Midday Report: Recovery From Recession? Only for Top 7 Percent
The wealth gap is turning into a sinkhole for most people: A new report from the Pew Research Center finds the rich are indeed getting richer, while the rest of us are struggling to keep our heads above water.
If your household net worth tops $500,000, you've probably done really well in the two years after the recession ended in 2009. That accounts for about 7 percent of the population.
But for the other 93 percent, it's as if the recession never ended.
But the upper 7 percent captured all of those gains. In fact, the wealth of the other 93 percent actually fell by four percent, even though the economy was recovering.
Here's the big difference between the haves and have nots: The affluent are heavily invested in stocks and bonds, but the rest of us are not. And those assets soared in value after the Great Recession ended.
In general, people in less affluent groups have more of their money tied up in their homes – which continued to lose value – and in savings that pay interest. And interest rates have been hovering near all-time lows. And it doesn't look as though this trend is about to change any time soon.
In fact, the author of a Brookings Institution report last month said the long-term trend of growing inequality in America is becoming permanent.
That's one reason why President Obama's budget plan proposes tax hikes that would fall most heavily on very high income households.
About 60 percent of the $800 million in new taxes would come from taxpayers making more than $1 million. Lower income earners would pay more mostly through higher cigarette taxes and a change in the way cost of living adjustments to Social Security and other programs are calculated.
Bottom line: the wealth gap keeps growing.
–Produced by Drew Trachtenberg