A new right-wing media narrative is brandishing out-of-context statistics on inherited wealth to argue that lower-income Americans are disproportionately benefiting from inherited wealth transfers, unlike the wealthiest Americans who earn their wealth with hard work.
As a national dialogue heats up over the problem of global and domestic income inequality, Fox News, Rush Limbaugh, and others are rushing to the defense of the wealthiest Americans by claiming that low-income Americans simply don't work as hard as their wealthy peers. As evidence, the conservative outlets are pointing to a Bureau of Labor Statistics (BLS) study showing top income brackets inherit a smaller percentage of their wealth than do lower income Americans, a finding that, according to National Review's Kevin Williamson, proves that rich Americans "work more -- a lot more."
The January 22 edition of Fox News' Fox & Friends hosted Williamson to discuss his theory, and co-host Elisabeth Hasselbeck introduced his segment by saying, "It's easy to assume that the rich inherit their money without earning it. But in reality, under 15 percent of top income earners inherit their wealth, while more than 40 percent of lower income earners inherit theirs." Fellow co-host Brian Kilmeade added, "So how does the rich really make their money? ... By hard work! That's the conclusion. Wealthy households tend to have four times the amount of full-time workers than poorer households."
Rush Limbaugh read from the National Review post on the January 21 edition of his radio show, stating that "The middle class and the poor, a greater percentage of their assets come from inheritance than from working, rich Americans. The country would be far better off if more people actually lived the way the top 20 percent do. If they actually worked like the top 20 percent do."
Ignoring the fact that Limbaugh, Friends, and National Review are attacking a straw man -- they never identify anyone who is arguing that wealthy Americans don't work hard -- their argument omits an important statistic from the BLS study they cite: The average value of "wealth transfers" (of which inheritances are a large percentage) to low-income Americans versus those to wealthier Americans.
BLS did indeed find that among the households in the highest income brackets, transfers accounted for only 12.6 percent of net worth. What Fox and the like omit is the fact that the average value of wealth transfers received by the top 1 percent of U.S. households was a whopping $1,045,200 in 2007. That's twenty-five times the average value of inheritances for households in the lowest income bracket, whose average inheritance was $42,000 the same year. For lower-income earners, 42 grand is a large chunk of their total wealth. But the average wealth of households in the top 1 percent isaround $16,439,400 -- so a million dollar inheritance is not as impactful.
More importantly, the claim that lower-income Americans receive 40 percent of their wealth through inheritance applies only to Americans receiving an inheritance. As the BLS study noted -- but Hasselbeck and company did not -- the wealthiest Americans are far, far more likely to receive an inheritance of some kind than people in the lowest wealth brackets (emphasis added):
On average over the seven years, 38 percent of households in the highest income bracket ($250,000 or more) reported a wealth transfer, compared to only 15 percent in the lowest income bracket (less than $15,000); and 45 percent of households in the highest wealth bracket ($1,000,000 or more) received a transfer, compared to 9 percent in the lowest wealth bracket (less than $25,000).
The study also noted that "almost all wealth, income, and demographic groups saw a moderate decline in the share of transfer recipients" between 1989 and 2001. The one group that didn't? The top 1 percent, whose share of households reporting a wealth transfer "remained virtually unchanged."