Incomes are up, the stock market is soaring, and U.S. home prices have largely recovered from the mortgage meltdown. But Americans still haven’t regained all the wealth they lost and, on the whole, are worse off than in 1998. (All figures in this article are in U.S. dollars.)

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The Federal Reserve’s just-released Survey of Consumer Finances, done every three years, tells a stubbornly grim tale. Median net worth for all families, measured in 2016 dollars, dropped 8% since 1998. (The survey’s definition of families includes single people and childless couples, and is equivalent to how other government surveys define households.)

But the rich are getting richer.

For the top 10%, net worth rose 146% since 1998. In 2013, the last time the survey was done, net worth for the top 10% had risen about 75% since 1998.

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The lowest income families — the bottom fifth — saw their net worth fall 22%.

Other report highlights:

  • Hardest hit is the working class, the second-lowest income tier, whose net worth declined 34%.
  • Families in the middle, with incomes from $43,501 to $69,500, treaded water, up just 3.5%.

An analysis of the 2016 data shows that people in the lowest two income bands are getting squeezed from both ends.

Americans own less and owe more

Median debt for all families increased by 25% since 1998, but rose much more sharply for the lower and working classes. Debt was up 57% for those with incomes below $25,300 and up 58% for those with incomes between $25,301 and $43,500. By contrast, debt for the middle class — households with incomes from $43,501 to $69,500 — rose 12.5%.

The top 10%, those with incomes above $177,100, saw a surge in debt as well. The median amount they owed rose 61% — but the value of their assets more than doubled. Contrast that with the lower class, who saw the median value of their assets slide by 47%, and the working class, whose asset value declined 27%.

Homeownership dropped in all income categories but most steeply in the bottom three. The homeownership rate fell 11% for the lower class, 7% for the working class and 5% for the middle class. Among the highest-earning families, the decline was less than 2%. The value of their homes, though, rose 66%, compared with 25% overall.

Why net worth matters

The decline in wealth actually started long before the recession, says sociologist Fabian Pfeffer, research assistant professor at the University of Michigan’s Institute for Social Research. The housing bubble, which peaked in 2007, obscured the fact that many Americans had been losing ground since the 1980s, he says.

Economists can debate precisely why so many people have taken it in the teeth in recent decades, but it’s clear that years of stagnant or dropping incomes have taken a toll on their ability to get ahead.

The Fed survey shows the median family income before taxes peaked in 2004; by 2013, it had fallen more than 12%. Incomes have since recovered somewhat but are still 4% lower than that high-water mark.

If all boats were rising, tax cuts that benefit mostly the affluent wouldn’t be a crisis. Under current circumstances, though, too many people are sinking or barely staying afloat. Lawmakers should focus their concern on those folks, not the ones in the yachts.

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