The Wealth Gap
The distance between who owns America and who works in it — and how that distance has been engineered over generations.
The short version
- The top 1% of American households hold more wealth than the bottom 90% combined — a concentration that has grown consistently since the 1980s and that translates directly into political inequality.
- The racial wealth gap is the most documented dimension: the median white family holds approximately eight times the wealth of the median Black family and five times the wealth of the median Hispanic family, a disparity rooted in specific historical policies rather than individual behavior.
- Wealth — not income — is the primary mechanism through which economic advantage compounds across generations: it provides collateral for loans, absorbs emergencies without debt, funds education, and is passed directly to children through inheritance.
- The United States has one of the highest levels of wealth inequality among wealthy nations and one of the lowest rates of intergenerational economic mobility — the gap between the 'American Dream' narrative and the measurable reality of who actually gets ahead is substantial.
What it is
Wealth is the total value of everything a household owns minus everything it owes — assets (homes, financial accounts, businesses, vehicles, retirement savings) minus liabilities (mortgages, student loans, credit card debt, auto loans). It differs from income, which is what a household earns in a given period. The distinction matters enormously for understanding economic security and opportunity: income tells you what flows through a household's hands; wealth tells you what cushion exists for emergencies, what assets can generate further returns, what can be used as collateral for additional borrowing, and what will be available to pass to the next generation. A household with high income and no savings is one medical emergency or job loss from financial crisis. A household with moderate income and substantial net worth can absorb shocks, invest in education, and fund retirement without that vulnerability.
The distribution of wealth in the United States is far more concentrated than the distribution of income, which is itself highly unequal. Federal Reserve data from 2023 shows that the top 1% of households hold approximately 30% of all household wealth; the top 10% hold about 67%; and the bottom 50% hold approximately 2.5%. The Gini coefficient for wealth — the standard measure of distributional inequality, where 0 is perfect equality and 1 is total concentration in a single hand — is approximately 0.85 for the United States, compared to approximately 0.45–0.60 for the Gini on income. This means that wealth is substantially more unequal than income, and that income measures systematically understate the full extent of economic stratification.
The racial dimension of the wealth gap is the most precisely documented and historically traceable dimension of American inequality. The Survey of Consumer Finances, conducted by the Federal Reserve every three years, shows that the median white family holds approximately $188,000 in net worth, compared to approximately $24,000 for the median Black family and $36,000 for the median Hispanic family. These are median figures, which means they describe the family in the middle of each distribution — the disparity is even larger at the mean, because extreme wealth at the top of the white distribution pulls the average upward. The gap is not primarily a current-income story: even controlling for income, Black families have significantly less wealth than white families at the same income level, because they face greater barriers to homeownership, have less family wealth to inherit, and more often started from a baseline of zero rather than from a cushion of inherited assets.
The mechanisms of wealth accumulation and transmission explain why the gap compounds across generations rather than correcting through market forces. Homeownership is the primary vehicle for wealth accumulation for middle-class families, and the history of federal housing policy — the FHA's exclusion of Black borrowers from federally backed mortgages through the 1960s, the redlining of Black neighborhoods, the predatory lending that stripped equity from Black homeowners in the 2000s — has produced a racial homeownership gap of approximately 30 percentage points that has barely moved since the Fair Housing Act of 1968. Children of wealthy families receive direct financial transfers: down payment assistance, tuition payments, emergency loans that don't charge interest, inheritance. These transfers are invisible in income statistics and exempt from most taxation. The estate tax, which applies to estates above $13 million per individual as of 2025, reaches fewer than 0.1% of estates.
Why it matters
Wealth concentration produces political inequality through mechanisms that are direct and well-documented. When the top 1% holds more wealth than the bottom 90%, the political influence that wealth purchases — through campaign contributions, lobbying, ownership of media, and the revolving door between industry and government — is also concentrated at the top. The Gilens and Page study (2014), which analyzed 1,779 policy outcomes over two decades, found that the preferences of average citizens have near-zero statistical impact on policy outcomes when they conflict with the preferences of economic elites. Wealth inequality is therefore not only an economic condition but a condition of democratic governance: extreme concentration of wealth tends to produce concentration of political power, which tends to produce policies that further concentrate wealth.
Intergenerational mobility — the probability that a child born to low-income parents will achieve a higher income as an adult — is substantially lower in the United States than in most comparable wealthy countries. Research by economist Raj Chetty and colleagues at the Opportunity Insights project found that the probability a child born in the bottom income quintile will reach the top quintile as an adult is approximately 7.5% in the United States, compared to approximately 11.7% in Denmark, 13.5% in Canada, and 17% in Denmark's Scandinavian neighbors. The American mobility rate is below that of France, Germany, Sweden, Finland, and most other wealthy democracies — a finding that directly contradicts the 'American Dream' narrative that effort and talent determine outcomes more in the U.S. than elsewhere. Place matters enormously: Chetty's work shows that mobility rates vary by a factor of three or four across U.S. regions, with children in the Southeast having dramatically lower mobility than children in the upper Midwest.
The wealth gap has specific consequences for Black Americans that trace directly to specific historical policies, not to behavioral differences or cultural factors. The destruction of Tulsa's Greenwood District ('Black Wall Street') in 1921 wiped out approximately $30 million in accumulated Black wealth in 18 hours of state-sanctioned violence. The GI Bill provided subsidized mortgages and college education to returning WWII veterans but was administered in racially discriminatory ways — Black veterans were systematically denied benefits that white veterans received, preventing the intergenerational wealth transfer that funded the white middle class's postwar prosperity. The subprime mortgage crisis of 2008 stripped approximately $1 trillion in home equity from Black and Hispanic families who had been targeted by predatory lenders. Each of these was not an accident of market forces but a specific policy choice or failure of enforcement with documented and durable wealth effects.
The persistence of the wealth gap in the face of anti-discrimination law illustrates the limits of formal equality as a remedy for structural inequality. Making racial discrimination in lending illegal in 1968 did not close the wealth gap, because the gap by then reflected decades of accumulated disparities — in homeownership rates, in inherited assets, in access to credit — that legal equality could not unwind. A family starting from zero in 1968 had a fundamentally different wealth trajectory than a family starting from a substantial inherited home, even if both families faced identical legal treatment thereafter. The policy implications of this observation are contested: proposals ranging from targeted homeownership assistance to baby bonds (government-seeded investment accounts for all children at birth) to direct reparations for the documented effects of specific historical policies have been debated, modeled, and in some cases piloted. None has been implemented at a scale commensurate with the size of the gap.