
Who Are the Top 1 Percent in America? - randomname2
https://promarket.org/top-1-percent-america-answer-new-research-might-surprise/
======
mgkimsal
This looks like it's talking about 1% in terms of income, or perhaps more
specifically, earned income ("wages"). It's not talking about the 1% with
respect to accumulated wealth. I would suspect there's some overlap, but the
two aren't the same. Much of the "1% wrt accumulated wealth" group wouldn't
have "wages" (if I'm understanding this correctly).

~~~
eevilspock
Does it really matter? I challenge the notion that the 1% in terms of "income"
is earned through working more or harder.

Rather that "earned income" is either extracted from the work of employees who
have no choice but to work for less given the supply of labor vs demand, or it
is extracted from one's unearned advantages (genes, better childhood, one's
skillset happening to be in short supply, etc).

While the free market may be a good mechanism for allocation of resources and
labor for production, I challenge the notion that it is a good mechanism for
determining what individuals deserve to keep for themselves.

~~~
taneq
> one's unearned advantages (genes, better childhood, one's skillset happening
> to be in short supply, etc).

So what would you consider to be "earned advantages", given that things like
"work ethic" and "moral behaviour" are direct consequences of the above?

~~~
JoeAltmaier
Do there have to be any? That may be an American myth.

~~~
taneq
Well, if you don't have any then it becomes somewhat awkward to define any
reasonable meaning for "fair".

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chiefalchemist
Two things:

> "They find that a significant chunk of the income accruing to the top 1
> percent of earners in the United States today goes to the owners of mid-
> market firms in a broad range of non-financial industries around the
> country. In other words, it’s not Wall Street..."

It depends. How are these mid-market firms financed? How are their customers
finance? Who/what ultimately drives the decisions and actions of these firms?

\- While inequality is one measurement, the other is poverty, lack of
opportunity, etc. The issue I see time and again (read: pattern) is once the
discussion is tied to the 1% (via inequality) the push back is "there's
nothing wrong with being rich (and greedy)" and immediately the war (for
change) is lost.

On the other hand, if we focus on the marginalized, their day to day plight,
etc. then we are less likely to get distracted. The point being, sure go ahead
hoard all the money you want...but in the 21st century do so many _have to be
left out_? How advanced are we when such history, a preventable pattern of
history keeps repeating?

~~~
heymijo
I appreciate this suggestion. When reading this I thought "Why do I care if
the 1% are working or rentiers?" The outcome, being a growing class of
marginalized people who lack equality of income, opportunity, and meaning is
the same whether these people are rentiers or not.

I'm reminded of this excerpt from a recent article on Dollar General stores
that was posted to HN.

"Essentially what the dollar stores are betting on in a large way is that we
are going to have a permanent underclass in America. It’s based on the concept
that the jobs went away, and the jobs are never coming back, and that things
aren’t going to get better in any of these places."

[https://www.bloomberg.com/news/features/2017-10-11/dollar-
ge...](https://www.bloomberg.com/news/features/2017-10-11/dollar-general-hits-
a-gold-mine-in-rural-america)

~~~
ameister14
I care because landlords are a type of business that can be passed on whole to
children and allows for the creation of hereditary wealth and hereditary
wealth maintenance without risk.

If the profitability of a business is mostly because of a single person
working there who takes most of the profit, when that person dies their
children will not be able to easily maintain that income and so are more
likely not to be hereditary members of an upper class.

~~~
gbacon
What data do you have to support your concern about creation of hereditary
wealth? Why do you believe that property management is somehow special as
compared with other businesses whose profitability is tied to a single person?

~~~
ameister14
>What data do you have to support your concern about creation of hereditary
wealth?

The history of Ireland, France, and the UK to start.

>Why do you believe that property management is somehow special as compared
with other businesses whose profitability is tied to a single person?

It's quite simple. If you own land and other people manage it, you just
collect a paycheck from the land without any impact on its profitability. You
can die and pass it to your kids and the profit stays the same and goes to the
same place.

If you own a company that is completely dependent on you for profit, when you
die the company stops being profitable. If you pass it to your kids and they
are incompetent, they eventually lose the business.

~~~
kodablah
> It's quite simple. If you own land and other people manage it, you just
> collect a paycheck from the land without any impact on its profitability.

In many places in the US, due to property taxes and other things, land is a
burden that you will spend your paycheck on, not collect it from (until you
sell). Granted if you are using the land for something profitable you might
collect on it, but rarely is that use passive (often only if you have mineral
rights, even e.g. landlords in the multifamily industry have to work to
maintain livability conditions). Using others to manage the land rarely
maintains an inherent value to keep you wealthy, at least in the US.

