The Bottom Half Is Making the Fastest Wealth Gains

The bottom half of American households has posted the fastest percentage growth in wealth since 2020, an economic gain that has received far less attention than the widening gap between millionaires and billionaires.

The Wall Street Journal recently focused on the growing divide at the very top of the wealth distribution. The wealth held by the top 0.1% has more than doubled since the end of 2019, while the threshold for reaching the top 1% has climbed substantially.

The Committee to Unleash Prosperity noted the unusual nature of the concern. Much of the widening gap highlighted by the Journal is no longer between rich and poor Americans. It is between the rich and the very rich.

A separate look at household wealth provides an even broader picture. Federal Reserve data highlighted by the Committee to Unleash Prosperity show that every major wealth group has gained since 2020, with the bottom 50% recording the largest increase on a percentage basis.

Wealth Growth Has Reached the Bottom Half

The largest dollar gains naturally accrue to households that already own the most assets. Rising stock prices can add billions of dollars to the fortunes of entrepreneurs and investors who hold large stakes in successful companies.

That does not mean households with fewer assets are being left behind.

Percentage growth shows how much each group has gained relative to where it started. By that measure, the bottom half of American households has outpaced the wealthiest groups since 2020.

The gap in total wealth remains large. Higher-income households own more stocks, businesses and other appreciating assets. But focusing exclusively on the gap misses whether Americans further down the distribution are building wealth themselves.

Federal Reserve data show substantial progress on that front.

Creating Wealth Is Not a Zero-Sum Game

The growing fortunes of successful entrepreneurs do not require other Americans to become poorer. Companies that grow in value can create wealth for their founders while providing jobs, wages, investment returns and new opportunities for others.

A widening gap between millionaires and billionaires therefore says little on its own about whether lower-income Americans are moving forward.

Public policy should focus on expanding the number of Americans who can build assets. Lower taxes on work and investment, stronger incentives to save and broader access to investment can help households turn earnings into long-term wealth.

The recent gains among the bottom half show what broader wealth creation can look like. Americans with fewer assets still have considerable ground to make up, but their financial position can improve even as successful businesses and their owners become wealthier.

CFE Takeaway

Concern about a growing divide between millionaires and billionaires overlooks a more consequential economic trend. Wealth has grown across the distribution since 2020, and the bottom 50% has recorded the largest percentage gain. Economic policy should expand opportunities for Americans to work, save, invest and build wealth rather than treating the creation of wealth at the top as evidence that everyone else is falling behind.