Top Wealth in the United States: New Estimates and Implications for Taxing the Rich

Here are CBS’s claims (I used your language describing them as opposed to theirs)

I’ve added in descending order research that refutes or provides context for their claims. Please let me know if this is directionally what you were looking for.

Steve

“….40% can’t cover a $400 expense (fed) disputed…”

We read the Fed report when it was released and pointed out it’s being misrepresented. However Michael Strain refuted it effectively in the Bloomberg op-ed, “…It turns out the claim that nearly half of Americans are a flat tire away from financial crisis is largely based on an inaccurate reading of one survey question. The question comes from theannual“Report on the Economic Well-Being of U.S. Households” by the Federal Reserve. Thereportfinds, in 2018, that 61% of adults would cover a $400 unexpected expense using cash (or its equivalent). Politicians and many in the media seem to be subtracting 61 from 100, and concluding that 39% of people, to use Warren’s phrase, “can’t come up with” the money they’d need to handle this situation….”

CBS News, “Income Inequality, and coronavirus’ economic fallout,” CBS News, September 6, 2020, https://www.cbsnews.com/news/income-inequality-and-coronavirus-economic-fallout/

CBS claims live here:

Kriston McIntosh, Emily Moss, Ryan Nunn and Jay Shambaugh, “Examing The Black-White Wealth Gap,” Brookings, February 27, 2020, https://www.brookings.edu/blog/up-front/2020/02/27/examining-the-black-white-wealth-gap/

Brookings provides some context for driver of the wealth gap btw black and white families with the same income, “…Why are high- and middle-income white families so much wealthier than Black families with the same incomes? We note a few reasons. White families receive much larger inheritances on average than Black families. Economists Darrick Hamilton and Sandy Darity conclude that inheritances and other intergenerational transfers “account for more of the racial wealth gap than any other demographic and socioeconomic indicators.”In addition, the income groups in figure 2 are based on a snapshot of family income, which does not fully capture lifetime income. Black families who make it to the top of the income distribution in a particular year are more likely than white families to drop out of the top in subsequent years, and their respective wealth levels reflect this difference. Likely less important, but still notable, high- and middle-income Black families are more likely than their white counterparts to be called upon to assist family members and neighbors…”

Rakesh Kochhar and Anthony Cilluffo, “How Wealth Inequlaity Has Changed In The U.S. Since The Great Recession, By Race, Ethnicity And Income,” Pew Research Center, November 1, 2017, https://www.pewresearch.org/fact-tank/2017/11/01/how-wealth-inequality-has-changed-in-the-u-s-since-the-great-recession-by-race-ethnicity-and-income/

They are attributing this to Pew’s analysis of SCF data, “… In 2016, the median wealth of white households was $171,000. That’s 10 times the wealth of black households ($17,100)– a larger gap than in 2007 – and eight times that of Hispanic households ($20,600), about the same gap as in 2007. (Asians and other racial groups are not separately identified in the SCF data.)…”

“…Black network 10% of white federal reserve…Hispanic 12% (same source)…”

Amazon’s pre-Covid peak for 2020 2,170.22 on February 19, it’s trough was March 12 1,676.61. Currently it’s 3,182.78 From February to today it’s up 46.65% from trough to today it’s up 89.83%. From the 18thto today it’s up just over 40%.

You are correct the work is benchmarked to March 18th.

“….Net worth of 600 billionaires increased (20%), I suspect they start at the market bottom and not the day before the drop… Bezo net worth up $43.8 B (again probably at the trough)…

https://www.dol.gov/ui/data.pdf

Thomas Stengle, “Covid-19 Impact,” U.S. Department Of Labor, September 3, 2020,

According to Labor Department this checks out, as of mid august 29mm persons were getting UI insurance

“…..29mm collecting unemployment…”

USDA “How Many People Lived In Food-Insecure Households?” USDA Economic Research Service, Accessed September 8, 2020, https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-us/key-statistics-graphics.aspx

9.5mm adults and 540,000 (.7% of children)lived in households which one of more children experienced very low food security defined as“…In these food-insecure households, normal eating patterns of one or more household members were disrupted and food intake was reduced at times during the year because they had insufficient money or other resources for food…”

If you look at the USDA statistics themselves37.2mm individual were in the broader food insecure households(this is defined as “These food-insecure households obtained enough food to avoid substantially disrupting their eating patterns or reducing food intake by using a variety of coping strategies, such as eating less varied diets, participating in Federal food assistance programs, or getting emergency food from community food pantries”

Paul Roderick Gregory, “If Children Are Hungry In America, It Is The Parents’ Fault,” The Mercury News, July 1, 2013, https://www.mercurynews.com/2013/07/01/hoover-fellow-if-children-are-hungry-in-america-it-is-the-parents-fault/

“…The 20 percent of families that are classified as “food insecure” worry food will run out, substitute cheaper foods, serve unbalanced meals or cut meal sizes at least once in the past 12 months. Such measures are far from the concept of regular hunger that celebrity media ads, sponsored by Feeding America, imply. Meanwhile, the USDA’s specific questions about child hunger are dutifully ignored. They are inconveniently low. The USDA’s most direct measures of child hunger show that around 1 percent of families with children have a child who experienced hunger (skipping meals or not eating for a whole day) at least one day in the last 12 months. This is a far cry from “1 in 5” children going to bed hungry we hear regularly in the media. The USDA’s figures for an incidence of child hunger on an average day show that one tenth of 1 percent of children were hungry on an average day. This adds up to two hungry children per ZIP code.Adult hunger should be higher than child hunger because USDA studies show children are given preference when food is low. The USDA finds, however, that on an average daily basis, one quarter of one percent of all adults do not eat for a whole day due to lack of money. That is 21/2 per thousand….”