~~~
EADGBE
> Using others to manage the land rarely maintains an inherent value to keep
> you wealthy, at least in the US.

Property maintenance contracts aren't nearly as expensive as you might think
they are.

Even with a mortgage, property taxes, maintenance cost and equipment upgrades,
one can still come out on top with a profit margin.

*This experience is based off of single-family units, though I may have misunderstood your "land".

~~~
kodablah
> one can still come out on top with a profit margin

Agreed, but that's rarely extreme wealth. The GP seems to point towards a more
feudal situation which, at least on this side of the pond, doesn't seem to
exist. And while land may be a primary inheritance mechanism, most significant
gains are realized only after sale.

~~~
ameister14
That's not accurate in my experience. I know about a dozen families that have
multi-generational wealth maintained in large part through physical property
holding and rent/leasing. They are all in cities, though; Cincinnati, Miami,
NYC and LA - perhaps that's the difference?

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assblaster
As someone who fits into the top 1% of income, I find these analyses as
inherently discriminatory against individuals in market positions that
generate high incomes, a la Obama's "you didn't build that" statement.

In other words, is it morally wrong for the secretary in a medical office to
be paid less than what the physician owner takes home in salary/dividends? The
analysis intuits this position, and pessimistically states at the end that
nothing will change for the secretary, attributed earlier to a political
economy working against their interests.

Individuals make decisions throughout their life, especially early on, that
determine the course of their futures. Do they have teenage pregnancy? Do they
study hard in high school or trade school or professional school or
engineering school? Do they have business intuition to start their own
business?

I think the indictment should be against the University-government complex
which tricks young people into taking substantial debt to chase degrees in
fields with no long term potential for high earnings.

~~~
eevilspock
> is it morally wrong for the secretary in a medical office to be paid less
> than what the physician owner takes home in salary/dividends?

To the extent that their differing roles are circumstances of birth and life,
and that fairness is part of your morality, yes, it is.

> Do they have teenage pregnancy? Do they study hard in high school or trade
> school or professional school or engineering school? Do they have business
> intuition to start their own business?

Those are all circumstances of birth, be it nature or nurture.

We have a strange notion of "deserve" in our society, that someone deserves
more simply because they have a skill or circumstances that are in lower
supply compared to demand. So physician skills are in shorter supply than
secretary skills. But if they were shipwrecked on a desert island, and the
secretary knows how to fish and keep them alive, suddenly he can command a
greater share of income on that island. Arbitrary no?

~~~
assblaster
>We have a strange notion of "deserve" in our society, that someone deserves
more simply because they have a skill or circumstances that are in lower
supply compared to demand. So physician skills are in shorter supply than
secretary skills. But if they were shipwrecked on a desert island, and the
secretary knows how to fish and keep them alive, suddenly he can command a
greater share of income on that island. Arbitrary no?

Does being a physician require a higher level of emotional intelligence,
memory, reasoning, spatial intelligence, determination, stamina, moral
conscientiousness, compassion, and a lower amount of mental illness, physical
illness?

Not everyone can become a physician. Those who lack in any particular
dimension have to compensate in other ways to succeed in medicine. It's why
medical school admission is so competitive and multifactorial, to weed out
those who can't make it, and shouldn't make it in the case of lack of
compassion.

What do physicians deserve for an income? What do basketball and football
players deserve? What do CEOs deserve? It's all from the same mindset: someone
else has something I do not have.

~~~
fjsolwmv
One the reasons "not everyone can become a physician" is because physicians
have one of the strongest protectionist unions in America, limiting access to
the field and driving customers to fake doctors (chiropractic, naturopath,
homeopath), hurting health outcomes.

~~~
shameshame
Do you have some research/information you can share about this? It's a
fascinating concept to me.

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jstewartmobile
Any time I see an article focusing on _income_ inequality instead of _wealth_
inequality, I know I'm about to get my dose of invisible hand worship for the
day. NYT statistic was that wealthiest 1% holds more than the bottom 90%
combined.

Top 1% wealth (roughly $10M and up) [https://dqydj.com/net-worth-brackets-
wealth-brackets-one-per...](https://dqydj.com/net-worth-brackets-wealth-
brackets-one-percent/)

Top 1% income (roughly $400K and up) [https://dqydj.com/united-states-
household-income-brackets-pe...](https://dqydj.com/united-states-household-
income-brackets-percentiles/)

Per Wikipedia, top 0.12% for household income is around $1.6M. Nothing to
sneeze at, but we all know many people make _much_ more.

The distribution in the tail is so extreme that singling out top 1% to top
0.1% of incomes seems like cherry-picking to focus on groups that provide
services and exclude groups that make money with money.

