More millionaires in US now, but then a million is worth less
Boston — The number of millionaires in the nation is soaring. In both 1972 and 1976 there were about 180,000 individuals with a net worth of $1 million or more. By 1981 the number had grown to between 350,000 and 500, 000, according to an Internal Revenue Service study.
With the jump in stock market prices and the increase in new issues of stock as more companies go public, there undoubtedly are many more millionaires about today. In the last year alone, the value of all stock has risen by more than $ 600 billion. The wealthy own a disproportionate share of corporate stock.
This probably accounts for the healthy sales of expensive cars, such as those made by Rolls-Royce, and other luxury items.
With inflation, however, a million isn't worth as much. It would have taken $ 2,173,982 in 1981 to get the same purchasing power (measured by the consumer price index) as $1 million in 1972. Using a broader measure of inflation, the ''personal consumption expenditures implicit price deflator,'' $1 million in 1981 was equivalent in value to $677,121 in 1976.
The IRS study, by Marvin Schwartz, also finds that there were about 4.5 million people in 1981 with gross assets of $300,000 or more. These ''wealthy individuals'' made up some 2 percent of the nation's population. They had a net worth (total assets less liabilities) of nearly $2.4 trillion.
In 1976, the number of these same ''wealthy individuals'' was nearly 2 million, and their net worth something more than $1 trillion (which is l,000 billion). Of course, with inflation, it would take $1.59 trillion in 1981 to be worth as much as that trillion in 1976.
That $1 trillion of wealth held by the wealthy 2 million amounted to nearly 23 percent of the net worth of all individuals in the country in 1976. But Mr. Schwartz did not make the comparison in 1981, apparently because total net worth numbers were not available for that year. So his study does not indicate whether the distribution of wealth in the nation has shifted in favor of the well-to-do, an issue of considerable political interest.
The stagnation in the number of millionaires between 1972 and 1976 was partially due to the slump in the stock market. Millionaires owned $215 billion of stock in 1972, or 48 percent of their total assets, and $181 billion in 1976 or 42 percent of their total assets.
Mr. Schwartz's statistics were estimated by using estate tax returns filed during 1977 and 1982. The numbers must be adjusted in several ways, including taking account of the fact that the wealthy live longer on average than the population as a whole.
Looking at the 4.5 million top wealthholders in 1981 (with gross assets of $ 300,000 or more), Mr. Schwartz finds that 65 percent were men. But the average net worth of the well-to-do females topped that of their male counterparts - $ 637,000 compared with $471,000. (Net worth is the level of wealth after all debts are removed from gross assets and includes the cash value of life insurance.)
Of these wealthy women, 28 percent were widowed. This compared with a mere 4 percent of the males who were widowers.
Some 83 percent of the well-to-do men and 52 percent of the women were married. This probably reflects differences in average ages and life expectancies. In 1981, 48 percent of all male wealthholders were under 50 years of age and just 29 percent of female wealthholders were in this bracket.
The largest single asset of the 1981 well-to-do was real estate, valued at $ 593 billion. Corporate stock, worth $484 billion, was next. These two accounted for 55 percent of their total assets, with lesser amounts in cash, bonds, noncorporate business assets, notes and mortgages, and so on.
Wealth, as might be expected, has considerable fascination for economists and politicians. An earlier study by Robert B. Pearl and Matilda Frankel of the Survey Research Laboratory, University of Illinois, found that total wealth of everyone in the US at the end of 1979 was $5.2 trillion. They used a survey, rather than estate tax returns, to estimate wealth. But Mr. Pearl thought actual wealth might be $2 trillion or $3 trillion higher because of the tendency of people to underestimate their possessions. In both studies property was the most important item in wealth, especially so for the middle class, those who do not fall into the ''wealthy'' group.
More people with more money 'The wealthy Total assets Net worth Year (thousands) (billions) (billions) 1976 1,938 1,238 1,043 1981 4,522 2,804 2,389 * Individuals with gross assets of $300,000 or more Source: Internal Revenue Service