Measuring the Top 1% by Wealth, Not Income
After our demographic profile of the 1 percent appeared on Sunday, there were a lot of questions from readers about the top 1 percent by wealth, rather than the measure we used, the top 1 percent by income.
We used income because the Census measures income, not wealth, and the Census contains the most timely data along with a large sample size, making it possible to look at income across many geographic and demographic categories.
But we also examined wealth through the Federal Reserve’s 2007 Survey of Consumer Finances. This survey is much smaller in scope, and somewhat outdated (a release based on the 2010 survey is expected later this year).
But an analysis of the Fed data is still revealing in that it shows the wealth gap, as measured by net worth, is much more extreme than the chasm as measured by income.
The Times had estimated the threshold for being in the top 1 percent in household income at about $380,000, 7.5 times median household income, using census data from 2008 through 2010. But for net worth, the 1 percent threshold for net worth in the Fed data was nearly $8.4 million, or 69 times the median household’s net holdings of $121,000.
Some readers wondered if the 1 percent by wealth weren’t an entirely different group of people from the 1 percent by income. But there is substantial overlap: the Fed data suggests that about half of the top 1 percent of earners are also among the top 1 percent in the net worth category....MORE