The rich are richer, but the poor are poorer too
That is what Stats Canada is telling us today. The Median for wealth has doubled since 1970 ’til 2005 (a 35 year period), however, that is the Median not the Mean or Average. This means that because there are more very rich people, it drags this Median up, however because the gap is so large, the data ends up being skewed by it. The top 5% of families fortunes have gone up a great deal in this time while “middle income” and lower income families have not shared in this growth of wealth to the same extent.
In young families the Median for wealth actually dropped (meaning they are losing the fight right now). If you are older than 35 then your wealth median went up by 40%, holy cow!
What does all this number mish mash really mean? The rich are getting richer, and the rest of us, aren’t keeping up! Sorry folks, that’s just the way it is right now.
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December 13th, 2006 at 12:37 PM
I’m curious if we eliminate primary real estate what would the effect be.
For example… when my parents bought their house in … 1979, they paid $80,000 for it. Now it is worth ~ $450,000, so that’s a wealth increase of $370,000 (ignoring interest payments) but they still just own 1 house.
Someone else that put the $80,000 in the bank, averaging 5% a year would only have increased their wealth by $218,676.50 (ignoring taxes on the interest).
Of course, if you didn’t have the $80,000, or the $20,000 for a down payment, as back then it was 25%, you couldn’t buy a house, and had to waste money renting, which limited your ability to grow wealth.
I think the biggest thing this also points out is the extension of the family. For example, I and another young couple might have identical wealth today, but I have wealthy grandparents and parents, and they have no extended relatives. That means that down the road, my family will inherit a greater amount of wealth, which we can then use to multiply (increasing the gap) and leave to our kids.