The US economy is a millionaire-making machine

Image: AP Photo/Casey Rodgers
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In the 1990s, being a millionaire really meant something. In 1995, only 3 million US households could claim wealth above the million-dollar threshold, which was around 3% of the population. The idea of becoming a millionaire seemed unlikely enough that a 1999 hit TV show asked who wanted to become one, and it seemed like a big deal.

Today, it’s not so special. According to the US Federal Reserve’s 2016 survey of household wealth, nearly 15 million US households have over a million dollars in net worth in today’s dollars. (Net worth is defined as a household’s savings and assets minus its debt.) If we adjust for inflation, there are just over 9.1 million households today that would have been millionaires in 1995, a big jump from 3% of the population to over 7%.

In recently released research, New York University economist Edward Wolff points out that in the decade prior to 1995, there was little growth in the ranks of millionaires. Their numbers have skyrocketed since then:

The millionaire boom is part of the rapid rise in wealth inequality since 1980 (pdf). While income growth has been slow for the lower and middle class, wages have risen steadily for high-income Americans. Combine higher incomes with a strong stock market, and you get a lot more millionaires.

From 2013 to 2016, the number of millionaire households grew by over 2 million, the most of any recorded three-year period. Wolff says this can mostly be attributed to the stock market. The rise in share prices also explains the rise of deca-millionaires, those with a net worth of $10 million, from about 400,000 households in 2013 to more than 630,000 in 2016.

The equivalent of a millionaire in 1995 would need to make almost $4 million today to rank in the same place on the wealth ladder. A million dollars isn’t worth what it used to be.