled, and smart. It is no surprise they have done well at the time less capable, having lost manufacturing jobs that paid them well to screw nuts onto bolts, have not.
The middle class was never sustainable. I was a mirage. Long-term, it was inevitable that it would succumb to competitive pressure.
By the way, who make up the top 1%? Why, that would be small business people, doctors, lawyers, and such.
No Loopey, the top 1% are not your average lawyers or small business people. There are roughly 6000 (.001%) elites who control this plane, there are several thousand (1%) who are mafia oligarchs and criminals who are sprinkled with some of the peerage of different countries and all of them combined don’t add up to squat out of 7 BILLION humans wandering around. You are seriously in the weeds Loopey.
As the industries folded and left middle America as an unsecured liability as far as pensions and benefit packages along with a comfortable middle class income government reps who were and are still owned by the 1% allowed the economic shit storm that required CEO’s and bankers to go begging for a bailout . Well they got bailed middle America took it up the ass !
The true circle jerk of socialism or crony capitalism from Wall Street to K-Street to Capitol Street works great for the wealthy 1% the government players elected to self serve and of course their supporters in the ranks of government employees . Especially those badge wearing minions just doing their job evicting you after those they truly serve and protect tax the great unwashed out of their homes . Yes , I know they are just doing their jobs . I hope they choke on it !
Boat,
Most people only get it half right. Put LLPOH and you together…the whole story.
Every citizen owes $224,281 to the national debt. So net worth starts at zero when this amount is first deducted. So most people have a negative net worth.
No word on the .01% ?
Come on, you can do it.
What’s missing from the charts is “ownership” of the power of government. THAT asset is the absolute MOST CRITICAL asset that 99+% of the 0.1% possess, as it is the key to providing (or ensuring the provision) of the bulk of the rest of their wealth.
The deer eat more of the apples in the orchard every Autumn than the turkeys do. They each get their fill.
If every last notional financial instrument was liquidated and redistributed to the entire population based on head count, what do you think the economic pyramid would resemble in a year’s time?
I’m puzzled as to why there must be an equally distributed amount of fictional stuff for all people in all circumstances or the cosmic OCD kicks in and sets off a culture-wide panic attack. Troubled times for a troubled people.
HF- I’m sure you understand that an elite who has such wealth that he can buy a president (a kingmaker) is at the upper level/capstone of the pyramid while the guy who can’t afford to buy a meal out at a moderate priced chain restaurant is at a HUGE disadvantage in this world.
Liberty is correct in that the kingmaker negates the schmuck at the bottom of the pyramid to continue the robbing and pillaging.
And fifty million illiterate schmucks at the bottom of the pyramid voting for their free shit negates the hard working people who are fully informed.
This is a natural phenomenon and it can’t be solved through any other means than collective violence in the form of an insurrection or revolution. Thus it has always been.
The masses are more powerful than the elites and the elites are more capable than the masses. It’s a see saw forever.
You are better than this HF, the free shit entitlement was not the work of the average hard working Joe’s but a conjure of the elite pirate class carried out by their CONgress puppets. The elites at the top of the pyramid who maintain their uber wealth with smoke and mirrors like the uni-party/(2 party) system, national elections, corporate welfare, insider trading, and yes , insurrection and revolution stirred by……..wait for it…..THE ELITE PIRATE CLASS.
They make vast fortunes when the blood is running in the streets. The fault lies with the wizards, not the 50 million ignorant dipshits at the bottom.
@ HSF:
There you have it in a nutshell…
Mygirl…..maybe- I hate to be a killjoy for those who blame the less than mentally gifted underlings but the truth is the truth. HF fails to point the finger in the right direction.