The Rich Are Getting Richer And Everyone Else is Going Deeper Into Debt

Growing income inequality has led to ballooning debt loads for the bottom 95% of Americans.

 The bottom 95% of Americans have seen debt levels balloon compared to their earnings over the past 20 years or so, as falling incomes made them more dependent on credit to maintain their lifestyles. In 1983, the bottom 95% had 62 cents of debt for every dollar they earned, according to research by two International Monetary Fund economists. But by 2007, the ratio had soared to $1.48 of debt for every $1 in earnings.

The bottom 95% had incomes of roughly $160,000 or less in 2007, including capital gains. And then there's the top 5%. Their debt-to-income level actually fell during the same period, from 76 cents of debt for every dollar earned in 1983, to just 64 cents in 2007. And experts say the picture hasn't changed much since then. 

The debt divide is a result of the growing income gap between the wealthiest Americans and everyone else. The top 5% saw their share of total income rise to 34% in 2007, up from 22% in 1983. This excludes capital gains, which pump up the income of the rich even more since they are more likely to invest. More...