The median wealth of lower-income households surged by an impressive 101% between December 2019 and December 2021, while the middle class witnessed a substantial 29% growth.
The Pew Research Center released on Monday, it was revealed that during the early stages of the COVID-19 pandemic, lower-income and middle-class households experienced a more rapid increase in their net worth compared to their higher-income counterparts
In contrast, upper-income households saw a more modest 15% increase in their net worth. Despite these gains, a significant wealth gap persists. The median net worth for high earners reached $803,400 in December 2021, whereas the middle class and lower-income households had nest eggs of $204,100 and $24,500, respectively, according to the Pew Research Center. Factors contributing to this growth include relief packages from Congress, featuring three rounds of stimulus checks totaling $3,200, expanded unemployment benefits, enhanced child tax credits, and housing aid.
The rise in home prices by 31% and historically low mortgage rates further bolstered homeowners’ equity, while stock prices rebounded after an initial pandemic-induced dip. However, despite these positive trends, a substantial portion of poorer households remained in debt. Half of these households had a net worth of $500 or less in December 2021, compared to $0 two years earlier.
Rakesh Kochhar, a senior researcher at Pew Research Center, noted the broad and deep financial gains across all households during the pandemic
However, Rakesh Kochhar, a senior researcher at Pew Research Center, highlighted that these gains were insufficient to lift the poorest households out of debt. While the financial situation improved for some racial and ethnic groups, the report suggests that these positive trends might not persist, citing reversed or moderated trends in income, increased household spending, and fluctuations in home values and stock prices in 2022. Other government reports, including data from the US Census Bureau, indicate that lower-income Americans faced challenges in 2022, with an increase in the poverty rate, particularly among children.
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