April 21, 2015

The New Elite: A Look In the Top 1% Of Wealth in the United States

The New Elite Top 1% of Wealth in the United States

The New Elite - those in the top 1% of wealth in the United States - are not what most Americans believe due to a mental model called the spotlight fallacy. You see a celebrity on the news in a chartered jet and believe that is how most, if not all, rich behave. It's not.

We already looked at how much money it takes to be in the top 1% of wealth in the United States.  Now we are going to look further into the top 1% of wealth.  This category, those who have between $5 and $10 million in investments, has been called by some The New Elite.  Personally, I call this the capitalist class and prefer that moniker.  Jim Taylor and Doug Harrison define this group as “people in the top 1 percent of half of 1 percent of the American economic spectrum: These people typically have at least $5 million in liquid assets (i.e., not including their primary residence) or have at least $500,000 in annual discretionary income.”  Those same authors consider affluent to be people who are “the top 5 percent of the economic ladder, which is roughly at least $1 million in liquid assets or $125,000 in annual discretionary income”.

But this begs the question: Who are the new elite, or the top 1% of wealth in the United States?  What behaviors and characteristics are displayed be members of the capitalist class?  Here are some facts and research from a great book written by some specialists who are among the leading marketers to the rich in America.  It is their job to know who the rich are, how they behave, where they live, what they drive, and how to turn them into customers.

General Facts About The New Elite
For every 100 new elite members in the United States:

  • The average age is 47 years old
  • 90 to 95 made the money themselves; only 5 to 10 inherited it
  • 90 are college graduates; 10 are not
  • For those who are college graduates, 3 out of 4 did not attend an Ivy League school
  • 8 are Asian (defined including those from Indian subcontinent); nearly 3x the rate found in the population
  • 96 do not own a yacht; 4 do
  • 50 haven’t furnished their homes in any way that would reflect their economic status

Stealth Wealth
The most shocking statistic about the new elite in the United States?  For every 100:

  • 80 practice “stealth wealth” so friends, family, and neighbors don’t know they are members of the new elite.  
  • 20 are known to be rich by family and friends

Why doesn’t this get covered in the media?  As Jim Taylor, Doug Harrison, and Stephen Kraus put it, “Happily married man builds a successful business and lives a quiet, happy life” isn’t necessarily news.  “Rich guy with many girlfriends buys huge yacht featuring built-in stripper pole” is going to get more headlines.

Family Background: 
For every 100 new elite in the United States:

  • 8 grew up in poverty
  • 28 grew up in lower middle class
  • 36 grew up in middle class
  • 25 grew up in upper middle class
  • 8 grew up in a wealthy or affluent class

Source of Wealth:
For every $100 the new elite in the United States making more than $500,000 per year in discretionary income have in net worth:

  • $35 came from owning their own business
  • $28 came from working for someone else’s business
  • $17 came from financial investments
  • $13 came from real estate
  • $4 came from inheritance
  • $2 came from other sources

Where The New Elite Grew Up:
For every 100 new elite in the United States:

  • 45 grew up in the suburbs
  • 27 grew up in urban areas
  • 20 grew up in rural areas
  • 9 grew up in the inner city
  • 1 grew up in a gated community

What The New Elite Drive:
The new elite in the United States spent $50,000 on average for their car.  Here are the top ten vehicles owned by the wealthy.  The figures add up to more than 100% due to many households owning more than one type of vehicle.

  • 25% drive a Mercedes-Benz
  • 23% drive a BMW
  • 22% drive a Lexus
  • 18% drive a Toyota
  • 16% drive a Chevrolet
  • 14% drive a Ford
  • 12% drive a Honda
  • 12% drive a Porsche
  • 10% drive a Volvo
  • 10% drive an Audi

Where the New Elite Live:
For every 100 new elite in the United States:

  • 20 live in the New York/New Jersey/Connecticut corridor
  • 17 live in California
  • 63 are dispersed throughout the remainder of the United States
  • Anonymous

    I’m curious as to what the point is that you’re trying to make.  Is this “well, gosh, those rich guys are just like us!” supposed to make us think that it’s therefore okay for so many in our nation to live in poverty?  If not, then what?

    • Joshua Kennon

      Knowledge doesn’t have an agenda. It’s factual data. Draw whatever conclusions you want from it. One of the objectives of this blog is to help highlight some of the considerations most people don’t realize so they can think for themselves. The fact you are asking me is proof of that. It is what it is. The question that matters: What do you think of it? What do you think the implications are?

      • Lickitysplit

        Where is this information sourced from?

        • Joshua Kennon

          …. did you bother to read the article?  There is a link in the first paragraph and a giant image of the book that, if you click on, will take you directly to it on Amazon.com.

