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2012 January 16 Monday
Only Requires $380k Per Year To Hit Top 1%

You don't even have to make a million dollars or even a half million a year to hit the top 1%. If you can hit $380k per year people will camp out in parks to protest your existence. Is that cool or what?

The range of wealth in the 1 percent is vast from households that bring in $380,000 a year, according to census data, up to billionaires like Warren E. Buffett and Bill Gates.

Surgeons can reach the top 1%. So can, say, owners of big car dealerships. The top 1% is just not that exclusive. How disappointing.

On the other hand, most people don't know that the top 1% starts at $380k. So if you can reach the $380k threshold you can brag to people that you make enough to be in the top 1% and then decline to state just how much you make.

Of course, earning in the top 1% isn't the same as owning in the top 1%. But most people excited about Occupy Wall Street are going to miss that distinction too. If you want to signal to the OWS crowd you are above them then make $380k a year and then brag to OWS supporters.

Getting into the top 1% by income is a lot easier than getting into the top 1% by net worth. Just to make it into the top 5% you had to have over $1.5 million in assets in 2009. That's not the top 1%. That's the top 5%.

In 2009, the median net worth of the top 10% of wealth in the United States was $1,569,000. That is, if you had exactly that amount, half of the top 10% would be poorer than you and half of the top 10% would be richer than you. You would be standing exactly in the middle. By definition, we know that this must be the cut-off for the top 5% of net worth.

The people making $380k from a high salary are at much greater risk of falling out of the income top 1% than those who make their $380k from interest and dividends. The people with extensive assets are the real elite.

If you think the top 1% is out of reach how about the top 5%? Based in adjusted gross income the IRS says in 2010 about $160k was the threshold for reaching the top 5%. That's after tax deductions, including 401k contributions and HSA contributions. So realistically you've probably got to earn about $190k to make it into the top 5%.

In that last link note that the top 50% only requires $33k of income. So it is pretty easy to feel like you've surpassed half the US population. The US government spending per household (at nearly $36k) has now surpassed the level of earnings of the average American wage earner.

What's tragic about all this: It has become expensive to live in a nice neighborhood. Your ranking by looking at your income might seem high at first glance. But what are you paying for? I'm reminded of a tweet from Steve Randy Waldman: "the most expensive amenity in real estate is well-behaved neighbors." Later in the exchange tells a non-American "...you'd be surprised how expensive a nice life in America is even for those who care little for the trappings of success." Too true.

Share |      By Randall Parker at 2012 January 16 11:38 AM  Economics Inequality


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Comments
Black Death said at January 16, 2012 2:35 PM:

Good post. The last paragraph is especially telling. As our friend Half Sigma would say, the principal goal of a high income is being able to send your kids to good schools (either private academies or public ones in exclusive neighborhoods) and not having to live around dangerous neighbors.

Check It Out said at January 16, 2012 6:43 PM:

Well 1% is 1%.

By the way is that only for America or is the rest of the world included? 380k really is a lot of money. At least it is for me!

CamelCaseRob said at January 17, 2012 7:36 AM:

It would be nice to know what the top 1% by worth is.

Bertie Wooster said at January 22, 2012 2:05 PM:

I'd say it's actually gotten a bit cheaper to live in a nice neighborhood over the last few years. Sure, the percentage of NAMs has climbed and continues to climb, but the housing crash means that their access to loans has all but dried up. No more NINJA loans. Nowadays only reasonably repsonsible people can get loans - as it always should have been. And that means fewer NAMs in middle class neighborhoods. NAMs will be increasingly concentrated in apartment communities for the forseeable future.


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