Wealth in Congress

With the branches of government in Washington all coming up with their own versions of how best to tax Americans and the resulting analyses which frequently show that wealthier Americans will benefit from the proposed changes to the tax code, a recent analysis by the Center for Responsive Politics (CRP) becomes particularly pertinent  In this analysis, CPR analysts looked at the personal disclosure data filed by all members of Congress for the year 2015 (the latest year for which all data is available) and have compiled a list of the wealthiest and least wealthy members of both the House and Senate. 

In 2015, more than 70 percent of Senators were millionaires with the median net worth of Senators hitting $3,132,848.  In the case of the House, the median net worth of Congressmen and Congresswomen was $888,508.  In the Senate, the net worth of Republican Senators rose 13 percent on a year-over-year basis, from $2.9 million in 2014 to $3.3 million in 2015.  The median net worth of Senate Democrats rose by 9 percent on a year-over-year basis, still well up from the 4.5 percent experienced by the public at large.  

Here is a line graph showing how the median wealth of both the House and Senate has changed over the decade between 2005 and 2015:

Since the personal disclosure data is not specific, reporting the member's wealth in a range rather than a specific value, here is a list of the twenty richest members of Congress and the Executive Branch based on their net worth (assets minus liabilities):

Here is a list of the ten wealthiest members of Congress in 2015:

These ten members alone account for nearly half of the entire net worth of the House and Senate combined.

As we know, not all members of the House and Senate are wealthy when they enter office, however, many of them are wealthy when they depart ceremoniously or otherwise.  Here is a list of the beneficiaries of the biggest increase in their net worth over the ten year period from 2005 to 2015:

By way of comparison and just in case you think that wealth and Washington are inextricably tied together, here is a list of the ten poorest members of Congress, many of whom are "poor" because they are carrying business or personal debt that exceeds the value of their assets:

In the case of David Valadao, the "poorest" member, most of his liabilities are related to an operating herd line of credit with a value of between $5,000,001 and $25,000,000 for his Valadao Dairy business along with an operating herd line of credit for his family's Triple V Dairy business as shown here:

With the level of wealth among Congress and the Executive Office and the ever-changing proposed tax changes by Washington, I think that common sense will tell us that at least some of these members will back changes that benefit themselves and their net worth.  At the very least, a very significant number of them have absolutely no idea of what it is like to be a member of the "Main Street Class" who have to worry about debt payments and making ends meet at the end of the month.

The Growing Ethnic/Racial Wealth Gap

A study by Dedrick Asante-Muhammad, Chuck Collins, Joshn Hoxie and Emmanuel Nieves at the Institute for Policy Studies looks at the racial wealth divide in the United States and the futility of trying to get ahead when you're not a white American.  The study looks at the accumulation of wealth in the United States over the past three decades, a problem that has become particularly prominent since the Great Recession, and projects what it will look like over the next three decades.  This study is particularly pertinent given the obvious social disparity in the U.S. and the connection between civil unrest, poverty and race.  Let's look at some of the key observations that the authors of the study have made.

Let's start by looking at a table that shows how household wealth has changed for Black, Latino and White households over the period between 1983 and 2013:

As you can see, in 2013,  average White households were by far the wealthiest, having 7.7 times the household wealth of an average Black household and 6.7 times the household wealth of an average Hispanic household.  As well, over the three decade period prior to 2013, Black households saw their wealth rise by 26.9 percent compared to 69 percent for Hispanic households and 84.8 percent for White households.

Other key measures of prosperity also show Black and Hispanic households falling behind their White counterparts:

1.) Homeownership:  71 percent of White households own their homes compared to 41 percent of Black households and 45 percent of Hispanic households.

2.) Unemployment:  White workers have an unemployment rate of 4.4 percent compared to 8.6 percent for Blacks and 5.8 percent for Hispanics.

3.) Earned Income:  A median White household earns $50,400 compared to $30,400 for Black households and $37,400 for Hispanic households.

4.) Use of Alternative Financial Services including cheque cashers and non-bank entities:  18 percent of White households use these high fee service providers compared to 46 percent of Black households and 40 percent of Latino households.

5.) Retirement Savings:  White households have an average of $130,472 in retirement savings compared to $19,049 for Black households and $12,329 for Latino households.

With this data in mind, let's look at what the future holds for all three people groups.  Here is a graph showing what household wealth will look like for Black, Hispanic and White households over the next three decades (to 2043) if the trends are the same as they were from 1983 to 2013:

By 2043, the authors' projections show that White households would experience an average annual wealth increase of $18,368, bringing their total household wealth to $1.2 million.  Black households would see their annual average wealth increase by $765, bringing their total household wealth to $107,000.  Hispanic households would see their annual average wealth increase by $2,254, bringing their total household wealth to $165,000.  In 2043, average White household wealth will be 11.2 times the household wealth of an average Black household (up from 7.7 times between 1983 and 2013) and 7.3 times the household wealth of an average Hispanic household (up from 6.7 times between 1983 and 2013).

