There’s a wealth gap even between millionaires, and it says a lot about growing inequality

millionaires
The wealth gap even at the top shows just how bad wealth inequality is overall.

  • There’s a wealth gap among very high net worth individuals, per a new Wealth-X report.
  • Those worth $15 million to $30 million make up just 16% of that cohort, but account for double the wealth.
  • It shows just how concentrated wealth really is at the top, and how stark inequality is.
  • See more stories on Insider’s business page.

Even millionaires have a wealth gap.

One out of every 10 millionaires has a net worth between $5 to $30 million, which Wealth-X defines as “very high net worth” (VHNW) individuals in its annual report. But the wealth among this wealthy class is lopsided.

Two-thirds of the VHNW class (about 1.7 million people) comprise the cohort’s lowest wealth tier of $5 million to $10 million, per the report. But those in the upper two tiers – the $15 million to $20 million range and the $20 million to $30 million range – represent just 421,170 people, less than 16% of the VHNW population. And they hold twice as much wealth, or 32% of the total.

The VHNW class is collectively worth $26.8 trillion, accounting for a quarter of millionaires’ total global wealth of $105 trillion. Those worth $1 million to $5 million account for 40% of this total wealth, while those worth over $30 million account for 34%.

This means that across both the larger millionaire population and the VHNW cohort, vast amounts of wealth are held by an exclusive group.

The pandemic has widened wealth inequality

Pre-pandemic, wealth inequality was lurking underneath America’s surface. As Insider’s Andy Kiersz reported, there was a “two-track” economy: those who owned stocks, or were already firmly middle or high-income, were reaping the benefits of a booming economy. An increasing share of national income was going to the top 1%.

The pandemic has since exacerbated the economy’s uneven dynamics, reported Insider’s Juliana Kaplan. Inequality deepened with a K-shaped recovery, as the different tracks diverged.

The bottom of the K dragged downward, with lower-income individuals continuing to struggle with the economic fallout. The poor were financially vulnerable, with many on unemployment benefits or risking their health as an essential service worker. From June to November, about 7.8 million Americans fell below the poverty line.

Meanwhile, higher-income Americans were six times more likely to be able to work from home than lower-wage workers, according to research from the Economic Policy Institute. They were spending less and saving more, and the very richest have been growing their billions.

The wealth gap among VHNW millionaires, and millionaires overall, says a lot about the wealth gap among the rich and the poor. It shows just how concentrated wealth is at the very top.

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Richer countries have most available vaccine doses as the global recovery becomes K-shaped

vaccination
A woman receives the Johnson & Johnson vaccine in the US, which is ahead of vaccination compared to other countries.

  • The wealthiest countries are vaccinating 25 times faster than the poorest countries, per Bloomberg.
  • Wealthier countries were snapping up doses in November, creating a vaccine shortage.
  • Poorer countries may not have enough vaccine supply until 2024, a Duke University analysis found.
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The vaccine race has intensified wealth inequality across the globe.

Bloomberg’s Vaccine Tracker found that the world’s wealthiest countries are vaccinating at 25 times the rate of the poorest countries. The database has thus far tracked more than 726 million doses administered in 154 countries.

So far, per the tracker, about 5% of the global population is able to get fully vaccinated. But the vaccines have been unevenly distributed, with 40% going to 27 wealthy countries that comprise 11% of the global population and 1.6% going to the countries comprising the poorest 11%.

Consider Pakistan. It has 2.7% of the world’s population, but has only received 0.1% of the vaccines. Meanwhile, the US, which accounts for 4.3% of the world’s population, has nearly a quarter of the world’s vaccines.

As of Thursday, the US has vaccinated nearly 20% of its population. It’s set to have enough vaccines for 75% of Americans by the end of June, per Bloomberg.

The pandemic has widened many wealth gaps

Patchy vaccine distribution is just the latest way the pandemic is exacerbating wealth inequality. In the US, the divide between the rich and the poor deepened as the economy’s recovery turned K-shaped, with higher-earning Americans recovering and lower-income Americans continuing to struggle.

From nabbing coronavirus tests when there was a shortage during the first stages of the pandemic to taking advantage of loopholes to get vaccinated early, the system has been working for the wealthy since the pandemic began.

The same dynamic has manifested on a global scale. While the global economy is expected to grow by 6% in 2021, according to IMF’s World Economic Outlook, that growth is projected to be uneven. Lower-income countries are expected to see an average annual loss of 5.7% per capita GDP from 2020 to 2024, but advanced economies will see a smaller loss of 2.3% in the same time frame.

“Recoveries are diverging dangerously across and within countries,” wrote Gita Gopinath, chief economist for the IMF.

Wealthier countries were snapping up “billions of doses” as early as November, reported The Washington Post’s Emily Rauhala, creating a supply shortage for poorer countries that could last until 2024.

She cited an analysis from researchers at Duke University’s Global Health Innovation Center that suggested these priority-supply deals between countries and drug manufacturers were undermining the World Health Organization’s initiative to equitably distribute vaccines.

