The Widening Wealth Divide: How America's Income Gap Compares to the Rest of the World

The United States stands out among developed nations for one sobering reason: the concentration of wealth in the hands of a few. According to the London School of Economics and Political Science, America exhibits more extreme wealth disparities than any other major developed economy. What’s alarming is that this divide continues to expand rather than narrow.

The difference in income between the richest and poorest citizens—what economists call income inequality—has reached historic proportions in the U.S., mirroring wealth concentration levels last seen during the 1920s.

Understanding Wealth: More Than Just Income

While income matters, the true picture of inequality emerges when examining net worth—the sum of what you own minus what you owe. Consider someone with a $400,000 home, $100,000 in savings and investments, a $250,000 mortgage, and $10,000 in credit card debt. Their total assets ($500,000) minus total liabilities ($260,000) yields a net worth of $240,000.

When researchers measure wealth this way, the disparities become impossible to ignore. As of Q1 2025, the wealthiest 1% of Americans control nearly 31% of the nation’s entire net worth—up dramatically from 22.8% in 1989. This represents a return to the extreme concentration of the 1920s era.

The picture gets bleaker for average Americans. The top 10% holds over two-thirds of all wealth, while the bottom half of the population holds less than 4%.

Where the Money Actually Lives

The upper and lower classes hold their wealth differently. Most people in the bottom 90% have their net worth tied up in real estate—typically their primary residence. The wealthy, by contrast, concentrate their holdings in financial assets. Data from Q1 2025 shows the richest 1% own approximately 50% of all corporate stocks and mutual fund shares in circulation.

Income: The Engine of Disparity

Income inequality fuels wealth inequality. According to the U.S. Census Bureau’s 2023 data, the top 20% of earners captured 51.9% of total income, with the top 5% alone claiming 23%. Meanwhile, the poorest 20% earned just 3.1% of aggregate income.

This income skew directly correlates with wealth accumulation over time. CEO compensation increased by more than 900% between 1978 and 2018, while typical worker pay rose just 11.9%—a stark mismatch that explains widening inequality.

Three Decades of Divergence

Historical data from the National Bureau of Economic Research reveals a troubling trend: the rich have gotten substantially richer while the poorest Americans have barely progressed or fallen further behind.

Between 1963 and 2022, Urban Institute research documented:

• Bottom 10% families: moved from $23 in debt to $450 in wealth
• 50th percentile families: wealth nearly quadrupled from $50,598 to $192,700
• 90th percentile families: wealth increased sixfold from $294,573 to $1.9 million
• Top 1% families: wealth surged sevenfold from $1.8 million to $13.6 million

While lower-income families saw minimal gains, top earners experienced exponential growth, fundamentally reshaping America’s economic landscape.

What This Means for Society

The Economic Policy Institute and Wealth Inequality Initiative highlight serious consequences: reduced worker protections, diminished economic mobility, increased marginalization of vulnerable populations, and broader negative impacts on economic health and social cohesion.

Understanding these wealth dynamics has become essential for anyone navigating America’s financial landscape.