Breaking news: there are now more millionaires in the United States than ever before.
Our knee-jerk response: who gives a damn? But first, the numbers.
The number of U.S. households with a net worth of $1 million or more, not including the asset value of their owner-occupied home, has risen to a record 9.63 million, according to a new study by the Spectrem Group research firm.
In 2007, prior to the financial crisis, the number of millionaire households was steady at 9.2 million and plummeted to 6.7 million when the crisis hit in 2008.
So, while employment has hardly rebounded and wages for the middle class remain stagnant at best, how is it that all the millionaires came back, in spades?
The answer, as anyone with social consciousness knows, is that income inequality is ingrained in our economic system. The reason why we are so flippant when it comes to this news is that more millionaires on the scene are not going to help the real estate market. The high-tier is what the high-tier is: strong and steady.
This news is really indicative of a systemic class issue that has been growing in the U.S. for a long time. The difference is between the rentiers and the debtors. Those millionaires that the U.S. has recovered since the financial collapse in 2008 are rentiers. That means their wealth is generated by collecting “rents”, usually in the form of interest collected on investment, as opposed to being generated by their labor.
One only needs to look at the stock market bubble currently brewing to see that this wealth is dependent on investment (buoyed by the Fed’s low interest rates) and not innovation, production and genuine growth.
This does not bode well for the real estate market, which depends on the middle class to exchange homes, become owners rather than renters and, in good times, upgrade to a more expensive property.
The real estate market does not need more millionaires. It needs more individuals with well-paying jobs — unfortunately not a phenomenon making headlines today.