The Biden administration committed $4 billion in February to Covax, a global vaccine alliance dedicated to ensuring equitable vaccine distribution, to help bolster the worldwide vaccine effort. More than 190 countries are participating.

“It’s unconscionable,” Zain Rizvi, an expert on access to medicine at Public Citizen, told Rauhala in a follow-up story. “Many countries will be lucky if by the end of the year they are close to where the US is now.”

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America’s wealthy are getting vaccinated faster than the poor, and a poorly designed system is partly to blame

vaccine worker
The wealthy are more likely to be vaccinated than the poor.

American inequality extends to vaccinations.

Communities of color, predominately Black communities, have been hardest hit by the pandemic. They’re also the least likely to be vaccinated.

Data indicates that the wealthiest zip codes across several states, from California and Colorado to New York and Florida, are more likely to be vaccinated than lower-income zip codes.

The wealthy have taken advantage of loopholes, using money and connections to jump the vaccine line, Insider’s Julia Naftulin and Allana Akhtar previously reported. They’ve been gaming the system, from calling up concierge doctors to gaining access to COVID-19 vaccination codes meant for communities of color.

But a wild-west rollout and socioeconomic technology gap are also at the heart of the problem in a poorly designed system advantaging the privileged. 

An unequitable rollout

In Florida, residents in affluent areas are getting vaccinated at a faster rate than lower-income neighborhoods, local news outlet WFLA reported. Consider Miami-Dade county, where the wealthiest zip codes are the most vaccinated, reported The Miami Herald

Some residents have criticized Florida Gov. Ron DeSantis for setting up special vaccine access in these wealthier areas. He recently set up a pop-up vaccine site in Lakewood Ranch, one of Florida’s richest neighborhoods with a median household income 75% to 85% higher than the county average, per WFLA, citing Census data.

DeSantis said in a press conference Wednesday that he chose Lakewood Ranch because of its elderly population. “We wanted to find communities that have high levels of seniors living in there, and this obviously has a high concentration,” he said. “You look at all these different communities, and there is a lot of senior citizens. If there were few senior citizens, then you wouldn’t have set up a pod here.”

It’s a similar case over in Los Angeles County. Dr. Paul Simon, chief science officer for the Los Angeles County Department of Public Health, told the Los Angeles Times that the county’s mass point-of-distribution sites have been successful in their goal to quickly distribute vaccines, but often don’t work well for poorer communities.

More residents in largely white and wealthy cities are vaccinated than the Black and Latino communities in lower-income areas, the LA Times reported. At least 25% of residents have received at least one vaccine dose in more affluent neighborhoods like Bel-Air and Beverly Hills, per LA County Department of Public Health data. It’s a sharp contrast from South LA and southeast LA county, home to working class cities such as Compton and Paramount, where at most 9% of the population is vaccinated.

A digital divide

The digital divide is also partly to blame. Vaccine appointments are a virtual task. Those without access to the internet can’t make an appointment, which is reportedly a difficult process to navigate even with access.

In Los Angeles, “websites have been flooded with folks trying to get an appointment,” Simon said. “And so those people who have the luxury of time can spend, literally in some cases, hours, I’m sad to say, working to try to get an appointment.”

Over in New York City, Mayor Bill De Blasio seconded this sentiment to Bloomberg. “Folks who have more privilege are best able to navigate this process,” he said. “Folks who have more confidence in the vaccine are going to go through more effort to get it.”

New York City is also seeing a disproportionate surge in vaccinations among wealthy neighborhoods, Bloomberg reported. De Blasio said there are 33 vaccination sites in “hard-hit” neighborhoods, accounting for 77% of total vaccination sites, but that the city needs to establish more.

He attributed the inequality partially to vaccine hesitancy. “Folks who have been doing very well in this society also have a high level of confidence in the vaccine,” he said.

In today’s modern world, less access to technology is generally equated with less access to education. And, right now, knowledge is power in getting vaccinated.

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The elite’s favorite status symbols have become way more expensive over the past 20 years

wealthy person
The elite have turned towards investing in education and health as a means to flaunt their riches.

Showing off wealth is no longer the way to signify having wealth.

Flashing a Louis Vuitton handbag or a multimillion-dollar Bugatti have long been standard status symbols for the elite, but the ultrawealthy have increasingly turned to intangible investments such as security and health to discreetly flaunt their wealth instead. An unlikely reflection of this transformation is the recent history of inflation in the US economy.

Consider American Enterprise Institute’s famous inflation chart, which was once dubbed by Bloomberg as “The Chart of the Century” and has made the rounds on various media platforms throughout the years.

The latest iteration, featured below, shows 54.6% overall inflation over the last 21 years, which works out to an annualized compound growth rate of 2.2%, very close to the Federal Reserve’s stated inflation target.

But as you can see, some services and goods have become way more expensive than others.

AEI
Services have grown more likely to become more expensive over time than material goods.

 

Hospital services, college tuition, medical services, and housing have seen disproportionate upticks past the average 54.6% inflation. Their costs have outpaced the hike in average hourly wages, which have shot up by 82.5%, or 28% more than the average increase in consumer prices.

