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Wealth inequality in the United States facts for kids

Kids Encyclopedia Facts

Wealth inequality in the United States, often called the wealth gap, is about how assets (like money, homes, and investments) are not shared equally among people living in the United States. It means some people have a lot more wealth than others. In the U.S., this gap is bigger than in most other rich countries, except for Switzerland and Denmark.

Understanding Wealth Inequality

Wealth inequality happens when some people or families have much more money, property, and investments than others. It's different from income inequality, which is about how much money people earn each year. Wealth is everything you own minus what you owe.

What is Wealth?

Wealth includes things like:

  • Money in bank accounts
  • Homes and other real estate
  • Stocks and bonds (parts of companies you own)
  • Other valuable items like cars or art

It's what you have saved up over time, not just what you earn in a paycheck.

Why Does the Wealth Gap Matter?

A big wealth gap can affect many things. It can make it harder for people with less wealth to get a good education or start a business. It can also lead to different opportunities for people depending on how much wealth their families have.

How Wealth Has Changed Over Time

The amount of wealth held by different groups in the U.S. has changed a lot. For example, in 2013, the richest 10% of families owned about 76% of all the wealth. At the same time, the bottom 50% of families owned only 1%. This shows a big difference in how wealth is shared.

Who Has the Most Wealth?

Since 1989, the share of wealth held by the richest 1% of people has grown. Meanwhile, the share held by the bottom 50% has stayed very small. This means the wealthiest people are getting even wealthier, while others are not seeing their wealth grow as much.

Wealth and Age

Wealth also tends to grow as people get older. Older adults often have more wealth because they've had more time to save and invest. However, even within age groups, there can be a big difference between the average wealth and the median wealth. The median is the middle point, which gives a better idea of what most people have.

Why the Wealth Gap is Growing

Many things can cause the wealth gap to grow. One important factor is how much money people earn compared to how much the economy produces.

Productivity and Income

For a long time, the income of a typical American family grew along with how much the economy produced. This is called productivity. But around the 1970s, this changed. Productivity kept growing, but the income of many families didn't grow as fast. This means that the money made from economic growth went more to company owners and investors than to workers.

The Role of Investments

People who already have a lot of wealth can invest their money. These investments can grow over time, making them even wealthier. For example, if someone owns a lot of company stocks, they can become much richer if those companies do well. This can make the wealth gap even wider.

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