The Rich are Different From You and Me: They're Old
Old people are rich. Young people are poor. Simple as that.
The old have gotten wealthier, while the young have become poorer. That’s the conclusion of “The Old Prosper Relative to the Young,” a recent report by economists and researchers at the Pew Research Center.
• From 1984 to 2009, the median net worth of older households rose 42%. For younger households, it declined by 68%.
• The gap in wealth between older and younger households widened over time. In 1984, the median net worth of older households was $108,000 higher than that of younger households. But by 2009, the median net worth of older households was $166,832 higher than that of younger households, the “largest (gap) in the 25 years that the government has been collecting this data.” (All figures are expressed in 2010 dollars.)
• In younger households, median adjusted annual income rose 27%, from $38,555 in 1967 to $49,145 in 2010. (Again, the figures are in 2010 dollars.) At the same time, income for older households rose 109%, from $20,804 to $43,401.
• From 2005 to 2009, median net worth for older households declined 6%, versus a 55% decline for younger households. Meanwhile, the adjusted median income of the oldest households rose 8%, while the youngest households experienced a 4% drop.
In a way, this is a victory of sorts. Social Security, when it was enacted, was designed to alleviate poverty among older Americans. Demographics being what they are, though, it has more recently entailed taking money from the paychecks of working -- ie, younger -- Americans and sending it to unexpectedly still alive-and-kicking non-working Americans, whose numbers are increasing just as the wage-earning youngster numbers are decreasing.
It's a version of the Law of Unintended Consequences. Sort of like the food stamp programs, which were designed to eliminate hunger among America's poor, with the result that, today, America's poor aren't even close to hungry. On the contrary: they're obese.
We hear a lot about one kind of income gap, but not a lot about this kind. I wonder why?