U.S. Has Worst Wealth Inequality of Any Rich Nation, and It’s Not Even Close

I’ve discussed the Credit Suisse Global Wealth Reports before, an excellent source of data for both wealth and wealth inequality. The most recent edition, from November 2016, shows the United States getting wealthier, but steadily more unequal in wealth per adult and dropping from 25th to 27th in median wealth per adult since 2014. Moreover, on a global scale, it reports that the top 1% of wealth holders hold 50.8% of the world’s wealth (Report, p. 18).

One important point to bear in mind is that while the United States remains the fourth-highest country for wealth per adult (after Switzerland, Iceland, and Australia) at $344,692, its median wealth per adult has fallen to 27th in the world, down to $44,977. As I have pointed out before, the reason for this is much higher inequality in the U.S. In fact, the U.S. ratio of mean to median wealth per adult is 7.66:1, the highest of all rich countries by a long shot.

The tables below illustrate this. First, I will present the 29 countries with median wealth per adult over $40,000 per year, from largest to smallest. The second table also includes mean wealth per adult and the mean/median ratio, sorted by the inequality ratio.

 

1. Switzerland  $244,002
2. Iceland  $188,088
3. Australia  $162,815
4. Belgium  $154,815
5. New Zealand  $135,755
6. Norway  $135,012
7. Luxembourg  $125,452
8. Japan  $120,493
9. United Kingdom  $107,865
10. Italy  $104,105
11. Singapore  $101,386
12. France  $  99,923
13. Canada  $  96,664
14. Netherlands  $  81,118
15. Ireland  $  80,668
16. Qatar  $  74,820
17. Korea  $  64,686
18. Taiwan  $  63,134
19. United Arab Emirates  $  62,332
20. Spain  $  56,500
21. Malta  $  54,562
22. Israel  $  54,384
23. Greece  $  53,266
24. Austria  $  52,519
25. Finland  $  52,427
26. Denmark  $  52,279
27. United States  $  44,977
28. Germany  $  42,833
29. Kuwait  $  40,803

Source: Credit Suisse Global Wealth Databook 2016, Table 3-1

Now that I’ve got your attention, let me remind you why this low level of median wealth is a BIG PROBLEM. Quite simply, we are careening towards a retirement crisis as Baby Boomers like myself find their income drop off a cliff in retirement. As I reported in 2013, 49% (!) of all private sector workers have no retirement plan at all, not even a crappy 401(k). 31% have only a 401(k), which shifts all the investment risk on to the individual, rather than pooling that risk as Social Security does. And many people had to borrow against their 401(k) during the Great Recession, including 1/3 of people in their forties. The overall savings shortfall is $6.6 trillion! If Republican leaders finally get their wish to gut Social Security, prepare to see levels of elder poverty unlike anything in generations. It will not be pretty.

Let’s move now to the inequality data, where I’ll present median wealth per adult, mean wealth per adult, and the mean-to-median ratio, a significant indicator of inequality. These data will be sorted by that ratio.

 

1. United States  $ 44,977  $344,692 7.66
2. Denmark  $ 52,279  $259,816 4.97
3. Germany  $ 42,833  $185,175 4.32
4. Austria  $ 52,519  $206,002 3.92
5. Israel  $ 54,384  $176,263 3.24
6. Kuwait  $ 40,803  $119,038 2.92
7. Finland  $ 52,427  $146,733 2.80
8. Canada  $ 96,664  $270,179 2.80
9. Taiwan  $ 63,134  $172,847 2.74
10. Singapore  $101,386  $276,885 2.73
11. United Kingdom  $107,865  $288,808 2.68
12. Ireland  $ 80,668  $214,589 2.66
13. Luxembourg  $125,452  $316,466 2.52
14. Korea  $ 64,686  $159,914 2.47
15. France  $ 99,923  $244,365 2.45
16. United Arab Emirates  $ 62,332  $151,098 2.42
17. Norway  $135,012  $312,339 2.31
18. Australia  $162,815  $375,573 2.31
19. Switzerland  $244,002  $561,854 2.30
20. Netherlands  $ 81,118  $184,378 2.27
21. New Zealand  $135,755  $298,930 2.20
22. Iceland  $188,088  $408,595 2.17
23. Qatar  $ 74,820  $161,666 2.16
24. Malta  $ 54,562  $116,185 2.13
25. Spain  $ 56,500  $116,320 2.06
26. Greece  $ 53,266  $103,569 1.94
27. Italy  $104,105  $202,288 1.94
28. Japan  $120,493  $230,946 1.92
29. Belgium  $154,815  $270,613 1.75

Source: Author’s calculations from Credit Suisse Global Wealth Databook 2016, Table 3-1

As you can see, the U.S. inequality ratio is more than 50% higher than #2 Denmark and fully three times as high as the median country on the list, France. As the title says, this is not even close.

The message couldn’t be clearer: Get down to your town halls and let your Senators and Representatives know that it’s time to raise Social Security benefits and forget the nonsense of cutting them.

Cross-posted from Middle Class Political Economist.

 

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