By Ben Leubsdorf
The gap between the richest and poorest Americans widened even
as the U.S. economic recovery gained traction in the years
following the recession, the Federal Reserve said Thursday.
Average, or mean, pretax income for the wealthiest 10% of U.S.
families rose 10% in 2013 from 2010, but families in the bottom 40%
saw their average inflation-adjusted income decline over that
period, according to the Fed's Survey of Consumer Finances, which
is conducted every three years.
Middle- and upper-middle-class families, in the 40th through
90th percentiles, "saw little change" in take-home pay and so
"failed to recover the losses experienced between 2007 and 2010,"
the report said.
Overall, average income rose 4% from 2010 while median--the
midpoint with half higher and half lower--income fell 5%,
"consistent with increasing income concentration during this
period," the report said.
The top 3% of families saw their share of U.S. income rise to
30.5% in 2013 from 27.7% in 2010. Fed economists said the data
reflect a return to the economy's prerecession trend, after the
income distribution narrowed during the recession when top-earning
families saw their incomes fall. The top 3% had held 31.4% of all
income in 2007.
Widening income inequality has gained increasing attention over
the past year from economists, policy makers and the wider public
amid concerns over the uneven gains of the economic recovery.
Thursday's Fed report described "substantial disparities in the
evolution of income and net worth" since 2010, even as the
unemployment rate fell and economic growth rebounded following the
2007-09 recession.
Fed Chairwoman Janet Yellen, during her confirmation hearing
last November, called widening inequality "a very deep problem" but
cautioned that "many of the underlying factors are things that are
outside of the Federal Reserve's ability to address."
Average income rose last year from 2010 by 7% for homeowners, 8%
for non-Hispanic whites and 5% for households headed by a person
with a college degree. Average income fell 1% for renters, 11% for
nonwhite and Hispanic families and 17% for households headed by
someone without a high-school diploma.
The median net worth of American families tumbled 38.8% between
2007 and 2010, while the average fell 14.7%. The situation has
stabilized, but families haven't regained lost ground, Thursday's
report revealed. Median net worth fell 2% in 2013 from 2010, while
average net worth was basically flat.
Ownership rates for most assets--from stocks to retirement
accounts, cars to homes--fell from 2010 to 2013, which "indicates
that while most families continue to hold some type of asset, many
more families now hold fewer different types of assets," the report
said. Some 65.2% of families owned their primary residence in 2013,
the lowest homeownership rate since 1995.
The report also found what it described as a "mixed picture" for
recent experiences with credit markets. Fewer families reported
applying for credit and being turned down, but more said they had
not applied at all for fear of being turned down. Fewer families
reported being late on their loan payments, but more reported
taking out payday loans.