Tags: Household | Net | Worth | stock

Census Bureau: Stock Implosion Fueled Collapse in Household Net Worth

By    |   Tuesday, 19 June 2012 12:12 PM

Median household net worth in the U.S. declined 35 percent between 2005 and 2010, wiping out three decades of savings and equity building, new Census Bureau data shows. But it wasn’t all about the housing crash.

Median net worth fell to $66,740, with stock and mutual fund portfolios down 33 percent and the median home equity value off 28 percent, the data showed, according to CNNMoney. Excluding home equity, median net worth fell 25 percent.

"One of the significant factors is housing, of course, but it's not that alone" Alfred Gottschalck, an economist with the Census Bureau, told CNNMoney. "It's how business conditions affect stock and retirement accounts."

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

Federal Reserve data last week showed median family net worth overall dropped nearly 40 percent between 2007 and 2010.

"The median household is no wealthier than they were in 1984," CNNMoney quoted Scott Winship, economic studies fellow at Brookings Institution, as saying.

Minority groups were harder hit than whites. Asian, black and Hispanic households each lost about 60 percent of their net worth, compared with about 30 percent for white households.

Households of people age 35 to 44 saw a 59 percent decline in median net worth, the most of any age group. Senior citizens, with more diversified and conservative portfolios and many with their homes paid off, lost 13 percent of their net worth, according to the report.

Overall net worth steadied between 2009, when the recession ended at midyear, and 2010. Overall it fell 4 percent, and rose 8 percent if home equity is excluded, the report said.

Household net worth isn’t the only measure of wealth that’s fallen. Real wages have also declined, according to data in the upcoming edition of ``The State of Working America’’ from the Washington-based Economic Policy Institute, the New York Times reported. The median hourly wage, adjusted for inflation, was lower in 2011 than a decade ago, the data shows.

“The wage problems brought on by the recession pile on top of a three-decade stagnation of wages for low- and middle-wage workers,” said Lawrence Mishel, the president of the Economic Policy Institute, a research group that studies the labor market. “In the aftermath of the financial crisis, there has been persistent high unemployment as households reduced debt and scaled back purchases. The consequence for wages has been substantially slower growth across the board.’’

Entry-level real hourly wages for recent male high school graduates fell to $11.68 last year, from $15.64 in 1979, according to EPI data. The percentage of those jobs that offer health insurance has plummeted to 23 percent, from 63 percent in 1979, the Times said.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

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