There are three types of inequality: income, wealth, and consumption (i.e., current spending). Over the past 30 years, wealth inequality has increased the most, while consumption inequality has increased the least. For instance, in terms of wealth, households at the 95th percentile were about 15 times richer than those at the 50th percentile in 1989; by 2016, they were close to 25 times richer. For consumption, households at the 95th percentile in 1989 spent 2.7 times more than those at the 50th percentile; by 2016, they spent 3.1 times as much (Fisher et al, 2018).
Wealth is usually calculated as what the household owns that can be cashed in for future spending. But shouldn't external sources of future spending be counted as household wealth as well? Why not count the value of investments into which other entities pay but the household collects, like government- or employer-funded pensions? For example, the median pension benefit for newly retired teachers in California is $40K a year. That works out to $1 million over 25 years*. If we included such sources of future spending as part of household wealth, wealth inequality in this country wouldn't look quite so bad.
--
* Yes, no one knows how long they will live after retirement and children do not inherit the pensions of their parents. But since most Americans are living 20 or more years after retirement, shouldn't there be a way to calculate the average value of pensions across households? Just saying....
Reference:
Fisher, Jonathan, David Johnson, Timothy Smeeding, and Jeffey Thompson (2018). Inequality in 3-D: Income, Consumption, and Wealth," Finance and Economics Discussion Series 2018-001. Washington: Board of Governors of the Federal Reserve System, https://doi.org/10.17016/FEDS.2018.001