wealth - The New School SCEPA

Schwartz Lecture by Atlanta Fed President Raphael Bostic Provokes Rich Dialogue | In these times of broadening precarity, how can Americans build wealth, economic mobility, and security as they grow older? What can policymakers do to give financially fragile aging Americans a fighting chance, and build greater economic equality? This crucial question was the focus of this year’s Schwartz Lecture, by Dr. Raphael Bostic, president of the Federal Reserve Bank of Atlanta.

Working Paper| Since 1992 wealth for the bottom 90% of households nearing retirement has fallen. Using SCF and HRS data over 20 years, we find the bulk of working-class wealth is government social insurance. Economists should not exclude social insurance from wealth calculations. We find social insurance is the most important source of wealth for most families. Government policies and institutions have failed wealth building for most American households with workers.

By: Teresa Ghilarducci, Siavash Radpour, and Jessica Forden

The only source of wealth helping the bottom 90% is Social Security. Despite pro savings policies and generous tax breaks for savings, the share of the bottom 50% having any retirement account didn’t change in 20 years -- 46% in 1992 and 47% in 2016. Even the middle class suffered with the share of the next 40% having retirement savings that fell from 85% in 1992 to a low of 71% in 2016. Housing ownership increased a bit for the bottom 50% but fell among the middle class and upper middle class. Home equity for the working and middle class fell. 

Read the full working paper here