By most standards, six-figure earners are the elite of the American workforce.Those earning more than $100,000 a year most likely to survive The mass layoffs early in the pandemic will most likely be able to when jobs return work remotely, Avoid exposure to COVID-19 and the time and money spent commuting, on top of the higher income security this income bracket typically enjoys.
However, according to recent Bank of America research, cracks are now appearing in the top 25% of the income distribution, and if the rich don’t pull themselves together, a feared “wealth concession” could be at hand. .
The bank said in a recent report based on its analysis of deposit data that households earning $125,000 or more had the fastest-rising unemployment rate. As of last month, the number of high-income households receiving unemployment benefits was up about 70% from a year earlier, more than double the increase in the lowest income bracket, which includes households earning $50,000 or less a year. The bank noted that the trend continued from a trend that began in early 2023, but became more pronounced this summer.
But what exactly is wealth transfer? How serious is this data? To understand what’s going on, you have to go back to the beginning of the year.
Crushing the rich and inconveniencing the poor?
“Wealth Inheritance” as a concept was born in wall street journal ‘Street Rumors’ by journalist Justin Lahat January 2023 column.A typical recession scenario, with MagazineIt crushes the poor and inconveniences the rich, and making the rich is naturally counterproductive. Sales of luxury real estate and clothing will drop, while popular restaurants remain open and mid-range cars keep rolling off factory floors. Since Lahat’s New Year’s warning to the wealthy, there have been some warning signs of high-society malaise, such as last month when luxury goods group LVMH reported surprising growth. sales drop With the “aspiring” shopper comes reality.
While the overall unemployment rate remains low, disparities between income groups are a concern for Bank of America, which notes that “higher earners’ unemployment has risen faster from very low levels than lower earners” brethren .
Blame it on the Fed’s rate hikes, which have hit the high-paying tech and financial industries disproportionately.Tech layoffs surge 16x from last year, according to jobs firm challenger, gray and christmaswhile layoffs in finance jobs more than doubled.
Unlike most downturns, which hit the lowest-paid workers first and hardest, the layoffs were largely concentrated in the professional sector, with once-prominent tech companies including Alphabet, Amazon and Meta laying off thousands of workers. jobs, even as layoffs continue at restaurants and construction firms. recruitment.
So it’s no surprise that wages at the top have been flat this year, while wages at the bottom third have risen 3% and those at the middle have risen 2%, according to Bank of America. Wages for the six-figure group actually fell earlier this year, likely as a result of fewer bonuses compared to the previous year.
A typical worker might reasonably ask: so what? The recent decline in the fortunes of the professional class is only a blip against the backdrop of: wage stagnation Amazing benefits for the lower middle class top 10% This has been the case for more than forty years.
But BofA noted that a top-level economic slowdown could herald a deeper slowdown in consumer spending. Because of the relative job insecurity, “upper-income households are likely to feel more cautious so far” — indeed, consumer confidence in this group has been weakening this year, the bank wrote.
If that trend doesn’t reverse soon, LVMH and its ilk could face a very cool summer.
Svlook
