Wealth
Wealth is tricky to understand. It is everything that a household owns, such as the home, vacation home, cars, 401K, savings, stocks, jewelry, etc...But, you must subtract what the household owes. So, if my house is $200,000 but I owe $160,000 then my wealth is only $40,000 on the house.
One way to examine wealth is through quintiles (20% increments). if you lined all the households up in the U.S. by wealth, what percentage would the top 20% own? And then the next 20% and so on...Another way to think about this is if you have 5 people who are sharing a pie, what percent of the pie does the first person get, and the second person and third, etc...
Try the following exercise on your own:
First, hypothesize, how much of the wealth (the pie) in the U.S. do you think each quintile (person) has:
Bottom 20%:______ 2nd 20%_______ 3rd 20%________ 4th 20%_______ 5th 20%_______Top
(least) (most)
Second, write how much you think each quintile should have?
Bottom 20%:______ 2nd 20%________ 3rd 20%________ 4th 20%_______ 5th 20%_______Top
After you have finished answering the questions above, watch this video:
What is the reality? How is the wealth actually divided?
1. How does your guess about wealth compare to how it is actually distributed? (Here is the Google form for this lesson - I recommend opening this in a new window and then answer each question after you read the info.)
The overall conclusion about wealth is that the disparity of wealth is greater than that of income (see the pie graph below). The top 1% of America owns 34% of everything. The top 10% owns 70%. And half of America owns 96% of everything. In other words the bottom half, 50% of America, owns almost nothing. They have no money saved - for retirement or otherwise. Once you deduct their debts, they have almost no equity - from their homes, or possessions or bank accounts.
The average wealth of Americans
DQYDJ (Don't Quit Your Day Job)
... is a finance and investing website founded in 2009. Wherever possible we like to add interactive features, tools, and calculators to our posts.
The DQYDJ 2020 analysis of wealth in America calculates the median net wealth for Americans at $121,000:
The median is up from this 2010 Huffington Post report which analyzed a Congressional Research Bulletin about wealth, "The median household net worth -- the level at which half the households have more and half have less -- was $77,300" For a much more detailed analysis of wealth, see this post from business insider.
How does your family or community compare to the average American?
Average American: 50% own 2 cars, 50% have a 401K, 66% own 1 home, (only 6% own a second home like a condo or lake house).
2. How does your family's wealth compare to the average American? Feel free to comment on any of the above stats, or a combination of them:
- how much the total household net worth is
- cars
- 401K
- owning a house or second home
Education
In the US, here are the percentages of adults over the age of 23 who have attained each degree in 2012:
| High school graduate | 87.65% |
| Some college | 57.28% |
| Associate's and/or Bachelor's degree | 40.58% |
| Bachelor's degree | 30.94% |
| Master's degree | 8.05% |
| Doctorate or professional degree | 3.07% |
Not only is education level stratified, but the family's educational level determines, on average what the family's income will be (on average). In other words, the higher your education is, the more money one is likely to earn. Link to College Board research report here. The graph below shows how median income goes up for each level of education, even if you factor in income taxes (which also go up):
Here is a post from sociological images that has a lot of info showing the connection between your degree and your income.
So, not only does more education mean more income, the more income means higher scores on standardized tests (which could mean a better education). See the data below. This link shows that on average, the higher a family's income, the higher the ACT score.
Another way that data shows education impacting social class is that parents' educational level correlates with children's educational attainment. The graph below shows that the less education that parents have, the less education their children obtain. In other words, if parents don't have a college degree, the child is not likely to attain a college degree and visa-versa; parents with an advanced degree are more likely to have children who attain an advanced degree themselves.
Not only is educational level shaped by parents' social class, but also the major that a student chooses is too. This research from Natasha Quadlin shows that the major a student chooses at college is influenced by social class.
Lastly, people from different social classes are more likely to interact together at college. From The Upshot of NY Times, this interactive site allows you to see what percent of students from the top 1% and bottom 60% attend each school of higher education. The graph below shows where students from different social classes end up after high school:
Much of these conclusions are supported by Hamilton, Roksa and Nielsen (2018)
Additionally, if you are interested:
Elite Colleges Constantly Tell Low-Income Students That They Do Not Belongfrom Clint Smith in the Atlantic.
How Admissions Really Work: If The College Admissions Scandal Shocked You, Read This from NPR.
