Wealth Is Becoming More Concentrated among the Richest Families

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For the past 40 years, the share of wealth owned by the wealthiest families in the U.S. has increased, according to French economist Thomas Piketty. New research from the St. Louis Fed’s Center for Household Financial Stability shows that this trend has picked up speed over the past few years.

In the latest issue of In the Balance, Senior Economic Adviser William Emmons and Senior Analyst Lowell Ricketts examined three trends Piketty identified in his best-selling book, Capital in the Twenty-First Century. Piketty predicted that the U.S. and other advanced economies would experience:

• Further increases in national capital-to-income ratios
• Further increases in the share of national income received by owners of capital
• Further concentration of wealth among the richest families

Emmons and Ricketts showed that the first two points have indeed continued occurring since 2010. However, this did not mean that additional concentration of wealth was a given. The authors noted that capital stock could grow faster than national income even while the distribution of wealth across the population became more equal. They wrote: “Piketty showed, for example, that the capital share (α) in France has increased since 1950, but the share of wealth owned by the very richest families has not.”

The figure below shows the share of wealth owned by families that rank in the top 10 percent, top 1 percent and top 0.1 percent of the U.S. wealth distribution in each year.¹

Emmons and Ricketts noted that data from the Federal Reserve’s Survey of Consumer Finances roughly match Piketty’s estimates for 1990, 2000 and 2010. The data also show that the wealth-concentration ratios increased further by 2013, the date of its most recent survey. In fact, wealth shares of these groups increased faster after 2010 than during the four decades ending in 2010.²

The authors noted: “Thus, the increasing share of national income flowing to owners of capital in the U.S. has, in fact, coincided with increasing wealth concentration.”

Notes and References

¹ These are not necessarily the same families over time.

² The average annual increases in the share of wealth owned by the top 10 percent, top 1 percent and top 0.1 percent of families between 1970 and 2010 were 0.18, 0.14 and 0.08 percentage points per year, respectively. The average annual increases between 2010 and 2013 were 0.20, 0.48 and 0.31 percentage points, respectively.

Additional Resources

• On the Economy: Why Are Some Countries So Rich and Others So Poor?
• On the Economy: The Relationship between Wage Growth and Inflation