The Dynamics of Privately Held Business Assets in the United States

Although privately held businesses are central to the American economy, little is known about how their assets are distributed among the population. In this study, we describe the household distribution of private business assets in the United States and examine how it has changed over time. Using data from the 1989-2019 Survey of Consumer Finances, we show that the relative number of business owners has remained stagnant at low levels and that assets in privately held firms have become increasingly concentrated among the wealthiest owners over time. At the most recent wave of data collection, the top 1% of households controlled nearly 80% of private business assets, up from about 70% in the late 1980s. We attempt to explain this trend by evaluating how technological change, the financialization of banking, and rising market power have influenced the distribution of private business assets in recent decades. Our findings suggest that all three factors contributed to increasing asset concentration in this sector.

Impact of Economic Shocks on Cumulative Advantage Processes: Recession, Recovery, and Trajectories of Inequality

This study compares the effect of the 2008 recession and subsequent recovery across generational cohorts by evaluating age-cohort trajectories of income inequality. Using data from the 2007 to 2016 waves of the Survey of Consumer Finances, we examine the trajectory of inequality for the overall population and by cohort in years spanning the Great Recession and subsequent recovery. We find that increases in per-capita income and wealth observed at the population-level during the recovery were not reflected among households below the median, leading to increasing inequality. Within cohorts, we observe growing inequality within cohorts in their primary working years. Findings are consistent with a model of integrative cumulative dis/ advantage, which predicts increasing within-cohort inequality over the life course influenced both by persistent micro- and macro-level processes of increasing heterogeneity. Our analyses highlight the potential role of extreme business cycle fluctuations, booms and busts, to exacerbate this underlying process.

Post-crisis developments in young adults’ housing wealth

How has housing wealth inequality changed for young-adult households in the post-financial crisis period, and what is driving such change? We chart a path for subsequent studies by analysing the previously unexamined post-crisis housing wealth profile of young adults via different angles and using multiple inequality measures. Using household micro-data for 11 European countries ( Household Finance and Consumption Survey, 2010–2017) and the United States ( Survey of Consumer Finances, 2010–2016), we find that the accumulation of housing assets for 22–44 year olds is unevenly concentrated among high-income homeowners, over and above what would be expected given the well-known decline in homeownership. We describe and assess several potential drivers for these wealth profile changes, finding that the current explanations offered in the literature do not adequately account for the unequal wealth profile of young people. We conclude that a mix of dynamics, including housing market volatility, housing market configurations leading to uneven capital gains and losses, and the increased social selectivity of homeownership intersect to shape the ways that young adults navigate the housing market in post-crisis times.

A Pathway to Racial Equity: Student Debt Cancellation Policy Designs

Student debt in the United States has had a disproportionate negative impact on black and Latinx borrowers. We argue that analyses of plans proposing student debt cancellation should therefore foreground their potential impact on racial equity. To do so, we use data from the 2019 Survey of Consumer Finances and model the impact of debt cancellation on four key policy outcomes (reach, impact on the most vulnerable borrowers, borrower wealth gains, and impact on racial wealth gaps). We examine universal policy designs as well as designs that incorporate an income eligibility threshold as a means of targeting benefits toward less affluent borrowers. We find that cancellation amounts ranging from $50,000 to $75,000 yield the most desirable outcomes, especially when paired with a relatively low household income eligibility cutoff at between $100,000 and $150,000. Such policies would cancel roughly half of all outstanding student debt without substantially expanding the racial wealth gap, while still reaching a large majority of borrowers and leading to substantial wealth gains, especially for black households.

Recent trends in wealth inequality among older Americans in two surveys

We document changes in wealth inequality across American households with a member aged 55 or older, comparing data in the Health and Retirement Study (HRS) with that in the Survey of Consumer Finances (SCF) between 1998 and 2016. We examine net wealth including housing, financial and nonfinancial assets and debt, without the cash value of insurances, DB pensions or Social Security wealth. We find very similar distributions of net wealth in the two surveys between the 25th and 90th percentiles, but substantially higher wealth in the SCF at the top of the distribution. Both surveys show an increase in wealth inequality between 1998 and 2016, first mostly due to increased wealth at the top, and, after 2012, due to an increase in the share of households with very little wealth as well. Both surveys agree that wealth inequality by education and race, already substantial in 1998, increased further by 2016.

A Wealth of Information: Augmenting the Survey of Consumer Finances to Characterize the Full U.S. Wealth Distribution

We use the Survey of Consumer Finances (SCF) to advance U.S. wealth analysis along several dimensions. We develop a comprehensive framework that modifies the SCF to recover the wealth distribution over families, tax units, and individuals from 1989 to 2019. We show that, by ignoring unequal holdings within families, existing estimates considerably understate U.S. inequality across individuals. We find wealth concentration rose through the recent economic recovery, which differs from leading models that capitalize income into wealth even after aligning conceptual differences. We illustrate that private businesses are a growing impediment to accurately modeling wealth from income.

Financial Stress, Race, and Student Debt During the Great Recession

As the onus of paying for higher education shifted from the state onto students and their families, student indebtedness grew across a wide range of households in the United States in the 2000s, especially among Black and Hispanic households. Holding student debt is a financial risk that may leave households more vulnerable to economic shocks. We study the relationship between household student loan burden and the likelihood of financial stress during the Great Recession using the unique 2007 to 2009 panel of the Survey of Consumer Finances. We find a robust positive relationship across four dimensions of student loan burden and holding constant household characteristics and previous financial stress. We find that Black and Hispanic households with higher student debt burdens experienced higher odds of financial stress relative to White households, even once accounting for prior financial stress. Our results demonstrate the importance of considering the household risk incurred in the US system of financed attainment, especially during the inevitable downturns of a capitalist economy.

Improving the Measurement of Racial and Ethnic Disparities in the Survey of Consumer Finances

The Survey of Consumer Finances (SCF) is one of the main data sources in the United States for assessing and analyzing differences in wealth and financial well-being across families. In recent years, the SCF estimates of racial and ethnic wealth gaps have garnered considerable attention, in part because these disparities are so large and persistent.