Affluence in the United States

Affluence means how much money and wealth a person or family has compared to others. We can see this in two ways: by how much money they earn each year, or by how much they own.

In the United States, many families have a good amount of money. In 2019, over 30% of families earned more than $100,000 each year, and over 30% had more than $250,000 in wealth. But not all families share this wealth the same way. Half of all families only own about 2% of all the wealth in the country.

Income vs. wealth

See also: Household income in the United States

In the United States, many families earn a lot of money each year, especially families between 35 and 64 years old. Families who are a bit older, between 65 and 74 years old, usually have saved the most wealth.

Income and wealth are two different ways to measure how much money a family has. Income is the money a family earns in a year, like from jobs or salaries. Wealth is everything a family owns, like houses, savings, and investments, after paying off what they owe. Income changes every year, while wealth builds up over time.

Income as a metric

Affluence in the United States is often linked to inherited wealth. Many very wealthy people grew up in families that were already well-off.

Income is a common way to measure affluence, but it depends on who you compare yourself to. For example, someone earning $77,500 might seem wealthy compared to the average American, but not when compared to a top business leader.

The U.S. Census Bureau shows that many households have two people working, which raises their total income. In 2005, the top 5% of households earned over $166,200, and the very top earners made even more.

Wealth

Wealth in the United States is often measured by net worth. Net worth is all the things a person or family owns, like their home, minus what they owe, like loans. The United States is the richest country in the world.

For example, if a family owns a home worth $800,000 and has savings and investments worth $95,000, but they owe $300,000 on loans, their net worth would be $595,000. Net worth can change depending on how much things are worth at any time.

Generally, families that earn more money also have more wealth. The number of wealthy families is growing, especially among older workers. Wealth is not shared equally, with the richest families owning most of the country's wealth.

The total wealth of U.S. families and non-profit groups grew from $44.2 trillion in early 2000 to a high of $67.7 trillion in late 2007. It then dropped to $54.6 trillion in early 2009 because of financial problems, but it went up again to $86.8 trillion by late 2015. This is almost double what it was in 2000.

Mechanisms to gain wealth

Assets, such as stocks, bonds, private companies, and real estate, are important for building wealth. Some government tools can help people save and build wealth. These tools include special savings accounts like 401k plans, 403b plans, and IRAs. These accounts let people save money that they do not have to pay taxes on right away. There are also Roth IRAs, which let savings grow without paying taxes on the earnings. However, these tools work best for people who can save a lot of money over many years.

Top percentiles of income

Affluence and how rich people are in society are often shown using rankings. These rankings can be based on income levels, such as the top 5%, 10%, or 15%, or on the percentage of households with incomes above certain amounts like $75,000, $100,000, or $200,000.

Household income changes over time, with bigger gains for those at the top compared to those at the bottom. Since the late 1960s, especially in the late 1990s, all income groups have seen their incomes rise, but the top groups have seen much larger increases.

Households in the top income group are more likely to have two or more people earning money. For example, in 2006, over 76% of households earning more than $91,200 had two or more earners, compared to just 42% of all households. This difference helps explain why income gaps between the richest and poorest have grown.

Income growth and changes in tax rules for wealthy people also affect income levels. Between 1979 and 2007, the top 1% of earners saw their incomes grow by an average of 275%, while the middle 60% saw their incomes rise by only 40%. In 2009, the average income for the top 1% was $960,000.

During the economic growth from 2002 to 2007, the top 1% saw their incomes grow ten times faster than the bottom 90%. In 2007, the top 1% had a larger share of total income than at any time since 1928.

It’s important to note that many households move between income groups over time. For example, most households in the top income group one year will be in a lower group ten years later. Similarly, households that start in the lowest income group often see more income growth over ten years than those that start in the highest group.

Income levels also depend on age and experience. Older, more experienced workers usually earn more than younger, less experienced ones.

Wealth distribution

Net personal wealth in the U.S. since 1962

The richest 1% of people in the U.S. have much more wealth than the bottom 50%. Wealth has grown for everyone, but especially for wealthier people.

Some households have little or no wealth, while others have a lot. Married couples usually have more wealth than single people.

