In this week’s edition of Charts of the Week, we highlight recent research on the distribution of wealth and debt in the United States. For more insight, this week’s charts can be explored in “Six facts about wealth in the United States” by Isabel Sawhill and Christopher Pulliam. Also visit the Future of the Middle Class Initiative at Brookings for more in-depth research.
The majority of American debt is in our homes
Sawhill and Pulliam note that home mortgages comprised 68 percent of American household debt in 2018. However, the share of debt in student loans increased over 150 percent since 2006. “Millennials are, in fact, the ‘student debt generation,’” Sawhill and Pulliam write. “Compared to their Generation X peers, they took out more loans at higher amounts and were more likely to default, largely due to higher tuition, increased enrollment at for-profit schools, and a weak labor market.”
Middle class wealth is shrinking
Middle class families increasingly own less of the wealth in the country. In 2016, the top 20 percent held more than triple the wealth of the middle class. Further, the top 1 percent’s wealth share exceeded that of the entire middle class. “This has not always been the case,” Sawhill and Pulliam note. “Before 2010, the middle class owned more wealth than the top one percent. Since 1995, the share of wealth held by the middle class steadily declined, while the top one percent’s share has steadily increased.”
Generational wealth inequality is growing
Between 1989 and 2016, the median net worth of Americans 65 and older increased by 68 percent, while the median net worth of those 35 and younger fell 25 percent. Sawhill and Pulliam indicate projected federal spending over the next decade will largely benefit older families, while investments in younger families and children are expected to fall. “Younger families will not only have less wealth but will be expected to pay for debt-financed federal spending that has mainly benefited prior generations,” the authors write.
Betsy Broaddus contributed to this post.