The U.S. economy is minting new millionaires at an astonishing rate, according to a paper by New York University economist Edward N. Wolff.
The number of households with a net worth of $1 million — measured in constant 1995 dollars, or about $1.6 million today — grew from 2.4 million households in 1983 to 9.1 million households in 2016, a growth rate of 279 percent.
For comparison, the total number of households grew by just 50 percent over that period, meaning that the population of millionaires grew at more than five times the rate of the general population.
In 1983 fewer than 3 percent of households had a net worth greater than $1 million in 1995 dollars.
By 2016, over 7 percent of households were worth that much.
Net worth is a measure of a household’s assets, such as home value, stocks and retirement accounts, minus debts. From 2013 to 2016 alone, the economy added more than two million households with a net worth of $1 million or more in constant 1995 dollars. That works out to roughly 1,845 new millionaire households each day during that period.
Rates of growth in the upper echelons of the wealth spectrum have been even more rapid. From 1983 to 2016, the number of households worth $5 million grew by 649 percent. The number of households worth $10 million or more grew by 856 percent over the same period.
“Much of the growth (in millionaire households) occurred between 1995 and 2001 and was directly related to the surge in stock prices,” Wolff writes in his paper.
The real estate market also has been a significant factor in recent years.
The results “show growing polarization with (the) very wealthy pulling farther away from the middle,” Wolff said via email.
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This also is plainly apparent in the increasing share of American wealth owned by the richest one percent of households, he said.
The American middle class has been in decline for decades. As of 2015, middle class households were no longer a majority in the United States, according to a Pew Research Center analysis.
Part of that shift is due to people falling out of the middle class. Between 1971 and 2015, the share of American adults in the “lower middle” and “lowest” income tiers grew by four percentage points, according to Pew.
But the middle class is also shrinking because many households are becoming better off, as the American Enterprise Institute’s Mark Perry has noted. This is undoubtedly good news, particularly for the newly prosperous families benefiting from the trend.