American families have gone backwards.
In a paper for the Russell Sage Foundation released last month, three University of Michigan researchers show over the past decade, that the median wealth level, defined as the value of assets minus debts, for an American family has declined 36% to $US56,335. We first saw the paper on WonkBlog.
“Through at least 2013, there are very few signs of significant recovery from the losses in wealth experienced by American families during the Great Recession,” they write.
Here’s the trio’s table. They use data from UMich’s Panel Study of Income Dynamics, which tracks 5,000 representative families. Wealth levels declined for everyone but those above the 90th percentile.
The new median wealth level is also significantly below where it was three decades ago.
While the recent housing crash played a role in this decline, it wasn’t the only factor. Even with the bull market in stocks, the median wealth level for assets not held in real estate declined about 30% between 2007 and 2013. Somehow though, the wealthiest families managed to avoid this fate: non-real-estate asset values climbed 13% for the 95th percentile. The authors suggest the average family has been forced to dig into every wealth source they can to make ends meet, and that this phenomenon has room to run.
“It is possible that the very slow recovery from the Great Recession will continue to generate increased wealth inequality in the coming years as those hardest hit may still be drawing down the few assets they have left to cover current consumption and the housing market continues to grow at a modest pace.”