This mail bag question deals with a sub-specialty of the top 1%; those earning more than $1,000,000 per year, or $83,333 per month, often in the form of dividends, interest, and rents.
How many people earn more than $1 million a year in income in the United States? – Pltn8
According to a Wall Street Journal article published on October 25th, 2011 called The Wild Ride of the 1%, in 2007, before the Great Recession, there were nearly 400,000 individuals earning $1,000,000 or more in the United States.
In the depths of the recession in 2009, there were still 236,883 individuals who earned more than $1,000,000 in the United States. We know from other research that, by rough estimates, 90 out of 100 men and women reaching this income level are self-made with little to no inheritance. Almost all have college degrees. Men dominate the field, and almost all own or started their own business or work as an executive for a large business.
That same year, it required an income of $380,000 or more to qualify as “the 1%”, which means literally you earn more than 99 out of 100 Americans. The question of top 1% of net worth becomes trickier, which we discussed in-depth in How Much Money Does It Take to Be in the Top 1% of Wealth and Net Worth in the United States?.
The interesting thing is the level of fluctuation in the income of America’s richest titans. As the article states:
Though often described as a permanent plutocracy, this elite actually moves through a revolving door of riches, with some of today’s nouveau riche becoming tomorrow’s fallen kings. Only 27% of America’s 400 top earners have made the list more than one year since 1994, one study shows.”
The bottom line: There are a whole lot of self-made people making a whole lot of money in the United States alone, not to mention the rest of the world. Making the top 1%, or $380,000 in income per year, is easier than being one of the 236,883 people earning $1,000,000 or more a year. However, 236,883 is still a lot of people, earning a lot of money. It’s not like an Olympic gold medalist, where there can only be 1 person standing on the top spot in the podium. That’s the beauty of our economic system.
The interesting thing is the rise in volatility among the top economic stratospheres has to do with the increasing preference for people to engage in “financialization” of their wealth according to Robert Frank, the author of the Journal piece. Instead of owning, say, blocks and blocks of townhouses and collecting rental income, people now package the company into a REIT and issue shares on the public markets. This leads to greater price quote volatility, whereas in the old days, there was no perceived wealth drop, even in a recession, because you weren’t getting daily quotes on your holdings.