Without counting pensions and Social Security, the richest 1% of Americans owned a large share of the country's wealth in 2007, and the next 19% owned most of the rest. This means the top 20% of Americans owned most of the country's wealth, while the bottom 80% owned only a small part. But pensions and Social Security are very important for most families, especially when they retire, and when these are included, wealth looks a bit more even.

After the Great Recession that began in 2007, the share of wealth owned by the richest people grew, while the wealth of middle and lower-income families fell.

Income inequality

Main article: Income inequality in the United States

People with more education often have higher incomes and more wealth.

Experts worry about the growing gap between rich and poor in America, saying it could cause problems for the country's future. Robert Shiller, a professor who won a Nobel prize, says rising inequality is a big challenge today.

Changes in wealth

From 1989 to 2001, more people in the United States became wealthier. Fewer households owed more money than they owned. The number of very wealthy households grew a lot — those with a lot of money doubled, and millionaires tripled.

After 2007, household wealth dropped sharply from 2007 to 2009. By 2010, it began to grow again, and by 2014, it reached a new record high. Even among the wealthiest families, there were big differences in income.

Occupations

Further information: High-net-worth individual

Some jobs that pay well include doctors, dentists, lawyers, engineers, and people who lead large companies. When people earn more money, they often feel happier at work. This is not only because of the money; people with these jobs usually have more education and more choices about their work. They also get to use their knowledge to solve problems and give advice.

In the United States, jobs like these often pay the most. Doctors and dentists are usually at the top, with some making over $300,000 a year. Lawyers, scientists, and engineers also earn a lot, often more than $70,000 a year. The pay can vary depending on the job and the company.

Education

Further information: Educational attainment in the United States

Education helps people earn more money. Those with more education often make more. For example, a person with a professional degree might earn about $100,000 a year, while someone with less schooling may earn less.

Students from families with more money often have a better chance to get into top schools. This shows how education and family income are linked to earning money.

Religion

Many people with different religions have become wealthy in America. Most of these people are from Mainline Protestant groups, like Episcopalians and Presbyterians.

A study from 2016 found that Jewish people were most likely to have high incomes. This was followed by Hindu people, Episcopalians, and Presbyterians.

Catholics are the largest group overall. The study also showed that education often links to higher income. For example, many American Hindu people have at least an undergraduate degree.

Race

See also: Racial inequality in the United States § Home ownership

Race affects how much money families earn in the United States. Families that earn more than $91,200 often include more Asian Americans and White people than other groups.

In 2006, Asian American families had the highest average income at $61,094. This was 26% more than White families, who earned $48,554. Over a quarter (27.5%) of Asian American families made more than $100,000 a year, and 40% made more than $75,000.

Among White families, 18.3% made more than $100,000, and 28.9% made more than $75,000. For Hispanic and African American families, these numbers were much lower. For example, only 9% of Hispanic families made more than $100,000, and 17% made more than $75,000.

The differences in income also show up when looking at individual earnings. In 2005, about 11% of Asian Americans and 7% of White people made over $100,000, compared to just 2.6% of Hispanics and 2.3% of African Americans.

Source: U.S. Census Bureau, 2006

Indian Americans are the top earning ethnic group.

Status and stratification

Economic well-being is often linked to how important a person is in society. Jobs that need special skills, like those that need a school degree, usually pay more money. This is because these skills are rare and very important.

High-paying jobs often need skills that not many people have. For example, doctors earned more than lawyers even though both jobs need special skills. This is because doctors' skills are considered even more rare.

Overall, jobs that need rare skills tend to pay more than jobs that are more common. Society uses higher pay to make sure people with important jobs do their best work. However, other things like fairness for all people, choices a person makes in their career, and connections can also affect how much someone earns.

In the United States today, a person's income often shows their status, but this can be tricky. Many families have two people working, which can make the family's total income higher even if each person’s job isn't the highest paying. For example, two nurses each earning $55,000 a year might have a higher family income than one lawyer earning $95,000. Even though the family earns more together, each person individually hasn't moved up in their job status.

Wealth statistics

The total value of all household wealth in the United States in the year 2000 was about $44 trillion. Before the Late-2000s recession that started in December 2007, this value was $65.9 trillion. After the recession, it dropped to $48.5 trillion by early 2009. By late 2009, it had risen again to $54.2 trillion, showing that the economy was beginning to recover.