A new study shows that the rich really ARE getting richer while the poor are getting poorer. Over the last 20 years, the net worth of the top two percentile of American families nearly doubled, from $1,071,000 in 1984 to $2,100,500 in 2005. But the poorest quarter of American families lost ground over the same period, with their 2005 net worth below their 1984 net worth, measured in constant 2005 dollars. Are we headed for a financial crisis?
The poorest ten percent of families actually had more liabilities than assets, meaning that poor people are now more in debt than ever. The poorest 5% of American households had a negative net worth of a little more than $1,000 in 1984, compared to nearly $9,000 in 2005. Researcher Frank Stafford says, “These findings show that the wealth gap is increasing steadily.”
While low income people were racking up debt (probably due to the easy accessibility of credit cards), wealthy people were getting even more money (probably due to recent tax cuts for upper income earners).
Overall, the rate of short-term debt?unpaid credit card balances, student loans, and medical or legal bills?has increased. But black families have experienced an even greater increase of that kind of debt. In comparison, slightly more than half of all white families have this kind of debt. The average amount of short-term debt black families carried is $12,900; for white families, the average amount of debt is $16,800. Stafford says, “That’s a lot of credit card debt to be carrying.”
Art credit: freeimages.co.uk
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