        • http://profile.yahoo.com/KBHW3F6RO4NNI3VUELPAR2FZVA ofdo

          probably made up.  there are not enough mega millionaires for one in every hundred people in america to be worth 8 million or some other fanciful number – and at the same time these faboulously wealthy folks not being smart enough to earn what, 5% on this to totally blow away the “income” of the top one percent being 360K or something…..

        • Joshua Kennon

          Take the time to read this page, along with the comments. It sources all of the data showing how the top 1% of income and wealth are calculated in the United States and even includes a lively debate about whether or not the IRS estate multiplier technique is better than the Federal Reserve’s figures. http://www.joshuakennon.com/how-much-money-does-it-take-to-be-in-the-top-1-of-wealth-and-net-worth-in-the-united-states/

          But you say the numbers “could not possibly” be accurate. Seriously? Even if you don’t trust the government’s data (which I’m guessing you don’t if you don’t believe the click-through sources), even the private market research by privately owned firms shows the same thing. Last year, the Merill Lynch / Capgemini study showed that there are currently 3,100,000 millionaires in the United States. Ref: http://blogs.wsj.com/wealth/2011/06/22/u-s-has-record-number-of-millionaires/

          With a population of 310 million, that is 1 out of 100 people. Strip out the infants, kids, and extreme elderly who have already disposed of much of their estates for tax reasons prior to death and the figure is higher since it isn’t really fair to evaluate a 7-year-old’s wealth given that he or she isn’t actively working in the labor or capital markets. Most millionaires have far more than $1 million so even a back-of-the-envelope calculation would indicate that the concentration of millionaires is enormous in the USA.

          You could even check the possibility of the figures being accurate in a rough sort of way by considering that the total assets of all United States citizens is between $75 and $80 trillion, which works out to give or take $250,000 per person on the current population base. If you know anyone – even a 3 year old – with less than a quarter of million in assets, that money has to be in the hands of someone else. It doesn’t disappear.

          And there are plenty of millionaires earning 5% or less. Wealth tends to concentrate towards old age due to the nature of compounding. At that point, a lot of people don’t want to take risks. I know a guy in Southern Missouri who owns $3 million worth of assets, almost all of which are earning at or below the rate of inflation because he is in his 80’s. He doesn’t want to risk any of it since it is going to his kids and grandkids. I know another woman, in her late 70’s, near Kansas City who is sitting on $1 million in cash earning 0% in the bank. She is terrified of the stock market.

          Seriously, there are far more ‘millionaire next door’ types in the United States than you think. The IRS sees them. The Federal Reserve sees them. The privately owned banks on Wall Street (who want fees) see them.

          They tend to have the same profile – 50 to 60 years old, white, male, Christian, married to the same spouse since youth, 2 or 3 kids, college educated, own their own business, live in the Midwest, and have no outward signs of their wealth. Just because they aren’t rolling around in Bentley’s doesn’t mean they aren’t there. Someone has to be holding the $75 to $85 trillion in assets we as Americans amassed and if your family has less than $250,000 per member sitting around in one form or another, that means, by mathematical definition, some OTHER family must have more.

      • http://ismaelsobek.com Ismael

        Facts don’t have an agenda, but the people curating them often do.

        • neoLiberal

          And the agenda here is to share the facts. Nothing more. Unless you care to eloborate?

    • Gilvus

      I can’t speak for Joshua, but I see two points here: 1) to teach, and 2) to inspire.

      1. It’s supposed to get our brains moving and think “Oh, that’s interesting. Rich people don’t act like everyone thinks they do; maybe the world isn’t as black-and-white as I originally thought.”
      2. It’s supposed to inspire us by instilling an attitude of “Wow, maybe if those rich folks are like normal people, maybe I can be rich too. I can provide a good life for my kids, and I can live without the fear of bankruptcy or debt; I only have to figure out how.”

      Joshua is doing what any good educator does: trying to teach, and trying to inspire. In this case, the data is simple enough to teach and inspire by its own merits. He only has to make the data accessible to us.

    • Richard Long

      If you define poverty as the bottom 20% of the population there will always be people in poverty.

      Strangely, those people are regularly obese. Doesn’t exactly give the picture of poverty, does it?

    • Bill kennedy

      sherrietee: I’m given to ask, reference your post, what is the point of your question? It seems, correct me if I’m wrong, that you have concluded that those that have more, or you perceive to have more, have it because they took it from those that have less. They just got to the money pile first so to speak. It might easily follow that this injustice is best corrected with the coercive force of government ( start by thinking taxes and then get creative ).

