Jaspreet Singh frequently offers wisdom and insights on money to his nearly 2 million YouTube subscribers. In one of his recent videos, Singh discussed the widening wealth gap and how to build wealth despite the changes occurring.
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Here is what Singh had to say about the growing class divide and his insights on how to stay ahead of it in order to come out on top.
Also see how much the definition of middle class has changed in every state.
The Gap Is Growing
Why does Singh say the gap is widening and the middle class is shrinking? Singh showed viewers the historical trends that have been stretching the dollars of the middle class over the last 50 years.
“While incomes have increased from 1971 to 2019 to 2024, the price growth of other things that you need — like your house, your car and your college — have outpaced the household income growth,” he said. The median household incomes cannot keep up with other prices that keep going up, he explained.
Expanding out to a national level, Singh broke down how the GDP and U.S. debt have changed over the past 50 years. In 1971, the GDP was $1.1 trillion with the national debt at $398 billion, or a 36% ratio of national debt to GDP. Jump to 2019, when the national debt was $22.7 trillion, outpacing the GDP at $21.3 trillion — a 106% ratio of debt to GDP.
“Not only is the government spending more money that they don’t have,” Singh said, “but they are accelerating the rate at which they spend money that they don’t have. They are accelerating the rate at which they are spending on this national deficit, which could also be contributing with the price of things rising faster than incomes.”
Lastly, Singh showed that between 1971 and 2024, the median household income in the U.S. has shot up by 700%. At the same time, the S&P 500 skyrocketed by 5,700%. (The income figure, Singh noted, was rounded up, and the stock market figure was rounded down.)
“This is why the middle class has been shrinking,” Singh explained. “The prices of things have been rising faster than incomes. While at the same time, investment values — like the stock market — have been rising significantly faster than the prices of things. And they have been rising significantly faster than incomes. So if you are an investor, you’ve become wealthier. If you rely on your salary, you’ve become poorer.”
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The Shrinking Middle Class
Indeed, there are others who have noted that the middle class is getting smaller. Earlier this year, Pew Research Center noted that the share of Americans in the middle class is smaller than it has been in the past, going from 61% in 1971 to just 51% in 2023.
“As a result,” Pew noted, “Americans are more apart than before financially.” Pew pointed to two main areas in which the middle class has fallen behind. Income growth for the middle class hasn’t kept up with income growth for those in the upper-income tier. Additionally, the share of household income that the middle class holds has gone down.
Though it’s worth noting that part of the reason the middle class has shrunk is more people have moved into the upper class, per The Motley Fool.
Build Wealth With Assets
So what does Singh suggest his viewers do to stay on the right side of the widening wealth gap? “This is why it’s so important … for you to become financially educated, for you to become an investor, because the reality is the middle class is shrinking,” he said.
The economic system, Singh explained, is designed to benefit investors, which is why he advocated investing to build wealth.
“Over the long term, investments have gone up,” Singh said. “The stock market has gone up. Housing prices have gone up. We’ve seen stock market crashes. We’ve seen housing market crashes. But if you know what you are doing, you can build wealth in a system that’s designed to benefit investors.”
Singh explained that this requires someone to understand what is happening, have the money to invest, have the financial education to invest and understand the financial trends to know where to invest.
“The key is to take some of the money you’re earning as an employee … and turn it into assets, turn it into investments, that can continue to grow in this economic system. Because the average person is not an investor — they are just a consumer,” Singh said.
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This article originally appeared on GOBankingRates.com: Jaspreet Singh: How To Stay on the Right Side of the Widening Wealth Gap
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