For more than 30 years, the wealth gap has been growing between the top 1% and the bottom 99% of earners in the U.S. — and the disparities become even more prominent when the numbers are broken down by race. Below we’ll explore what the wealth gap is, what caused it, and what you can do to start closing it.


Wealth is the cumulation of all tangible and intangible assets that have value, like homes, stocks, bonds, inheritances, wages and income, savings and more.

The wealth gap is the large disparity in the distribution of money and assets among individuals, groups, populations, or social classes. The wealth gap permeates population segments based on a number of different factors, like sex, race, geographic location, occupation, historic income and more.


In the U.S., the wealth gap is larger than in almost any other developed country1, and the highest of all the G7 nations2. But how exactly did we get to this point? Income inequality has been the largest catalyst in creating the wealth gap. American workers’ hourly compensation only increased 24% from 1979 to 2018, while productivity during the same period rose by 134%3 — due largely to the decline of labor unions since the 1950s4.

A culmination of events and policies,5 over several decades has created and exacerbated the U.S. wealth gap, including:

  • Decreases in wages for workers with less education
  • Tax cuts that disproportionately favored the country’s richest households
  • Large decreases in U.S. manufacturing jobs
  • Fewer unionized positions with good benefits
  • A minimum wage that has not kept pace with inflation
  • An increase in low-paying service-sector jobs

Additionally the African-American community and other minorities have dealt with challenges like segregation, Jim Crow, redlining, evictions and exclusion, and denial of access to wealth-building opportunities6, among other obstacles, have driven a large wedge between ethnic minorities and white communities in terms of wealth and wage equality.

One of the few equalizing forces among all groups in the U.S. in terms of wealth is Social Security. According to one report7, “The gap in Social Security wealth between white households and households of color is substantially less than the gap in holdings of pension and IRA wealth.”

The same report goes on to explain that because it provides universal coverage and requires mandatory contributions, social security helps close the wealth gap by providing assets to those who need them most, regardless of race.


Beyond providing stability and income, wealth can help protect families from financially derailing due to income loss or temporary setbacks. A lack of wealth may mean less access to working capital needed for an entrepreneur to start a business, create jobs, and contribute to community wealth. Not only that, but a lack of wealth may mean less access to housing in safe neighborhoods with high-quality schools — decreasing the chances that the next generation will succeed and be able to build wealth of their own.


There are a few primary ways Americans have built wealth, including:

  • Home ownership
  • Reducing expenses where you can
  • Inheritance
  • Entrepreneurship
  • Investing in the stock market
  • Career advancements/choices

However, wealth-building requires both knowledge and systemic changes in everyday life. As the old adage goes, “it takes a village,” and recruiting (or becoming) a financial ally can help people from groups with historically less wealth build and sustain more wealth. There’s also a common misunderstanding that financial professionals only work with wealthy individuals or only if you have investments. This is not the case. There are professionals who can help close the wealth gap with meaningful .

  • Mortgage lenders can assist in finding tools to get the best rates.
  • Investment advisors can give insights about where and how to invest money.
  • Financial professionals can provide guidance on how to leverage term or whole life insurance and other tools to accumulate wealth and leave a legacy for the next generation.
  • Accountants and financial professionals can help individuals define and reach financial goals through saving, investing and retirement strategies.
  • Career and business coaches to help achieve short and long-term goal.

Building assets is essential in establishing financial health and wealth. When assets accumulate over time, the chances for success will increase for future generations.  With over a trillion dollars for the U.S. to gain from doing so, closing the wealth gap means making both systemic changes and personal, everyday changes to the way we navigate our lives.8 Learn more by starting a conversation with a financial professional today.


Brought to you by The Guardian Network © 2020. The Guardian Life Insurance Company of America®, New York, NY

2020-110025 Exp. 10/2022