      The distance between me and the 1% is essentially infinity but “rich” people didn’t take my money and it’s very unlikely that they took yours.


  • M0n0p0ly_

    this is a good article . It’s to show people that thery’re rich people who werent always brought into wealth and  had to go out and get it.  So why is everybody mad cause they’re too lazy to do what the “rich” people did..hard work pays off… never put your money in a wishing well …

    • Monopolysopinionsucks

      Excuse me Mono-poly

      The false reality that is taught to us as children is how were all winners, and bs like…………..you can achieve anything you want as long as you work hard .  Working hard is something most Amerians do, but not everybody can successfully (in terms of money if you call money success when the feeling of LOVE feels better than the feeling of being rich but not everybody has the opprotunity of having a fat wallet due to lifes circumstances that prevent people from reaching a goal or a dream they have.  That certainly dosent make a person “LAZY” by no means. Its like telling an aspiring musician dreaming of making it big and he/she tries there whole life and worked their ass off trying to make that dream come true but never does…………………………would you still consider that hard worker/dream follower “LAZY”

      And how do you know that some rich people that didnt come from wealth, managed to borrow some money from a family member that enabled them to start climbing up the ladder of “false” success.  And had it not been for that push forward they would still be trimming trees.

      The problem with rich people is that they have all the money for one thing and continue to hoard the wealth .  How is everybody else supposed survive without breaking the bank every month while the rich people turn their heads at the number one problem in this world.  Sucess to these people is seeing how much more they can pile in the bank. .  Best wishes to all with money but instead of hoarding it all,  donate it, pass it out when you see people that could use .  Heres a great idea, do what Bill Gates and his friend are doing and getting rid of their money , leaving their family with enough green to get them through life and thats its.  When a person of wealth sits on it their whole life everyone suffers because the ones inheriting it wont know what hard work is because they were blessed with a rich family member that never did good with their money so now the ones lucky to inherit that kind of money never have to work hard (those r the ones that become lazy my friend) plus theyll for sure get diagnosed with that “Diva Disorder” uhhhhhhhhhhh 

      Maybe one could donate some money to mcdonalds for their training program to help better prepare their employees to do their job RIGHT instead of f YOU cking up my order everytime i go there. :)

  • http://www.facebook.com/Heir.Snoopen.Groven Ed LaFleur


    • Blissfull_ignorance

      Please refer to the above reply from Mono-Polys narrowminded comment

    • Hkhkhkhk

      FYI…………..a Villin is defined as a “bad guy”  and if someone kept their riches and did nothing that would benefit people in need, would be considered a “bad guy’.  They were not being nice (opposite of BAD) with it.  VILLINS…………………VILLANS………………………………You Villins YOU  Villians


        YES i see that Villains is mispelled for those clowns lookn to find spelln and grammer error and assume someones stupid because of it.  you people r stupid for not taking circumstances into account………………….

  • http://profiles.google.com/rwaldock Rhett Waldock

    Great article and some really interesting breakdowns. Seems to be a math problem with the “What the New Elite Drive” list, though. It says “Out of every 100″ and then provides a sample distribution that adds up to 144.

    • Gilvus

      Probably means that they have more than one car. Maybe someone drives a Beemer for funsies but also drives an F-150 for his gardening hobby.

    • Joshua Kennon

      Many households own more than one type of vehicle so the percentage who drive a certain brand can’t be summed to 100% (e.g., if you owned a Mercedes and your spouse owned an Audi, your household would be counted as driving both of those classes despite being a single household.)  I added that disclaimer in the article to clarify.  If you liked the data, you really should buy a copy of the book.  It’s a great, informative read and contains far more information than the article does.  

    • READ

      um this is one reason why i believe people in america are not the brightest .. he definitely explained why that is in the paragraph explanation before the listed data… people really need to make sure they have thoroughly studied the facts in front of them before making these types of statements.

      • http://www.clearsitecreative.com/ Rhett Waldock

        Joshua added the note above the data break-down in response to my comment (see his response to me below). This was over two years ago. I think, in general, Americans are about as bright and observant as any.

  • Ronbadoo

    Very interesting and inspiring article at first glance, but how come “What The New Elite Drive out of 100″ adds up to more than 100??

    • FratMan

      Because some millionaires own multiple vehicles. 

    • Joshua Kennon

      Many households own more than one type of vehicle so the percentage who drive a certain brand can’t be summed to 100% (e.g., if you owned a Mercedes and your spouse owned an Audi, your household would be counted as driving both of those classes despite being a single household.)  I added that disclaimer in the article to clarify.  If you liked the data, you really should buy a copy of the book.  It’s a great, informative read and contains far more information than the article does.  

