The richest are getting richer.
And the rest of us are fading in the race for wealth.
The folks most of us will never become — those in the top 1 percent in wealth — earned more than 19 percent of the nation’s household income in 2012. The top 10 percenters reaped a record 48.2 percent of all earnings.
This has created the widest gulf between the truly haves and the have-nots since the Roaring ’20s. The inequality has been growing wider for three decades.
How do they do it?
The source of the income for the wealthy is simple: 34 percent of their income is from compensation for work; 22 percent is from business income, and 35 percent is from investments.
Compare that to the income for the never-to-be-wealthy: 64 percent is from compensation. Only 11 percent is from investments. You see the difference.
The wealthy aren’t just lucky. They know the ins and outs of investment. Many folks figure we’ll never have anything to invest. Or they’re wary of the market. Or fearful that their 401Ks are sure to fall into the hands of a company facing an SEC investigation.
That mindset is hard to get over. But taking time to study investment options is the first step, perhaps, in addressing the income gap. The richer you are, the more likely you’re doing it.
Government at every level should renew efforts to help those in small businesses, reduce unnecessary ills like inheritance taxes and make it easier for businesses to start up. It’s also part of the responsibility of government to make sure that everyone has access to a good education and that minimum wage levels are set high enough that workers can rise above poverty.
But a good part of the responsibility for accumulating enough resources to live comfortably lies with individual adults. Those who work hard and constantly seek better jobs generally succeed, particularly if they’re willing to get additional education. On the spending side, materialism or costly habits like smoking can help push people into poverty.
For many people, it’s simply a matter of self-discipline to accumulate enough wealth to avoid poverty. Are you investing as much as you could be? Look past your immediate wants and needs for a second, and make a move to invest. Perhaps you could even become one of the wealthy.
In summary Government can help in easing financial burdens but many of us have to get a new mindset about investing.