Federal Reserve Speeches·Nov 12, 2026, 10:00 AM ET

Barr, American Inequality and the Future of AI

The 2025 Federal Reserve Survey of Consumer Finances confirms that wealth and income in the United States are highly concentrated, with the top 10% of households receiving nearly half of all income.
The top 1% of households hold about one-fifth of total income, while the wealthiest 10% control nearly three-fourths of all wealth.
The bottom half of households by wealth hold only 2% of total wealth, with an average of $52,000, 31% of which cannot cover a $500 emergency expense.
Wealth concentration is extreme at the very top, where the upper 0.1% own one-sixth of the nation's wealth, a share that rose from 3% in 2022 to 4% recently.
Business equity is the primary driver of widening wealth inequality, as returns from capital income outweigh wage growth for the wealthiest households.
Private equity investments, which are largely inaccessible to middle-income families, have delivered higher returns than typical middle-class assets.
Historical trends show that inequality widened during the Gilded Age, narrowed after World War II due to progressive taxes unionization, and increased again starting in the late 1970s.
The labor share of national income has fallen to a record low of 52.8% in the second quarter of 2026, driven by technological innovation, market concentration, and declining worker bargaining power.
AI is identified as a potential capital-biased innovation where returns may flow primarily to capital owners rather than laborers.
Dominance by "superstar firms" in the AI sector could accelerate market concentration, increase markups, further reduce the labor share of income.
While AI has not yet caused widespread worker displacement, it is already substituting labor for younger, less-experienced workers in specific tasks.
Future AI adoption could lead to significant labor market disruptions unless society invests in worker training, job creation, and other mitigation strategies.