Why We Should Care About Wealth Inequality

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Financial literacy comes with an awful lot of terms to remember, almost all of which sound either deceptively simple or deeply boring or both. Having a strong handle on your money vocabulary can pay dividends throughout your life, though, and knowing how to think about money can give you a clearer understanding of the world around you too. One new study shows just how much switching up your phrasing can reveal.

Public health researchers at Oregon State University have just published a paper about poverty rates and wealth. It turns out the news is pretty dire: Most Americans don't have enough financial assets to make it through three months without income. The researchers measured these assets by how quickly and easily a consumer could access and liquidate them, so this means stocks, bonds, and mutual funds, rather than houses and property, which are considered real assets.

This so-called wealth inequality is also more pronounced than income inequality, which plenty of research has shown is pretty wild. Combine this news with another story — that Americans are socking away more in savings than ever before — and the gap only seems to widen.

According to the OSU team, one huge underpinning of this gap is a fairly minimal social safety net within the United States. "[S]o few American families receive any type of transfers at all, compared to other countries," said lead author David Rothwell. "The fact that the U.S. safety net is so connected to work, and then you have this huge shock to employment [with COVID], you have a system that's not prepared to handle such a big change." If you've got opinions on how that relates to your daily life, there's no time like the present to tell your elected representatives about it.