August 24, 2020

Starting Point for Wealth Growth Was Dictated by Forbes Annual Report; Fact Remains Ultra Rich Have Gained a Lot During Period of Greatest National Suffering

Fact checking organizations PolitiFact and have found fault with a claim made by former Secretary of State Hillary Clinton in her speech during the Democratic National Convention, saying her reference to a $400 billion increase in billionaire wealth during the pandemic “needs context,” and is “misleading.” 

Clinton’s claim was based on a May 21, 2020 report from Americans for Tax Fairness (ATF) and the Institute for Policy Studies (IPS) – Inequality Project showing that the wealth of the nation’s 600-plus billionaires had increased $434 billion during the first two months of the pandemic, beginning on March 18. The two organizations have continued to track billionaire data at this website

The fact-checking groups argued that the report’s central claim is a quirk of timing. They note that the stock market, a key generator of wealth for America’s billionaires, fell sharply in the month prior to the March coronavirus economic lockdown and that the big gains since then are merely a recouping of losses. They accuse us of choosing a starting point for our analysis that would show the greatest possible gain in billionaire wealth and therefore dismiss our thesis as invalid. 

But the accusation is false, and the conclusion drawn from it is wrong. 

  • Forbes, not us, determined the March 18 starting point for the data. Forbes magazine, the recognized authority on great wealth, is the source of our data. Our analysis starts on March 18, 2020, because that’s the date Forbes released its annual report on the wealth of the world’s billionaires. The Forbes Global billionaires list comes out annually around the same time each year—the 2019 data was released March 3, 2019 but was based on Feb. 8, 2019 wealth estimates. ATF and IPS did not begin collecting real-time wealth data for the country’s billionaires until after the May 21 report
  • In any case, March 18th is an apt starting point because so many COVID-related events and decisions occurred shortly before or soon after that date. It is roughly the beginning of the official response to the pandemic: President Trump declared a national emergency on March 13; California went into a lockdown on March 19 and New York on March 20. It is the week when the first surge of job losses occurred, with a record 3.3 million workers filing initial unemployment claims. On March 23, the Federal Reserve initiated “extensive new measures” to stabilize the economy through several monetary policies while prospects improved on Capitol Hill for what would turn out to be the biggest coronavirus aid package so far, the CARES Act. The bill was enacted four days later.

    These federal rescue measures reversed the slide in the stock market, which since its low on March 23 has increased in value by about half. But that financial recovery means little to most Americans. Only about half are invested in the stock market (even indirectly through pensions) and with a median holding of only about $40,000, even a big bounce in the market won’t make much material difference in their lives. Of much greater and more immediate impact from the pandemic are the millions of jobs and tens of thousands of small businesses lost, along with the ongoing threat posed by evictions, hunger, illness and death.
  • Billionaire gains are also huge when you measure from the year before the pandemic. Total billionaire wealth jumped by 20.2%—or $628 billion—between February 8, 2019 (the date of the data used in Forbes 2019 annual billionaires report) and August 20, 2020. (This figure includes about one-third of the billionaires, or 223, who lost wealth during the period.) By comparison, billionaire wealth grew by $792 billion, or 26.9%, from March 18 to August 20, 2020—relatively similar amounts. (This figure includes about one-fifth of the billionaires, or 129, who lost wealth during the period.) Jeff Bezos is half again richer than he was 18 months ago, up almost $64 billion. How many working Americans could claim the same, or even that their wealth had risen 20% since the spring of 2019?
  • Everyone lost at the beginning of the pandemic, but billionaires enjoyed a snap-back recovery while working families face a long struggle. The late-winter stock market swoon was the shortest bear market in history, and Wall Street has now recovered all its losses after a steady, reassuring rise in share prices for the past five months. For the rest of America, the crisis got worse over that span—55 million lost jobs, 5.6 million infections, 176,000 deaths—and there’s still no clear end in sight.
  • The bottom line is billionaires live in a different world, and that’s dangerous. The pandemic has thrown into high relief our society’s gross disparities: tycoons quarantining on yachts while grocery stockers ride crowded buses to work. The wildly divergent fate of the billionaire class compared to all the rest of us over the past half year is the starkest example of that economic gap, which destabilizes our society and threatens our democracy.