A Project of The Annenberg Public Policy Center

Sanders Stretches State of the Rich


Sen. Bernie Sanders claims that in the United States, “almost all of the wealth rests in the hands of the few.” He exaggerates. At most, the top 0.1 percent of U.S. families own 22 percent of the nation’s wealth, and Federal Reserve Board economists put the figure at 14 percent.

Either way, that’s a high concentration, and it has been growing in recent years. But neither 22 percent nor 14 percent is anywhere close to “almost all.”

Even if Sanders’ idea of “the few” includes the top 1 percent (about 1.6 million families), one study he has referenced puts their wealth at 42 percent of the total, and the Fed puts it at 36 percent. That’s not even most of the wealth, let alone “almost all” of it.

22 Percent?

Sanders, a presidential candidate, made the comment during his keynote address at the Iowa state Democratic Party Hall of Fame dinner on July 17 (at about the 5-minute mark).

Sanders, July 17: Today, in our great country, we are the wealthiest country in the history of the world, today, in the history of the world. But most Americans don’t know that because almost all of the wealth rests in the hands of the few.

America now has more wealth and income inequality than any major country on earth, and it is worse today than at any time since 1928.

Some of Sanders’ claims on income and wealth come from a widely quoted October 2014 study by economists Emmanuel Saez of the University of California, Berkeley, and Gabriel Zucman of the London School of Economics and Political Science. It garnered lots of headlines with its finding that wealth was more concentrated now than it has been at any time since the Great Depression.

But the Saez-Zucman study estimated that the top 0.1 percent (about 160,000 families) held 22 percent of the nation’s wealth, not “almost all.” And while it estimated that the top 10 percent owned 77.2 percent of the wealth, that would be well over 31 million people, which hardly qualifies as “the few.”

Furthermore, the Saez-Zucman study is an estimate that other economists say is inflated. The authors couldn’t actually measure anyone’s wealth directly, of course, because an individual’s net worth is generally confidential information not usually shared with the public or even with the Internal Revenue Service, which requires reporting of taxable income but not of the value of a house or of stocks or bonds or bank accounts.

Instead, the authors infer wealth from 2012 income as reported to the IRS, the most recent year for which they had income tax data.

(As for Sanders’ claim about wealth and income inequality, we covered that previously. Nations including Russia, Turkey and Brazil have greater inequality than the U.S.)

Or 14 Percent?

Saez and Zucman’s work has been criticized by economists at the Federal Reserve Board, which has conducted its own studies of the wealth held by U.S. households since the 1960s. The Fed’s Survey of Consumer Finances is based on extensive surveys conducted every three years. The most recent covered 2013 (one year more recent than the Saez-Zucman paper’s coverage) and was based on a sample of about 6,500 families who agreed to share detailed information about their net worth.

The Fed’s survey data put the share of wealth held by the top 0.1 percent at 14 percent.

What accounts for the difference? Saez and Zucman argue that the Fed’s survey misses some of the richest families — those featured in the Forbes magazine list of the 400 wealthiest Americans. But that alone can’t account for the gap. The combined net worth of the entire Forbes 400 for 2013 was $2.021 trillion, accounting for just about 3 percent of total wealth, according to a paper published in June by Fed economist Jesse Bricker and three colleagues, Alice M. Henriques, Jake A. Krimmel and John E. Sabelhaus.

The Fed economists offer a detailed critique of the Saez-Zucman methodology, arguing that it has an “upward bias.” For example, the tax return data used by Saez and Zucman measure only taxable income, and can’t account for a lot of untaxed benefits, such as employer-paid health care and employer contributions to Social Security and Medicare, which benefit those in the middle more than those at the top.

They also defend their own methodology, noting that the Fed survey deliberately over-samples wealthy families and makes other adjustments to compensate for the fact that the very rich are relatively scarce and thus often missed by random surveys.

We won’t attempt to resolve this academic dispute. It may be that the correct figure for the top 0.1 percent lies somewhere between 14 percent and 22 percent of all wealth. We’ll just note that neither set of figures supports the overheated claim made by Sanders.

— Brooks Jackson