To paraphrase Charles Dickens, a look at the US economy reflects that it’s the best of times for some Americans and the worst for others. We’ve heard a lot about increasing inequality with the top 1 percent of citizens getting a bigger and bigger share of income and wealth, but as economist Doug Poutasse explained in a presentation at our June First Monday lunch, some cities and regions in the US are doing much better than others. Fortunately for us (except in terms of housing costs), the Boston metropolitan area is one of those more dynamic regions.
Here are some of the statistics Poutasse presented:
- In the Boston metro area, 24.5% of adults have bachelors degrees and 19.5% have advanced degrees. Nationwide, the numbers are 18.3 and 11.0%, respectively.
- During the recession, employment in Boston dropped about 4% and it has now increased almost 8% from where it was before the recession. Nationally, the drop was more than 6% and employment is now about 4% above pre-recession peaks. Some cities, such as Las Vegas, St. Louis and Newark, have not recovered to their pre-recession employment levels.
- In New England, Burlington, Boston and Worcester are doing much better than the national average. Pittsfield, Hartford, New Haven and Bangor are doing much worse.
- Though there are a lot of apartments being built in Boston and surrounding areas right now, Poutasse, who works at Bentall Kennedy, a real estate investment company, predicted that it will take a long time for supply to catch up with demand. Last year, the number of apartments in greater Boston grew by 1% while jobs grew by 2%.
- As the growth of the 25 and older population in the Boston area continues to outstrip the growth of housing, more and more people are cramming into smaller and smaller apartments and houses.
- The top 1% of Americans own more than a third (35.4%) of the wealth in the country. The top 5% own 63% and the top 10%, 75.7%, leaving less than a quarter for the other 90% of the population. The following chart shows how much new wealth flowed to the top groups over the past 20 years.
- A third of Americans have less than $5,000 in net worth, and most of them have negative net worth, their debts exceeding their assets.
- The top 1 percent’s share of wealth actually hasn’t changed dramatically in recent years. It was as high as 44% in 1924 and as low as 20% in 1971, hovering around 35% since the early 1980s.
- But the wealth of the rest of the population has skewed towards the higher end, the top quarter increasing its holdings from 83 to 90% of US wealth over the last 30 years, while the share of the other 75% dropped from 17 to 10%.
- In 2010 dollars, the average wealth of the top 1% increased from $9.6 million in 1983 to $16.4 million in 2010. That of the top 20% increased from $1.2 million to $2.1 million. White Americans have much more of this wealth than non-whites.
- The following chart demonstrates the relative lack of mobility in the US. On the left is the parents’ wealth quintile. It shows that 41% of those Americans whose parents were in the top quintile are in that quintile as well, and the same percentage of Americans who grew up in the bottom quintile stayed there. Of course, this shows that almost 60% changed quintiles, but only 7 or 8% went from top to bottom or from bottom to top.
Child’s Wealth Quintile as Adult
|Parents’ Quintile||Top 20%||Middle 20%||Bottom 20%|