• Who Are the 9.9 Percent? A Closer Look at the Math of American Inequality

    Matthew Stewart Considers Home Ownership, the Merit Myth, and the Cruelty of the American Dream

    When you are not rich, you are quite sure you know what it would feel like to be rich. Once you become rich, you are not so sure. You come to see that there are many people much richer than you, and you can’t help but wonder what it would be like to be them. This was one of the thoughts I picked up from Grandfather, rather indirectly, when he complained, as he often did, of the monstrous injustice of the estate tax.

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    The government, I learned early, taxed away three quarters of the Colonel’s fortune upon his death. The remaining quarter was divided among four siblings. Thus, the Colonel at death must have been worth an impressive sixteen times more than Grandfather at his peak, or so I calculated with my sixth-grade math skills. I thought this might explain some of the deference—or was it fear?—that crept around the edges of Grandfather’s voice when the subject turned to the Colonel. I wondered if it also explained the occasional outbursts of hostility that Grandfather directed at the Rockefellers. They must have been worth sixteen times more than the Colonel, or maybe much more.

    I never quite got all the numbers down, but then again, I realized that the perceptions of wealth that organized my grandparents’ lives were not all that reliable either. On the one hand, they lived in a world that was transparently ordered by money, with all of the poor people out on the mainland, all of the rich people on the island, and the richest people in the biggest houses on the island. On the other hand, the exact relationship between house size and wealth was always measured in imprecise terms. And, having spent some time across the water in West Palm Beach on the way in, I got the sense that it was not actually a pestilent wasteland.

    What stayed with me, in any event, was this Russian-doll experience of not quite knowing when you will finally arrive at the innermost sanctum of wealth. An unequal world, according to the usual way of thinking, is one that is angrily divided between the rich and the poor. But in reality, it may also be one that is united in the universal awareness that there is always someone richer than you—a lot richer. And sometimes it isn’t the actual wealth but the impressions of wealth that determine where you will end up. These simple intuitions seem worth bearing in mind as we turn to the extraordinary increase in economic inequality in the United States over the past half century.


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    The story of rising economic inequality is by now so familiar that it fits easily onto a T-shirt. But the way the story is told is often imprecise enough to leave out much of the plot. “We are the 99 percent” sounds righteous enough, but it’s a slogan, not an analysis. It suggests that the whole issue is about “them,” a tiny group of crazy rich people, who are nothing at all like “us.” But that’s not how inequality has ever worked. You can glimpse the outlines of the problem if you take a closer look at the math of inequality.

    Between 1963 and 2016, this top one thousandth of the population have tripled their share of the pie and now own almost one quarter of everything of economic value in the country.

    Supposing we stick for the moment with the questionable suggestion that “we” are merely a collection of percentiles in the wealth distribution tables—and I will question that suggestion in a moment—the first thing to note is that “99 percent” is not the right number. Contrary to popular wisdom, it is not the “top 1 percent” but the top 0.1 percent of households that have captured essentially all of the increase in the relative concentration of wealth over the past fifty years.

    Between 1963 and 2016, this top one thousandth of the population have tripled their share of the pie and now own almost one quarter of everything of economic value in the country. The top 0.01 percent have done even better, and the 0.001 percent better still. In 1982, the price of entry into the Forbes list of the 400 wealthiest Americans (“the 0.00025 percent”) was $75 million and the prize at the top was $2 billion and change. As of 2019, $2 billion doesn’t even get you onto the list, and you’ll need a couple of extra digits to break into the top two spots. Even adjusting for inflation and economic growth, the rich today are an order of magnitude richer than they were just forty years ago. The last time the rich were this rich, in relative terms, was in 1928, or right around the time that my great-grandfather’s fortunes peaked.

    And yet not all of the percentiles below the fabulous 0.1 percent lost ground over the past half century. Only the bottom 90 percent did. In the years between 1963 and 2016, every percentile below the 90th saw its relative share of the wealth decline. Collectively, the bottom 90 percent is down about one third in its piece of the pie, even while the top 0.1 percent is up by the corresponding amount. All of the 401(k)s, checking accounts, mattress money, and college savings plans of the bottom 90 percent now add up to a mere 10 percent of the nation’s financial wealth. Throw in the houses, cars, old pianos, and the other things that people generally can’t afford to sell, and the aggregate wealth of the bottom 90 percent totals up to about the same as the wealth of the top 0.1 percent. If our society had $2 to share between the richest 0.1 percent and the bottom 90 percent, it would give $1 to the guy in the private jet and the other $1 to the other 900, or about enough people to fill 20 city buses. Back in the 1960s, by contrast, the people on the buses shared $4 for every $1 among the sky people.

    In between the 0.1 percent and the 90 percent, there is a collection of percentiles that has held on to its share of the growing economy. It has pulled away from the 90 percent, even as it has fallen far behind the 0.1 percent. Taken on the whole, the 9.9 percent is the richest segment of the distribution and controls more than half of the personal wealth in the nation. In fact, if the super-rich in the 0.1 percent and the masses in the 90 percent have $1 apiece, this group has about $2.50 to share among its members. As of 2016—the numbers will almost certainly be higher by the time you read this—$1.2 million in net assets will get you into this stretch of the wealth spectrum, and about $20 million will push you up to the 0.1 percent. This is the 9.9 percent.

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    The population that happens to reside in the 9.9 percent at any one moment is diverse, and no generalization about the group is accurate in more than a loose, statistical sense. Nonetheless, it is safe to say that this isn’t the place to look for superstar performers and the great disruptors of free market lore, and it isn’t a den for villains and plotters either. For the most part, it is home for people who follow the rules and do as they are told: professionals of all sorts, but especially in medicine and law; platoons of midlevel bankers; managers of processes you’ve never heard of; small business owners; and older couples who planned sensibly for retirement. One thing most of them have in common is the conviction that the system works and that their own success is the proof.