    • ..lol READ

      um this is one reason why i believe people in america are not the brightest .. he definitely explained why that is in the paragraph explanation before the listed data… people really need to make sure they have thoroughly studied the facts in front of them before making these types of statements.

      this comment was copied and pasted because somebody else made the same exact comment………………… this type of mentality is more common that it should be, maybe we need an article on how to be smarter thinkers.

  • Domu Domu

    The issue of income and wealth distribution has become acute because most of the country isn’t making any progress economically and have found themselves far more vulnerable than they expected.  There is an underlying phenomenon that I don’t see discussed much.  This article gives information about the new rich, but it doesn’t address the question of WHY THESE particular people are so successful. 

    First of all, remember that we all operate within an existing system that we didn’t create.  Although there are many paths to success, including some that might be considered bad, the two personal characteristics that most consistently characterize the successful are intelligence and drive.  Many or most of these people would be successful in another system or time, because they are smart and ambitious.  They figure out how to make money within the environment they are born into, which is not always the same as creating real value (e.g., high-frequency trading).  Today’s technological world has magnified the tendency of money to concentrate in the upper levels of the success pyramid.  A relatively small superiority can lead to outsized returns.

    Do the successful have any obligation (at a societal/governmental/tax) level to help those less successful?  The Randians say no.  Those dumb, lazy people who never paid attention in school and don’t work very hard deserve the privation they get.  Jesus might disagree.

    Closely related is that wealth is power, and there is a powerful feedback between wealth and power that tends to increase both.  “Those that have, gets.”  If money becomes political power that can change the rules to favor the wealthy, the system can become fundamentally unfair.  When that happens, revolution becomes legitimate, and those who benefit from the ancien regime can cause its collapse.

    • DiracWinsAgain

      High frequency traders add value. They reduce the bid/ask spread and therefore save people money when they buy and sell stocks. Their efforts have probably saved me $1.50 personally and each retiree much more. It’s really really difficult to make money without providing value to someone. Assuming you don’t use physical force.

      As a further note about Objectivists I don’t think they would say that at all. They simply identify taking property from someone by force as deeply immoral.

  • http://pulse.yahoo.com/_YPW3NVDF7E45JAVR6KBECGMYIY Greg Kramer

    I find the article compelling. I also wonder why the authors didn’t also include a subset about the real “job creators” the top .1% and discuss their demographics.  

    I would be interested in reading that book, if it ever comes out.

  • http://twitter.com/markhricher markhricher

    Joshua you wrote: Jim Taylor and Doug Harrison define this group as “people in the top 1 percent of half of 1 percent of the American economic spectrum”

    I can’t make sense of it. At first it seemed you were discussing the top 1% of wealthiest in the U.S. and wrote that this “capitalist class” had $5-10 million in investments. Is there a typo in the text? Did you mean to write “the top 1 percent OR half of 1 percent”? If not, then what did you mean?

    • Joshua Kennon

      It will need to find the book in my home library but I am still at work.  It might be a typo.  At the very least, I need to clarify it.  I will try and check it out as soon as I can and make a change if it needs it.  Thanks for pointing out that wording was confusing!  

      • Carleton_Bears

        I wish you would fix the typo. I assume that at $5 to $10 million you are talking about the lower one-half percent of the top one percent – 99.0%ile to 99.5%ile.

  • http://twitter.com/markhricher markhricher

    These are all interesting “factoids”. Thanks much for sharing this information.  It seems, however, one could reach a distorted conclusion regarding one’s odds of ending up in the elite or capitalist class from reading this information without thinking more deeply about it. Obviously anyone can take actions to increase this likelihood, but that does not make for a level playing field. What would be interesting in this regard is a deeper analysis that answers questions such as if you grew in a wealthy or affluent class, then what are the odds  you will remain in that class? If the answer is 100%, for example, then what we could conclude is that 92% of new elites will come from other classes.  Even more relevant is to analyze the other groups. What are your odds of moving into the elite class if you start in the upper middle class? And so on. If the elite class is the smallest, then 8% is deceptive in a way. Same with upper middle class.  A quarter of the new elite come from this class, but this is also a small percentage of Americans. Your chances of advancing are only known by answering the question “what percentage from each class reach the elite class?”  This to me is a more interesting question. It’s a different question and perhaps less relevant to marketers to the wealthy, but more interesting in terms of economic and tax policy and other issues. 

