Many of the big companies that made the most money early in the pandemic, like Amazon and Walmart, spent more on shareholders than raising workers' pay, says Molly Kinder of Brookings. Above, the interior of a Walmart. Frederic J. Brown/AFP via Getty Images
About $42 trillion in new wealth was created in the first two years of the pandemic.Two-thirds of that has gone to the richest 1% of the world’s people, according to a report out Monday from the nonprofit organization Oxfam.In the United States, billionaires are a third richer now than they were before the pandemic.
It’s no secret that it’s a lot easier to make money when you already have money.
“So much of what typical people in this country have is based on their income and what they make in the labor market,” said Elise Gould at the Economic Policy Institute. But that’s not the case for the superwealthy, she said.
“Those at the very top are making kinds of investments because they have the money.”
Investments in real estate, in companies, in the stock market, all of which have gained a huge amount of value in the pandemic.
Particularly in the first couple of years, said Molly Kinder at the Brookings Institution.
“The stock market boomed through 2021,” she said. “Companies did extremely well. They benefited from [Federal Reserve] policy, from low interest rates, from big government spending.”
And when companies did extremely well, so did the very rich.
“And that’s because the bulk of stock in this country, of shares, are owned by the wealthiest households. Upwards of 70% of all stock is owned by just the top 5% of richest households,” she said.
But it’s not just that the rich own a lot of stock and the stock market did well, Kinder said. It’s also what many of the big companies that made the most money in the early days of the pandemic — companies like Amazon and Walmart — chose to do with those profits.
“These companies spent five times more rewarding their shareholders through dividends and stock buybacks than they did raising pay for all of their workers,” she said.
Meanwhile, in many countries, inflation is outpacing wages for most workers.
“Hundreds of millions of people are unable to afford the cost of living,” said Nabil Ahmed of Oxfam America, which put out the report.He said extreme poverty is rising again around the world after falling for several decades.
“At every turn, we’re seeing inequality widen as a result of this pandemic,” Ahmed said.
But he said it’s not inevitable.“It comes down to political and policy choices.”
Particularly around taxes and who pays what.In the U.S. and many countries around the world, the richest people often pay a lower tax rate than the middle class.
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FAQs
They benefited from [Federal Reserve] policy, from low interest rates, from big government spending.” And when companies did extremely well, so did the very rich. “And that's because the bulk of stock in this country, of shares, are owned by the wealthiest households.
How did the rich get richer? ›
Wealthy people can grow more wealth by holding assets over time and taking advantage of tax benefits. They can also afford to put their money into risky investments.
How did the richest people in the world get rich? ›
While people have gotten super-rich in everything from soy sauce to palm oil to damaged cars, being in finance, whether private equity or hedge funds or venture capital, is the most common way the world's wealthiest got so rich.
Who got richer and who didn't during the pandemic? ›
Asian households held the most wealth overall, the report found. Their net worth grew 43% to $320,900 in 2021. White households posted a 23% increase to $250,400.
Did the richest families add $1.5 trillion in wealth? ›
In total, the 500 wealthiest people saw their net worth jump an eye-popping $1.5 trillion, Bloomberg reported on Friday. That's a massive turnaround from 2022, when that same group lost almost $2 trillion.
How do the rich get richer during inflation? ›
Inflation can have varying effects on different wealth brackets with the middle class benefiting from real estate assets, but facing challenges in other areas. The "wealth effect" benefits those with substantial assets from increased asset values, like stocks, real estate and entrepreneurial endeavors.
How did most millionaires become rich? ›
The majority of millionaires are self-made and have accumulated their wealth through a combination of hard work, education and investing. Tim Corley, a wealth expert and author, has spent years interviewing hundreds of millionaires to learn their habits and how they think.
Who profited from COVID-19? ›
Corporate profits benefit wealthy, older white people
Benefits from COVID-19 corporate windfalls will overwhelmingly go to very wealthy households. The richest 1 percent of American households controls over half of the total stock and mutual fund wealth in the United States.
Who owns most of the world's wealth? ›
The richest 1% own almost half of the world's wealth, while the poorest half of the world own just 0.75%
How much money did the world lose from COVID? ›
COVID-19 to slash global economic output by $8.5 trillion over next two years. Against the backdrop of a devastating pandemic, the global economy is projected to contract sharply by 3.2 per cent this year, according to the United Nations World Economic Situation and Prospects (WESP) mid-2020 report, released today.
The world's richest person could be worth $1 trillion within 10 years | Fortune.
Who are the richest 1% of Americans? ›
To belong to the 1% in America, your net worth would have to be about $5.8 million or higher, according to the new Wealth Report from real estate company Knight Frank.
Did the rich get richer during the Depression? ›
Not everyone, however, lost money during the worst economic downturn in American history. Business titans such as William Boeing and Walter Chrysler actually grew their fortunes during the Great Depression.
Who first said the rich get richer? ›
Percy Bysshe Shelley (whose wife Mary famously penned Frankenstein) is credited with first coining the aphorism “the rich get richer, the poor get poorer,” which was itself a riff on the Biblical parable of the talents in Matthew 25:29 which made much the same point.
How did old money families get rich? ›
Old money is a term used to describe families that have been wealthy for generations. These families have accumulated their wealth through inheritance, investments, and business ventures.
Did the rich get richer in the 1920s? ›
A poor distribution of income compounded the country's economic problems. During the 1920s, there was a pronounced shift in wealth and income toward the very rich.
