Affluence in the United States

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

In the United States, many families are quite well off. As of 2019, more than 30% of families earn over $100,000 each year, and more than 30% have more than $250,000 in wealth. But not everyone shares this wealth equally. Half of all families only own about 2% of all the wealth in the country, while just the richest 1% own about 35%.

In 2019, the middle point, or median, for how much families in the United States earn each year was $60,030, and the median amount of wealth they owned was $97,300. If we look at the average instead, families earned about $89,930 each year and owned about $692,100 in wealth.

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 those between 35 and 64 years old. Families who are a bit older, between 65 and 74 years old, usually have saved up 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, which 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 also 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 given time.

Generally, families that earn more money also have more wealth, but earning a lot does not always mean having a lot of wealth. The number of wealthy families is growing, especially among older workers. Wealth is not shared equally, with the richest 25% of 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. While these assets are not shared equally, 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 economic standing in society are often shown using percentile 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 average personal wealth of the richest 1% of people is more than a thousand times greater than that of the bottom 50%.

Wealth has grown for everyone, but especially for wealthier people.

The 10th percentile of American households have zero net worth, while the 90th percentile has $1.8 million of household wealth.

Married couples generally have more wealth than single individuals, no matter their age or gender.

According to an analysis that leaves out pensions and Social Security, the richest 1% of Americans in 2007 owned 34.6% of the country's total wealth, and the next 19% owned 50.5%. This means the top 20% of Americans owned 85% of the country's wealth, while the bottom 80% owned 15%. Differences in financial wealth were even larger, with the top 1% owning 42.7%, the next 19% owning 50.3%, and the bottom 80% owning just 7%. However, pensions and Social Security are very important for most households during retirement and make up a large part of their wealth. When these are included, the distribution looks more even. In 1992, the richest 1% owned 16% of the country's total wealth, compared to 32% when pensions and Social Security were not counted.

After the Great Recession that began in 2007, the share of total wealth owned by the top 1% grew from 34.6% to 37.1%, and the share owned by the top 20% grew from 85% to 87.7%. The Great Recession also caused a drop of 36.1% in median household wealth but only an 11.1% drop for the top 1%.

Income inequality

Main article: Income inequality in the United States

Median annual salaries and wealth differ greatly depending on education level.

Experts have expressed concern about America's growing differences in income, calling it a danger to democracy and social stability. Yale professor Robert Shiller, who won a Nobel prize for economics in 2013, stated that rising inequality is one of the most important problems we face today.

Changes in wealth

From 1989 to 2001, more people in the United States became wealthier, and fewer households had more debt than assets. The share of households with a negative net worth fell from 9.5% to 4.1%. The number of very wealthy households grew a lot — those with net worth between $500,000 and $1 million doubled, and millionaires tripled.

After 2007, household wealth dropped sharply by $17.5 trillion from 2007 to 2009. By 2010, it began to recover, and by 2014, a record high net worth of $80.7 trillion was reached. Even among the wealthiest families, there were big differences in income.

Occupations

Further information: High-net-worth individual

Some jobs that pay the most include doctors, dentists, lawyers, engineers, and people who manage big companies. When people earn more money, they often feel happier at work. This isn’t just because of the money; people with these jobs usually have more education and more choices about what they do. 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 a lot depending on the job and the company.

Education

Further information: Educational attainment in the United States

Education is very important for earning money. People with more education usually make more money. For example, someone with a professional degree can earn around $100,000 a year, while someone with less schooling might earn much less.

Students from families with more money have a better chance of getting into top schools. This shows how education and family income are closely linked to how much money a person can make.

Religion

Many people with different religious backgrounds have become wealthy in America. Most of these people are from Mainline Protestant groups, especially Episcopalians and Presbyterians. A study from 2016 found that Jewish people were the most likely to have high incomes, with 44% living in households earning at least $100,000 a year. This was followed by Hindu people (36%), Episcopalians (35%), and Presbyterians (32%).

Catholics make up the largest group overall, with over 13 million of them living in households earning $100,000 or more each year. The study also showed that education often links to higher income. For example, about 77% of American Hindu people have at least an undergraduate degree, and they earn the most on average at $137,000 a year. This is followed by Jewish people (59%), Episcopalians (56%), and Presbyterians (47%).

Race

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

Data from the U.S. Census Bureau shows that race plays a role in how much money families make. In the group with the highest incomes—those earning more than $91,200—Asian Americans and Whites were more common than in the general population, while Hispanic and African American families were less common.

In 2006, Asian American families had the highest average income at $61,094, which 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 percentages 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.