There are lots of ways that wealthy families get a boost in the college admissions process. Most are quite legal.
Here is a map of the connection between location and education. Notice the greens and blues near the coasts and in cities and the other large areas that are only orange, red and yellow. Also, even within cities notice the distinct segregation by education. This article by Business Insider highlights the urban educational segregation.
Location
The price of a home depends on a lot more than the physical structure of the home. From FRED, the average home price in the United States in 2019 was about $380K. But the average home price varies considerably from state to state. For example, West VA was the lowest with an average home price of $108K and California was one of the highest at $554K. The average for Illinois was $202K.
4. How do you think your home's value compares to the average home price? (Remember from the wealth section above, the average American owns a home.)
Other location examples:
Click here to see some houses for sale in Lake County, IL in 2014. Which do you think are the most expensive? Which are the least? When you see the actual prices, why do you think that is?
This heat map from Trulia shows the median sales price for areas across Lake County.
Opportunity Insights provides data about how neighborhoods shape residents' life chances.
Here is a map from Time showing the most economically segregated cities in America. Can you find your town? How does this segregation affect the residents?
This research from Harvard shows that zipcode is a better predictor for health than genetic code.
Here you can find data by zipcode about the average home price ( as well as income and other data).
Location is also related to mobility:
This report from NPR's Planet Money details how where you grow up can affect your income later in life.
And here is a video and stats from CNN Money that show how where you grow up limits or benefits you.
An online data tool called Opportunity Atlas finds a strong correlation between where people are raised and their chances of achieving the American dream.
Here is an NPR piece explaining it.
Here is the NY Times Upshot explaining it.
Location and where College Grads Move
WSJ data shows where college grads are likely to move after they graduate. Recall that only about 30% of Americans get a college degree, and out of that small group, notice where most of them move to after college.
Here is Indiana U and U of I:
Here is Indiana U and U of I:
Try Accessing the data through this link (sometimes you have to be on campus to get it to work):
Where Graduates Move After College
If the link above does not work, these might:
OFF CAMPUS ACCESS DURING PANDEMIC:
OFF CAMPUS ACCESS DURING PANDEMIC:
You will use the same link to access, then click the "sign in" link in the corner and use the username and password below:http://www.wsj.com/highschoolUsername: schoolaccess@wsj.comPassword: wsj123
ON FACEBOOK:
Accessible through this facebook link: https://www.facebook.com/groups/486893378140308/?multi_permalinks=1004035523092755¬if_id=1532189664367938¬if_t=feedback_reaction_genericON CAMPUS:
For full access to the WSJ when you're on campus, you need to use the following special link: www.wsj.com/highschool
- Once there, the fastest way for you (and your students) to find the article you're looking for is to click the search icon and enter the words "grads database"
- The only result that pops up should be "Where Graduates Move After College" and you should all be able to access it.
https://www.wsj.com/graphics/
Try to make your own conclusions about the data:
What does this data say about your life after college?
On a less personal level, what does this data say about the U.S. in general?
5. How do you think where college grads move affect social class in the U.S.?
Prestige and power
People view different occupations with different levels of prestige. This prestige can translate to real power such as being appointed to boards or committees. It can also simply give you credibility or respect in social situations. Here is a chart of prestige ratings.
6. What is the median prestige job in this data? Where does your family's prestige rating fall compared to this?
Power, according to Max Weber, is the ability to impose one's will on others. One example is how the world's most powerful leaders gather in secret meetings annually to discuss how they can shape policy, economics and laws among other things. One such meeting is the American Enterprise Institute held every year on an island off the coast of Georgia where attendees can fly their jets on and off the island in private. Another meeting is the Bilderberg meeting.
Some examples of power are the abilities to keep yourself out of jail, influence politicians and enact laws that are you favor. Here is one example from The Daily Show comparing teachers and Wall Street Investors. Can you guess who has the power?
Here is a link to a Washington Post article explaining that wealthy Americans use their power to create favorable government policies.
And this article from the NY Times shows that an executive at United Airlines accused of corruption charges was forced to resign. Imagine if a teacher was accused of corruption and was forced to resign. That would be it - out of a job and no compensation. But,
United filed a report with the Securities and Exchange Commission on Tuesday indicating that Mr. Smisek would receive nearly $4.9 million in a separation payment, and 60,000 shares of stock, valued at over $3 million.