------
rbcgerard
If I’m reading this properly I’ve seen this dynamic countless times in middle
market firms - founder/owner/CEO’s paying themselves $150k/year salary at
companys doing $5m-$30m EBITDA. I.e. they pay themselves way below market
because six vs half a dozen and optically having a lower salary is better.

~~~
delinka
Not to mention that "salary" is taxed higher than "capital gains." Paying
oneself a "reasonable salary" (according to the IRS; and such that one is
paying full tax on that salary) and taking other distributions at lower
capital gains tax rates legally reduces the tax bill and lets one keep more
money in one's own pocket.

You, too, can benefit from this scheme. Set up your S-Corp, stop being someone
else's employee, and play along in the tax reduction shell game!

~~~
meritt
Prior to 2018 at the federal level, this strategy only saves on payroll taxes,
which is effectively just the medicare portion: ~2.9% - 3.8% of tax savings.

In 2018 however pass-through income gets to take a very significant 20%
deduction off the top. Whatever findings they uncovered in that study are
going to accelerate very rapidly under the new tax plan.

~~~
mark212
Not true. The new tax law excludes businesses that are labor-based (eg law
firms, doctors, tax advisors). Precisely the folks described in the paper as
the working 1%.

It’s really only a benefit to people who earn income from passive real estate
investments — like Trump and Sen. Corker in a coincidence that will shock
precisely no one.

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ra1n85
>Secondly—and relatedly—S-corp owners are getting rich because so much of the
revenue being generated by their enterprises is going into their own, rather
than their staffs’, pockets. This may be occurring even in the absence of any
nefarious Dickensian scraping of value out of exploited workers

If owners are pocketing more revenue, in lieu of distributing it as profit
sharing or employee salary increases, that would seem to indicate the salary
bargaining position of current and new employees is not strong.

~~~
gbacon
Buyers compete against buyers, but sellers also compete against sellers.
Employees are sellers of labor.

~~~
TheOtherHobbes
Employers can manipulate the market politically much more easily than
employees can. The result looks like this:

[http://econintersect.com/images/2013/10/67888593productivity...](http://econintersect.com/images/2013/10/67888593productivity-
wages-1948-2011.JPG)

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justherefortart
This is why we need estate tax. It should also apply to trusts and the like.

If you're in the 1%, most likely you did nothing to earn it.

This is one of the reasons people left for America from the UK. You couldn't
own land.

~~~
bovermyer
The article states that a large portion of the 1% (at least in America) is
comprised of the working rich.

Whether an estate tax is needed or not is irrelevant to the material of the
article.

~~~
notfromhere
1% of income earners, not 1% of wealthy individuals. That's a very important
distinction

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ckip
Misleading. Likely intentionally so. Top 1% mostly comes from artificially
scarce markets and pyramid schemes: lawyers (with intentional bottlenecks on
supply at the associate level and a pyramid scheme to make partner), doctors
(with intentional barriers in both requiring unrelated undergrad study and the
hazing style apprentice model), elite university professors (pyramid scheme
with grad students and post docs; salaries are now typically above $200k,
reaching a million), executives (pyramid scheme based on connections and
kickbacks), finance, etc.

The only domain requiring unique productive skills is doctors... The rest is
all market manipulation.

~~~
gbacon
Where did you find your stats on distribution (“mostly”)?

The article mentions other professions without the supply limiting that
physicians and attorneys enjoy.

 _“Typical firms owned by the top 1-0.1 percent are single-establishment firms
in professional services (e.g., consultants, lawyers, specialty tradespeople)
or health services (e.g., physicians, dentists),” Smith et al. write. “A
typical firm owned by the top 0.1 percent might be a regional business with
$30M in sales and 150 employees, such as an auto dealer, beverage distributor,
or a large law firm.”_

Engineering-services firms also fit this description. Specialty tradespeople
include plumbers, electricians, and lawn care and to belong to this cohort,
they are running more substantial operations than solo self-employed: at least
$3-10M top line and twenty or more employees.

~~~
sharemywin
Don't forget the franchise systems.

~~~
gbacon
Excellent point. Some franchise terms require significant net worth and have
six-figure fees, but that is not the case across the board. I have heard that
Chick-fil-A’s franchise fee is only $5,000 but also that they are very
selective. Subway’s initial fee is in the $10-15k range[0] with the cost to
open between $100-300k, and the company will provide and help with financing.

[0]: [http://www.subway.com/en-
us/ownafranchise/franchisingfaqs](http://www.subway.com/en-
us/ownafranchise/franchisingfaqs)

