John Stephens
Executive Vice President
EFG Companies
The economic picture has certainly looked relatively good for the last few years. Unemployment is at record low levels and companies report continued hiring. However, wages remain mostly flat and the Federal Reserve just issued a quarter-point interest rate hike. A potential trade war could also bring a serious cloud to our sunny economy.
In addition, there lies a very troubling and widening gap in wealth in this country. According to data from the Pew Research Center, the median upper-income family (those who make more than $127,600) now holds 75 times the wealth of the median low-income family (those who make less than $42,500). To give some historical perspective, in 2007 the upper-income family was worth 40 times as much as the lower income family. In 1989, the multiple was 28. To put it another way, the top 1% of US wage earners now holds 38.6% of the nation’s wealth, up from 33.7% in 2007. The bottom 90% now holds only 22.8% of the nation’s total wealth, down from 28.5% in 2007.
Some in retail automotive might perceive this widening gap as good news. More wealth can mean more auto sales, or at least more luxury vehicle sales. But, let’s add some perspective to those numbers.
According to FORBES, despite being the largest generation in the workforce today, Millennial salaries are 20 percent lower than Baby Boomers’ salaries when they were the same age. Their unemployment rate is twice the national average, and according to CNBC, their student loan monthly payment hovers just under $400.