A 2022 Oxfam survey showed that poverty increased by 160 million people during the first two years of the COVID-19 pandemic. Meanwhile, the world’s ten wealthiest men more than doubled their fortunes from $700 billion to $1.5 trillion. These ten men are six times richer than the world’s poorest 3.1 billion people.
Those are a lot of big numbers to unpack. Let’s backtrack a little and start with the basics.
What is wealth?
This might seem like a pretty straightforward question, but there’s more to it than you might think.
…people making $50,000 to $100,000 say they’d need to make $260,000 to feel rich. People making over $100,000 say it’s half a million. Only 28 percent of investors with $1 million to $5 million in assets consider themselves “wealthy.”
It can also feel pretty subjective – “wealthy” to one person is “average” to another.
For our purposes, we’ll define wealth as the total value of everything a person or organization owns. This includes money, property, stocks, and other assets. In this way, wealth and wealth gaps become quantifiable.
What is the wealth gap?
The wealth gap is the difference in how much money different groups have. You can measure it in different ways, but one standard method is to look at the difference between average and median incomes.
The average income is the total amount of money that all people in a group make divided by the number of people in the group. The median income is the amount of money that the middle person in a group makes.
If a significant difference exists between the average and median incomes, a lot of money is at the top and not much at the bottom. This is what we call a wealth gap.
The pay gap, or gender wage gap, is the difference between one group’s average earnings across a given workforce, usually measured as a percentage. For example, women are typically paid about 82 cents for every dollar paid to men.
While the pay gap has narrowed over time, it persists across all demographics and industries. Though unequal pay is obviously a factor, the wealth gap is a bigger issue.
The wealth gap is wider than the pay gap; that’s a bigger problem.
While a pay gap reflects how much a person can earn, a wealth gap reflects how much someone can keep. It reflects money, property, stocks, other assets, debts, and loans. Regarding the gender wealth gap, women have 32 cents for every dollar a man has. Meanwhile, black and brown women have a penny.
Though the gender pay gap has decreased over time, gender wealth has been moving in the wrong direction. The wealth gap had been growing in the United States even before the pandemic. In 1970, the top 1% of earners made about 8% of the country’s income. By 2007, they earned about 23% of the country’s income. Before this, everyone’s wealth grew at about the same rate.
“No person, I think, ever saw a herd of buffalo, of which a few were fat and the great majority lean. No person ever saw a flock of birds, of which two or three were swimming in grease, and the others all skin and bone.”
Henry George, American Political Economist
Why is there a wealth gap?
There are many different reasons for wealth gaps. One reason is that some people inherit a lot of money, while others don’t have any money passed down to them.
Three reasons why gender wealth gaps persist
1. Women earn less money than men for doing the same work.
This disparity can be traced back to several factors, including the prevalence of women in specific sectors of the workforce (e.g., caregiving or service), women working part-time jobs, and historical discrimination.
2. Women are more likely to be responsible for unpaid work, such as childcare and household tasks.
This unpaid work is often referred to as “women’s work.”
3. Women are more likely to be in debt than men.
This can be attributed to various factors, including the wage gap, the fact that women are more likely to work part-time jobs, and the fact that women are more likely to be single parents.
Why wealth gaps matter
Wealth gaps matter because they can create huge disparities in opportunities and life outcomes. People with more money can often afford better education, health care, and housing, while those at the bottom of the wealth ladder often struggle to survive. This can lead to a wide variety of social problems.