A neat little series of graphs by Dr. Amir Sufi, Professor of Finance at the University of Chicago Booth School of Business, shows how the Great Recession was tougher on some Americans than it was on others.
Here are the three graphs showing the growth and decline in net wealth to poorer (25th percentile), median and high (90th percentile) net worth American households over the past two decades:
Right away, you will notice that after 2007, the net worth of both poorer and median net worth households dropped shockingly with low net worth households seeing their net worth drop by nearly 50 percent from the peak in 2001. In the case of median net worth American households, their net worth dropped by 40 percent from its peak in 2007. In sharp contrast, the most wealthy American households barely saw their net worth change from its peak value in 2004, dropping by less than 10 percent.
In large part, median net worth households saw their net worth decline between 2007 and 2010 because of their investment (some might say over-investment) in housing. As housing prices collapsed, their net worth dropped in lockstep. Lower net worth households gain most of their wealth from their employment income; as unemployment rates rose, poorer American households suffered proportionately higher unemployment than their wealthier counterparts.
Basically, in three short years, the wealth gains made by the bottom 50 percent of American families were completely eroded. In contrast, the most wealthy American households are still 80 to 90 percent wealthier than they were two decades ago.
Over the past 45 years, as shown on this graph, America has increasingly become an economically stratified society:
In case you haven't heard of the Gini coefficient, it measures the divergence of incomes within a population or, basically, the inequality of income distribution. The higher the coefficient, the more income inequality there is in a given population. As you can see from the graph above, America's Gini coefficient has increased substantially since the late 1960s. Taken in conjunction with the data from Dr. Sufi's analysis, one can quite quickly see that inequality in the United States is certainly not getting any better with time.