In recent years, much has been made of the super affluent – the so-called “one percenters.” Obviously, the derivation of this term is that these are households that earn more than 99% of the rest of American households. Many people have been demonizing OPs. Most of the characterizations of them have been negative, such as “greedy,” “self-absorbed,” “out-of-touch with reality,” and having “too much power and influence.” These criticisms have been promulgated by the media (movies, journalists and tv commentators), social activists, such as the “Occupy Wall Street” movement, and politicians, such as Bernie Sanders and, to a lesser extent, Hillary Clinton with an agenda. The one percenters are generally portrayed as rich, old white men who control the financial system, exert undue influence on the government through massive political contributions, and spend their days thinking up ways to bilk the rest of Americans.
Are these characterizations accurate, or are they misleading falsehoods perpetrated by others with an agenda? My extensive research into the OPs disclosed the following:
- There is no universal agreement as to the income level at which one becomes a OP. I found publications that reported the minimum annual income level for entrée to that group as anywhere from $250,000 to over $600,000. But, the latest figures from the IRS and the Congressional Budget Office from 2009 both put the threshold at about $340,000, so I will go with that amount. This is household income, not individual income, and for you financial “mavins” out there we are talking about adjusted gross income, not necessarily total income.
- This low threshold may surprise some people, particularly those who live in high tax, high expense areas such as NY or San Francisco, where those who earn that amount will tell you they don’t feel rich.
- The latest data discloses that African Americans, which comprise about 14% of the country’s population account for less than 2% of the OPs.
- According to the IRS, in 2009 the OPs reported 17% of the total household income and paid 37% of households’ taxes. I suspect both percentages are higher now.
- The wealth disparity between the OPs and the other 99% appears to be growing. In 2009 a study by the Economic Policy Institute disclosed that the average OP’s wealth was 225 times greater, which was the largest gap it had ever recorded. This is disturbing to a lot of people, and rightly so, but I don’t believe the solution is to confiscate wealth from the rich as some have been advocating.
- Studies show the vast majority of people in the lower echelon of the OP category do not feel they are in that august group. As I said, they would describe themselves as “comfortable,” not rich. According to a recent Mendelsohn Affluent Barometer survey most of them rank themselves much lower, perhaps, in the top 20%. One possible reason for this is the financial and social circles in which they travel. Undoubtedly, they know many people who earn the same or more than them, so they don’t feel as rich as they really are. It would be more accurate to say that these people identify with the 99%. They don’t realize that the various criticisms of the superrich are being levelled at them.
- According to the CBO, one percenters earn approximately 50% of their income from salaries, 25% from self employment and business income and the remainder from “passive” sources, such as interest, dividends and capital gains.
- While it’s accurate that financial occupations, such as investment banking and hedge-fund management, are the fastest growing occupations of OPs, the latest data puts them second at 14%, just behind physicians at 16%.
- Most people would be surprised to learn that membership in the club is not 100% static from year to year. According to the “Economist,” in a typical year 25% of the OPs will drop out.
- Yes, in order to be rich, it helps to be born rich. Rich parents tend to provide a stable home environment, stress education and hard work and provide valuable connections.
What I learned from researching this blog, or more accurately, relearned, is not to believe everything you read and hear. OPs are not some homogeneous group of rich, white men who were born with the proverbial “silver spoon” in their mouth, nor are they static from year to year. They are not all greedy, self-absorbed, out of touch and power hungry. Yes, some of them exhibit some or all of those traits. But, many are self-made individuals, men and women both, who started at the bottom rung and worked their way to their present station. These would include three of the men running for president in this election cycle – Ted Cruz, John Kasich and Marco Rubio – as well as countless entertainers, athletes and others too numerous to name whose life stories have been well documented.
One final point. Recently, there has been much criticism of the growing income gap. I agree that the growing gap is a problem. Some have advocated solving that problem by confiscating assets from the rich, legislating equality as it were. At the risk of being obvious, I would like to denote that America has been built on capitalism, free enterprise, ingenuity, self-reliance, and hard work. In fact, the title of my blog is based on these concepts. Smart, well-educated, hard-working people always have and always will outdo lazy, poorly educated people.
The constitution guarantees us equal OPPORTUNITY to succeed; it does not guarantee that all of us will succeed equally. That, my friends, is up to each individual. The idea is not for the less fortunate to confiscate from the rich to drag them down to some median level. That would be Socialism, which, it has been demonstrated time and again, does not work. Rather, it is for the poor to strive to become rich themselves.