Average Net Worth Of The 1%

Many people perceive being wealthy as simply having a nice house, money in the bank, maybe a vacation home and a pleasure yacht. But the kind of money that the wealthiest one percent of the world's population has dwarfs this concept; they own entire corporations, multi-billion-dollar investment funds, islands in the Caribbean and soon may be able to start buying trips to the moon. The net worth of the richest segment of humanity has mushroomed over the past two decades and now towers further above the net worth of the average citizen than ever before.

Demographic Breakdown
Although the media has largely portrayed the top 1% as greedy, uncaring Wall Street fat cats, demographic analysis reveals a very different picture. The wealthiest 1% are spread across many industries and come from many backgrounds. They include medical professionals, entrepreneurs and executives as well as those who inherited wealth. They live in many different cities and their incomes range from just under $400,000 a year to the likes of Bill Gates and George Soros. The percentage of their income that comes from capital gains on their investment holdings is about 10 times that of the middle class, and they pay approximately a quarter of the income taxes in America and account for just under a third of all charitable donations.

The Widening Gap
The Economic Policy Institute reports that the net worth of the top 1% of wealthy Americans has risen substantially over the past 50 years. In 1962, the wealthiest 1% had net worths equal to approximately 125 times that of the average American household. Their net worths were shown to be approximately 288 times the net worth of the average household in 2010, equaling about $16.4 million. But this gap does not correlate precisely with the gap in income between the top 1% of earners and the rest of the population. Only about half of those who earn in the top percentile are also in the top percent of net worth. However, the wealthiest percent were paid nearly a quarter of all income earned in America in 2007. They also owned a whopping 40% of the country's overall wealth that year, a gain of 7% over the previous 25 years. And that 40% includes nearly half of all liquid stock, bond and mutual fund holdings held by investors of any type in America that year. Furthermore, the data that shows these figures also indicate that the wealthiest percent have not earned this much on an inflation-adjusted basis since the 1920s, and they only owe a measly 5% of the nation's debt.

Underlying Causes
Much of the growing disparity can be traced to tax breaks on income, gift and estate taxes by past presidential administrations as well as the decline of labor unions in America. Although the middle class also benefited somewhat from the reduction in taxes, it allowed the wealthy to retain a much greater portion of their assets and pass them on to their heirs. The technology boom also added new members to the top percentile of the wealthy, as shown in the Forbes annual list of the 400 wealthiest Americans. Their members' combined net worth currently equals an unbelievable $1.7 trillion, or one-eighth of the U.S. economy.

A Worldwide Condition
In 2006, The World Institute for Development Economics Research of the United Nations University published a detailed study of the allocation of wealth in the world. This study showed that the top 2% of the world's population owned about half of its wealth, but that the wealthiest percentile of the world's population equaled about 37 million people, and a net worth of just over a mere half million was needed to belong. The study also revealed that at that time, just over a third of the world's wealthiest 1% lived in America and just over a quarter resided in Japan.

The Bottom Line
The wealthiest 1% plays a major role in the shape and direction of our economy and society. Regardless of how they are perceived, their economic dominance of the world is almost certain to continue for the foreseeable future.



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