You’ve probably seen the headlines. Some billionaire buys a social media platform for the price of a small nation's GDP while your local grocery store prices make you want to cry. It feels lopsided. Because it is. But when we ask, is the problem of wealth inequality getting worse in america, the answer isn't just a simple "yes." It’s a "yes, and it’s getting weirder."
Wealth isn't just money in a bank. It's power. It’s the ability to survive a medical emergency without going bankrupt. For millions of Americans, that cushion is evaporating, even as the stock market hits record highs.
The Numbers Are Actually Kinda Terrifying
Let’s look at the Federal Reserve data. It’s dry, but it tells a story. In 1989, the top 1% of Americans held about 23% of the nation's wealth. By the end of 2023, that number climbed to over 30%. That sounds like a small jump. It’s not. We are talking about trillions of dollars shifting from the hands of the many into the hands of a few thousand people.
The bottom 50%? They share about 2.5% of the total wealth. Imagine a pizza cut into 100 slices. One guy takes 30 slices. The next nine people take 37 slices. The remaining 90 people have to fight over the leftovers.
It's a gap. A canyon, really.
Economists like Thomas Piketty have argued for years that capital grows faster than the economy. If you have money, your money makes money. If you only have a job, your wages barely keep up with the price of eggs. Since the 1970s, productivity has skyrocketed. People are working harder and more efficiently than ever. Yet, real wages—what you can actually buy with your paycheck—have stayed mostly flat when adjusted for inflation.
Where did that extra value go? To the top.
Why the Pandemic Made Everything Worse
You’d think a global shutdown would be an equalizer. It wasn't. While the service industry collapsed, the digital economy exploded. Billionaires saw their net worth increase by over $2 trillion during the pandemic. Meanwhile, the average family was waiting for a stimulus check to cover rent.
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This isn't a "pull yourself up by your bootstraps" problem. The boots are gone.
Low interest rates meant cheap debt for the wealthy. They used that debt to buy more assets—real estate, stocks, private equity. This drove prices up. Now, a first-time homebuyer is competing against institutional investors like Blackstone. When a corporation buys a neighborhood, they aren't looking for a place to live. They’re looking for a yield. This turns the American dream of homeownership into a permanent subscription model.
Rent goes up. Wealth building stops.
The Education Trap and the Great Divide
We used to say education was the great equalizer. That’s a bit of a myth now. College costs have outpaced inflation by a staggering margin. Students take on six-figure debts for degrees that don't always pay off.
If your parents are wealthy, they pay for your school. You start your career at "zero."
If your parents aren't, you start at "negative $50,000."
That’s a ten-year head start for the rich kid. They can buy a house sooner. They can invest in the S&P 500 sooner. Compounding interest is a miracle, but only if you have something to compound. This is how wealth inequality becomes hereditary. We’re drifting toward a neo-feudalism where your last name determines your financial ceiling more than your actual talent.
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The Role of Technology and Automation
Silicon Valley changed the game. Software scales in a way that physical labor can’t. One engineer can write code that replaces a thousand clerks. That’s "efficient," sure. But the profits from that efficiency don't go to the clerks. They go to the shareholders.
AI is the next frontier. We’re already seeing it. Entry-level white-collar jobs—the traditional path to the middle class—are being automated. If you own the AI, you get rich. If you’re replaced by the AI, you struggle. There’s no middle ground being built to catch the people falling through the cracks.
Is the Problem of Wealth Inequality Getting Worse in America? Look at the Tax Code
Warren Buffett famously said he pays a lower tax rate than his secretary. He wasn't joking. Most of a billionaire's wealth comes from capital gains, which are taxed lower than regular income. If you work at a desk for $60,000 a year, you’re taxed on every dollar. If you sit on a pile of stocks that grows by $60 million, you don't pay a dime until you sell.
And many don't sell. They use a strategy called "Buy, Borrow, Die."
They buy assets, borrow against them at low interest rates to fund their lifestyle, and pass the assets to heirs with a stepped-up basis. It’s legal. It’s smart. It’s also a massive reason why the gap keeps widening. The tax system is built to reward those who own things, not those who do things.
Real-World Consequences (It’s Not Just About Money)
When the gap gets too wide, society starts to break. Health outcomes diverge. In the U.S., the richest men live about 15 years longer than the poorest. 15 years. That’s an entire childhood and then some.
It’s about stress. It’s about access to clean food. It’s about not living in a "pharmacy desert" or a "food desert."
Then there’s the political side. When wealth is concentrated, political influence follows. Lobbying isn't cheap. If a small group of people can fund entire campaigns, the laws naturally start to favor their interests. This creates a feedback loop. More wealth leads to more influence, which leads to laws that create more wealth.
Myths We Need to Stop Believing
People love to say that inequality doesn't matter as long as everyone is getting richer. "A rising tide lifts all boats," right?
Well, that only works if you have a boat. If you’re standing on the ocean floor, the rising tide just drowns you.
The "American Dream" is statistically harder to achieve here than in many European countries now. Social mobility—the ability for a child born poor to become rich—has slowed down. We like to think of ourselves as the land of opportunity, but the data says we’re becoming the land of entrenched status.
What Actually Changes the Trajectory?
Fixing this isn't about "taking money away" just for the sake of it. It’s about restructuring the incentives.
Some experts suggest a "billionaire minimum tax." Others point to strengthening unions, which historically helped workers capture a larger share of the profits they created. There's also the idea of "baby bonds"—giving every child a small investment account at birth to bridge the wealth gap before it even starts.
None of these are silver bullets.
The problem is systemic. It requires looking at zoning laws that prevent affordable housing. It requires looking at how we fund schools through property taxes, which literally guarantees that rich kids get better educations than poor kids.
Actionable Steps for the Individual
You can’t fix the national economy by yourself. That’s a recipe for burnout. But you can change how you navigate this lopsided system.
- Focus on Assets, Not Income: Do everything you can to own something. A house, a small business, a fractional share of a stock. Income is taxed heavily; assets are where the real wealth grows.
- Audit Your Debt: High-interest debt is a wealth transfer from you to a bank. Kill it as fast as possible.
- Advocate Locally: Wealth inequality often manifests in local zoning. Show up to city council meetings and support high-density, affordable housing.
- Financial Literacy is Defensive: Understand how the tax code works. Understand the difference between a traditional IRA and a Roth. If the game is rigged, you at least need to know the rules.
The trend line for wealth inequality is pointing up. It has been for forty years. Whether it continues depends on whether we view the economy as a private club or a shared resource. Right now, the club is getting very exclusive.