Paul Roderick Gregory from Hoover has debunked this myth

“…54mm food insecure (feeding America)…”

His FPMis “..matches President Johnson’s initial standard. Second,these initial 1963 thresholds must be held constant in real terms over time by updating them each year using an unbiased measure of inflation. Third, the metric for evaluating success should include the full array of anti-poverty programs utilized by the government, including in-kind transfers and transfers administered through the tax code. No existing poverty measure meets all three of these conditions. We create a poverty measure, which we refer to as the Full-Income Poverty Measure (FPM), which meets all three of these conditions…”

Obviously Burkhauser finding that poverty rate based on President Johnson’s standards fell from 19.5 percent in 1963 to 2.3 percent in 2017 are also useful. What did Will Rogers say during the depression“We are the first nation in the history of the world to go to the poorhouse in an automobile”

Jeff Larrimore, Jacob Mortenson and David Splinter, “Presence and Persistence of Poverty in U.S. Tax Data,” Federal Reserve Board and Joint Committee on Taxation, February 2020, http://www.davidsplinter.com/LMS_PersistencePoverty_2020.pdf

“….There is substantial mobility in and out of poverty. For example, 41 percent of those in poverty in 2007 were out of poverty in the following year. However, many of those who are poor spend multiple years in poverty or escape poverty only to fall back into it. Of those who were in poverty in 2007, one-third are in poverty for at least half of the years through 2018….”

FRED actually has 41mm, however I think David Splinter’s research that shows the transitory nature of poverty for younger people is a better way to contextualize that number (granted he finds older people who are poor stay poor)

“…38mm in poverty (census)….”

Sarin’s SS paper may also be also useful here, she is showing that the Top 10% (so not top 5%) have around ~ 60% of total wealth with the top 1% accounting about half that with Social Security

Matthew Smith, Owen Zidar and Eric Zwick, “Top Wealth in the United States: New Estimates and Implications for Taxing the Rich,” National Bureau of Economic Research, July 19, 2019, http://ericzwick.com/wealth/wealth.pdf

Smith/Zidar/Zwick agree“…Overall, wealth is very concentrated: the top 1% holds as much wealth as the bottom 90%. However, the “P90-99” class holds more wealth than either group after accounting for heterogeneity. Relative to a top 0.1% wealth share of more than 20% under equal returns, we estimate a top 0.1% wealth share of and find that the rise since 1980 in top wealth shares falls by ….”

“Distribution Of Household Wealth In The U.S. Since 1989,” Distributional Financial Accounts Federal Reserve, Accessed September 8, 2020, https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/

This is directionally correct according to the Fed’s Z1 data the top 10% 68.7% of US wealth with the top 1% holding 31.2%, so presumably 96-99 get you there

“….5% own 2/3s of the wealth (sourced to oddly the NBER)….”

Bruce Meyer and James Sullivan, “Consumption And Income Inequality In The US Since The 1960s,” Center For Economics And Policy Research, January 15, 2018, https://voxeu.org/article/consumption-and-income-inequality-us-1960s

Meyer’s work on consumption inequality is also an effective rebuttal

Sylvain Catherine, Max Miller and Natasha Sarin, “Social Security and Trends in Inequality,” University of Pennsylvania, February 29, 2020, https://papers.ssrn.com/sol3/papers.cfm

Perhaps a better rebuttal is Sarin SS paper that found that wealth inequality has not increased in the past three decades after accounting for social security given she is Summer’s protégé

Gerald Auten and David Splinter, “Income Inequality in the United States: Using Tax Data to Measure Long-term Trends,” December 20, 2019, http://davidsplinter.com/AutenSplinter-Tax_Data_and_Inequality.pdf

Three recent paper’s come to mind that provide context, first the initial Auten/Splinter that found the top.1% income share had gone up, but not nearly as much as Saez suggests it has net taxes.

U.S. Census Bureau, “Income Gini Ratio For Households By Race Of Householder, All Races,” Federal Reserve Bank Of St. Louis, Accessed September 8, 2020, https://fred.stlouisfed.org/series/GINIALLRH

CBS is also citing Census which claims“The Gini index was significantly higher in 2018 than 2017 for the United States”but they are usingMedian Household Income showing.482 for 2017 and.485 for 2018.So that checks, even if we can point to the Household Gini to pushback.

According to FRED the Income Gini Ratio ForHouseholds By Race of Householders, All Racesticked down btw 2017 and 2018 (last year with available data from ) (from Census) from. 489 to.486

“…income inequality at highest level in 50 years Census 2109….”

Michael Strain, “Americans May Be Strapped, But the Go-To Statistic Is False,” Bloomberg, June 4, 2019, https://www.bloomberg.com/opinion/articles/2019-06-04/the-400-emergency-expense-story-is-wrong