    The merit myth—the vague and sunny belief that everything works out for those who try—is the first tenet of the Creed of the 9.9 percent. Another thing they have in common is that they are mostly—but not entirely—white. The median Black household had wealth of $3,557 in 2016—down by almost half from 1983. Latinos had $6,591, up a couple thousand dollars. The median white family, on the other hand, had $146,984, up over 80 percent in the same period. People of color are not absent from the top 9.9 percent of the wealth distribution, to be sure—a fact that is central to our collective self-image. It’s just that white people are eight times more likely to make it into those happy percentiles.

    Another thing the 9.9 percent have in common is that they are lucky to live in America. In this book I confine my focus on the United States; but that is less of a limitation than it sounds. The United States represents a little over 4 percent of the world’s population and 24 percent of world GDP, but its 9.9 percent would blow away the competition in any faceoff with the rest of the world’s 9.9 percent. That’s not because the United States is wealthier; it’s because the United States is that much more unequal. In the thirty-seven industrialized countries that make up the Organisation for Economic Co-operation and Development (OECD), on average, the top decile has about as much wealth as the bottom nine deciles put together.

    In the United States, the top decile has about four times as much wealth as the bottom nine. Between 1974 and 2014, while the ratio of income between the top decile and bottom decile rose from 3.5 to 7.3 in Sweden and from 5.3 to 7.8 in Holland, it rocketed from 9.1 to 18.9 in the United States. In some respects, the U.S. socioeconomic hierarchy looks more like those of India and Brazil, say, than those of traditional peers in the industrialized world such as Germany and Japan.

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    The merit myth—the vague and sunny belief that everything works out for those who try—is the first tenet of the Creed of the 9.9 percent.

    Another marker of membership in the 9.9 percent in the wealth distribution, at least in numerical terms, is an individual’s generational cohort. According to Census Bureau data, individuals who made the mistake of being born in the early 1980s, i.e., as one of the allegedly weak-willed and self-absorbed millennials, will have an average net worth 25 percent lower in 2016 in inflation-adjusted dollars than people born in the early 1950s had in the 1980s, when they were the same age. Meanwhile, those fat and happy baby boomers, now in their sixties and seventies, have seen their relative share of the wealth double. But before we incite a generation war, consider this: the growing gaps in starting salaries and starter-home values indicate that the secession of the 9.9 percent from the rest of society is now happening earlier than ever in the American life cycle.

    Homeownership is another feather in the cap of those who succeed in the 9.9 percent game. While the median homeowner has a net worth of $195,400, the median renter has $5,400. That’s not just because rich people buy homes; it’s because buying (the right) home makes people rich. Some research suggests that homeownership has become such a central part of wealth formation that it may account for most of the increase in wealth inequality.

    A lesson for success among the 9.9 percent worth noting up front has to do with the importance of having good taste in parents. The Federal Reserve estimates that between 25 percent and 53 percent of all wealth in the United States is inherited—the wide range has to do with assumptions about the rate of return on inherited wealth—and three quarters of inherited wealth ends up where approximately three quarters of all wealth starts off: in the pockets of the top decile. Setting aside the large financial fortunes at the top, a substantial part of that intergenerational wealth transfer passes through the family home.

    The spectacular rise of the 0.1 percent has received plenty of ink over the past decade, but the expanding chasm between the 90 percent and the 9.9 percent in some ways matters more to the real story of inequality in American life. In 1963, a household at the national median (that is, the 50th percentile) needed to increase its wealth by a factor of 10 to reach the median of the 9.9 percent. Now, the median household has to multiply its wealth by 24 times to achieve the same result. If you think of the American Dream as a mountain, that mountain is now more than twice as steep.

    According to the same math, the Dream is now also at least twice as cruel. The traditional theory of the Dream says that the universal striving for material riches is a good thing because, win or lose, everybody gains in the end. A rising tide lifts all boats, or so the song goes. This was a credible view in the postwar decades, when economic growth generated matching increases in median wages. Over the past forty years, however, real wages have remained anchored to the sea floor, even as tuition, housing, and health care costs have raised the price of admission to the middle class. Only the top decile have floated up with the tide. The new theory of the dream is: winning is everything, losers stay put.

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    From a statistical perspective, the 9.9 percent is more or less what you get when the middle class goes underwater. (Or, maybe more accurately, when the middle class turns on itself and shoves the other guys off the boat.) But there is no reason to get particularly fixated on the current number. By the time you read this, it may well be the 8.9 percent, or the 7.9 percent. The only certainty is that, as long as inequality is rising, the number will go down. Not all of the people on the boat have figured this out yet, but the nature of rising inequality is such that the circle of joy is always shrinking.


    Excerpted from The 9.9 Percent: The New Aristocracy That Is Entrenching Inequality and Warping Our Culture by Matthew Stewart. Reprinted with permission of the publisher, Simon and Schuster. Copyright © 2021 by Matthew Stewart. 

    Matthew Stewart
    Matthew Stewart
    Matthew Stewart is an independent philosopher and historian who has written extensively about the philosophical origins of the American republic and the history of management. With degrees from Princeton University and Oxford University and a stint as a management consultant, he was once a respectable member of the 9.9%. His work has appeared in The Atlantic, The Washington Post, The Wall Street Journal, and Harvard Business Review, among other publications. He lives near Boston, Massachusetts, and you can visit him at MWStewart.com.

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