Meanwhile, consumer goods such as new cars, clothing, computer software, toys, and TVs have become more affordable.

In a nutshell, it seems that the cost of intangible services (with the notable exception of housing) has increased while the cost of material goods has decreased, mirroring the shift from conspicuous to inconspicuous consumption.

The rise of discreet wealth

Inconspicuous consumption is a growing trend among not only millionaires and billionaires, but “the aspirational class.”

Elizabeth Currid-Halkett coined the term in her 2017 book, “The Sum of Small Things: A Theory of the Aspirational Class,” as the opposite of “conspicuous consumption,” a term conceived by 19th-century economist Thorstein Veblen referring to the concept of using material items to signify social status.

In the US in particular, the top 1% have been spending less on material goods since 2007, Currid-Halkett wrote, citing data from the US Consumer Expenditure Survey. In an era where mass consumption means both the upper class and the middle class can own the same luxury brand, she explains, forgoing material goods for immaterial means is a way for the rich to differentiate themselves.

“This new elite cements its status through prizing knowledge and building cultural capital, not to mention the spending habits that go with it,” Currid-Halkett wrote, adding, “Eschewing an overt materialism, the rich are investing significantly more in education, retirement, and health – all of which are immaterial, yet cost many times more than any handbag a middle-income consumer might buy.”

That inconspicuous consumption often goes unnoticed by the middle class – but getting noticed by a fellow elite is the appeal of the discreet. Investing in things like education, health, and childcare – which have all become more expensive since 2000, per the AEI chart – “reproduces privilege” and “offers social mobility” in a way that flaunting luxury couldn’t, according to Currid-Halkett.

Discreet wealth is just one of many inflation factors

Now, this isn’t to say that discreet wealth is the sole cause of inflation in the US.

Mark Perry, the AEI economist behind the chart, notes in his blog post that economists have attributed several reasons to these trends: Price increases correlate with a greater degree of government involvement in a good or service (like health care) and prices decrease as the degree of international competition for goods increases (like toys).

Mass production has enabled manufactured goods to become more affordable. And college has become more expensive for many reasons, including increasing globalization, increases in financial aid, and ballooning student services.

But the fact that the inflation chart correlates with the rise in discreet wealth indicates the power of demand in driving up prices – and the spending power of the elite as wealth inequality worsens in developed economies.

The more the elite covet sending their kids to high-end preschools and Ivy League colleges, or spending millions to live within walking distance of the country’s best public elementary and secondary schools, or buying their kids boutique healthcare as a way to signify status, the more expensive those industries are going to become.

Call it discreet inflation. 

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Elizabeth Warren says the stock market has become a ‘playground for the billionaires’. She’s calling for a wealth tax to fix it.

Elizabeth Warren
Sen. Warren questions the head of the Consumer Financial Protection Bureau in 2014.

  • Sen. Elizabeth Warren of Massachusetts emphasized the need for a wealth tax during an interview with CNBC on Thursday.
  • Warren said that the stock market is like a “casino” and is not reflective of the actual economy, hurting Americans who are suffering during the pandemic.
  • Establishing clearer SEC guidelines for market manipulation, along with establishing a wealth tax, would be effective methods to counter wealth inequality in the country, Warren said.
  • Visit Business Insider’s homepage for more stories.

Sen. Elizabeth Warren of Massachusetts stressed the need for a wealth tax to counter wealth inequality in the country during an interview on CNBC on Thursday.

Brought on to discuss the GameStop trade that shook the stock market in the last two weeks, Warren told CNBC’s Wilfred Frost and Sara Eisen that the Securities and Exchange Commission needs stricter and clearer rules on market manipulation. Without them, she said the stock market is like a “casino” and is not reflective of the state of the economy. Warren also cited the importance of new stimulus checks. 

 

“But the stock market, which has become the giant casino and playground for the billionaires, just keep spinning upward,” Warren said. “That means that our real economy has …really become detached from where the stock market is and the real economy right now is suffering. Stimulus checks are a way to deal with that.”

With so many Americans filing unemployment claims during the pandemic, Warren said, and with a 20% unemployment rate for Americans making less than $40,000 a year, a two-cent wealth tax on the top tenth of one percent of families would counter wealth inequality and distribute some of the benefits of a soaring stock market. 

Warren has long advocated for a wealth tax as a way to increase economic equality.  According to the Institute for Policy Studies – a progressive think tank – the 400 richest families in America own more wealth than all Black households and a quarter of Latino households combined. When speaking of the consolidated wealth in the country, the Senator said that “a lot of the wealth is quite visible and easy to see, it’s right there in the stock market.”

She said: “A two-cent wealth tax changes this country fundamentally because it means we say as a nation, we are going to invest in the next generation. We’re going to invest in creating opportunity not just for a handful at the top, we’re going to create opportunity for all of our kids. That’s how we build a strong future in this country.”

Congress plans to hold hearings on the stock market following the effects of the GameStop trade.

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