While this growing racial/ethnic wealth divide is interesting, what is even more interesting is, that by 2044, the U.S. Census Bureau projects that non-White households will account for less than half of all U.S. households in what they term as the "majority-minority" scenario.  By 2020, more that one-half of the nation's children will be part of a minority race or ethnic group.  This means that this very significant and racially-linked wealth disparity will impact more than half of American households.

The authors then projected how long it would take for Blacks and Hispanics to overcome this significant wealth disparity.  Assuming that White household wealth doesn't increase in the future (a highly unlikely scenario), it would take Latino households 84 years to accumulate the same wealth as White families have today (i.e. the year 2097).  In the case of Black families, the situation is even worse as shown on this graphic:

Let's close with one more interesting fact; the list of billionaires on the Forbes 400 list contains only two African-Americans and five Latinos.  These seven families own more wealth than the entire Black population and one-third of the Latino population in the United States combined.  Now that's inequality at its best/worst!

The massive and growing ethnic/racial wealth disparity in the United States is increasingly expressing itself as social and political unrest.  The sense of economic helplessness has grown, particularly since the Great Recession, and millions of non-Whites (and poorer Whites for that matter) are feeling as though they are being left further and further behind with no hope of providing for their futures or for the futures of their offspring.  The notable presence of public policies that exacerbate racial and economic inequality and the lack of will by Washington to change the system mean that the ethnic/racial wealth gap is becoming more firmly entrenched in society.  

America's Wealthiest Neighbourhoods

Dr. Stephen Higley (he likes to be called Steve), a Professor Emeritus in the Geography Department at the University of Montevallo in Alabama has released his list of the 1000 richest neighbourhoods in the United States.  While many of us would suspect that the richest of these neighbourhoods would be located in California or New York, such is not always the case.

Rather than using zip codes, Dr. Higley has tabulated data from the 2010 Census down to the city block using the American Community Survey 2006 to 2010.  The United States is divided into Census tracts, each consisting of about 5000 residents and about 5 block groups of about 1000 individuals each.  The boundaries of each block are drawn to group together people of similar socio-economic status.  He aggregates contiguous city blocks that form parts of Census tracts with a mean income over $200,000.  

In the Higley 1000, there are a total of 2,048,131 individuals, consisting of 0.6 percent of the total population of the United States.  Here is a look at the ethnic breakdown in 2000 and again in 2010:

The highest mean income neighbourhoods in the U.S. had a substantial increase in the number of Asians and Latinos at the expense of Whites whereas, while the number of wealthy African-Americans grew, they still form a very small fraction of their total representation in their population group.

Now that we have that background, let's get to the interesting part, America's top ten wealthiest neighbourhoods:

The highest 100 income neighbourhoods tend to be Whiter (85.6 percent) with 19 of the 100 having more than 10 percent Asians.  All of the neighbourhoods in the top 100 that have over 10 percent of their population listed as Latino are in Florida, although, some of these are live-in caretakers for large seasonal homes.  It is also interesting to note the substantial over-representation of Asians in most of the top ten wealthiest neighbourhoods when measured in terms of their representation in the population as a a whole. 

In this most recent iteration of the Higley 1000, New York City's metropolitan area dominates with 234 of the 1000 wealthiest neighbourhoods or a total of 664,771 individuals, nearly one-third of the U.S. total, coming from Long Island and the states of New Jersey and Connecticut.  A total of 91 of the 1000 wealthiest neighbourhoods or a total of 199,386 individuals come from the Los Angeles area followed by Washington, DC with 102 of the 1000 wealthiest neighbourhoods or a total of 192,480 individuals.

Over the ten year period between 2000 and 2010, Dr. Higley has noted the following changes in the block groups that make up the list of America's 1000 most wealthy neighbourhoods.

1.) There has been a substantial increase in the number of wealthy block groups that are found in central cities as many inner urban neighbourhoods undergo the process of gentrification.  This trend was particularly notable in Manhattan but was present in Los Angeles, Chicago, San Francisco and Boston which all saw new inner city areas join the 1000 richest neighbourhoods in the nation.

2.) Many of the older suburbs are undergoing rejuvenation with wholesale demolition of older houses that are being replaced with much larger mansions.  Neighbourhoods that were already considered "elite" are finding their already large houses replaced by houses that are far larger.

3.) Block groups that were formerly considered second home communities (i.e. seasonal dwellings) have now become the location of primary homes, pushing these communities up in ranking.  This is particularly noticeable in Florida.

4.) Some areas that are completely rural and not connected to any nearby urban centre are now joining the list of the most wealthy neighbourhoods in the United States. 

If you want more information on this subject or to see where the wealthy live in your area, I would highly recommend reading through Dr. Higley's entire listing where you will find a breakdown of the one percenters by city.