    Another analysis that be interesting is not just pointing out that 3/4 of the new elites are not from Ivy League schools, but analyzing from kinds of schools they graduated. There are very few Ivy League schools, but what about the top 20 highest rated, or top 50 or top 100. In other words, what percentage of the new elites went to top schools, not just Ivy League schools? You can then analyze the odds of attending these schools depending on which economic group you were born or raised in. I also wonder what percentage have graduate degrees and what kinds of degrees? What percentage have MBAs, law degrees, medical degrees, etc? In other words, what is the correlation between earning advanced degrees and entering this elite group, and furthermore, your odds of reaching this elite group the lower down the economic ladder you started through finding a way to earn certain degrees and/or attending certain schools? I don’t know the answers. If many of the new elite earned their own money, often through owning their own businesses, we don’t know how they were able to maneuver into that situation. Maybe it’s not necessarily through earning an advanced degree at an elite school, or maybe much more often it is. This is the kind of info I would find very interesting if we can dig deeper. Also it would help answer the question what increases your odds of success most depending on which economic group you are in initially. On the other hand, what it takes to increase your odds of landing in the top class is not necessarily what most increases your odds of reaching or staying in the middle class or upper middle class. It might be taking certain risks increases your chances of hitting a home run, but decreases your chances of hitting a single or double. I wish this is the kind of information we would hear more about in the news media rather than the constant political rhetoric that is almost absent of presenting any real data or useful analysis. 

  • Texascowboy

    Earning money is SO very boring! I was a pulmonary physiologist in my twenties, when I was on call at hospitals I was able to accumulate $3.5M in real estate.  This last crash was the best thing that happened for me: I bought fancy property in Naples Florida on the beach that appreciate about $3K per month. My losses in Chicago (on paper) totaled about $650,000.00+ so now I pay NO income tax.

    Stay away from stocks unless  your brokers invests at least once per year and gives you 40% on your money. They have their phantom insider info.  OR buy real estate.

    Oh, BTW, I am 69 Yrs old and “retired” at age 37.

  • Texascowboy

    In addition, the real estate nets $5k/mo cash.

  • baxter

    Texascowby what a liar you are.A pulmonary physiologist in your twenties? You would not be out of medical school in your twenties. And gee while you were on call you wee able to accumulate $3.5 million in real Estate? What planet are you living on?

  • Seth Tuttle

    Excellent DATA! It truly shows that there is not “secret” to accumulating wealth if you look at the data. The problem is one can achieve the highest levels of education and have a bias that precludes their accumulation of wealth. In the words of one political party – IT IS VERY BASIC MATH! Notice that geographic location (actually, it may be easier if you live in the sticks) and education (most of these wealthy don’t appear to have the advantage of the “best” schools) do not guarantee, or perhaps, even influence the result. As Ben Franklin concluded over 200 years ago, compounding can make you poor or rich, it just depends which side of the
    equation you are on! To me, the major point the data conveys is that within our system, we have the freedom to move withing the various social/economic (based on wealth) levels and it doesn’t require the permission of the unknown bureaucrat. So many times people seem to convey that those who have chosen to obtain more wealth has some unfair advantage instead of seeing that our individual levels of accumulated wealth is a product of the choices we make on a minute, by minute, hour by hour, day by day choices.

  • http://pulse.yahoo.com/_BSKKXHJN5ZUKQWBKXLFQJCGDOY Mike

    Do we have demographic breakdowns on The New Rich by political party affiliaton ? Religion ? Ethnicity ???

    • http://www.joshuakennon.com/ Joshua Kennon

      Ethnicity, yes. That is the Survey of Consumer Finances by the Federal Reserve.

      Political beliefs, the bottom-line is that the 1% is different in that we are “more Republican but not more conservative”, according to an analysis on the topic done by Gallup. That is, the top 1% tends to vote more Republican because the Republicans tend to let us keep more of our money, yet on specific social issues, we are as liberal as the typical American. I fit in that mold exactly – on most political tests, I score a 75% economic conservative and a 25% social conservative. That article is an interesting read, and can provide a lot more in-depth information by income bracket.

      There is also another, less detailed analysis, by Nate Silver, which itself links to several studies.

      Religion: I’d have to research it further. My initial suspicion is that it tracks the general population but I have no evidence for that so I don’t consider that a valid opinion, but rather a hypothesis. It would require further data.

  • [email protected]

    How many are women???

  • KevinR

    Excellent article! Seemed like a neutral article unlike what other commentors said. Breaking everything down into terms of 100 is user friendly. I some other details were provided:
    1) listing the top 10 states they live in, not just NY and CA.
    Income source:
    a) Investor vs.
    b) business owner vs.
    c) corporate big wig or
    d) Combination of the above.

    I’m confident this information would be valuable in a second edition of this article. LOL, I’ve considered going in to rich neighborhoods and giving them surveys, but I fear I wouldn’t be welcome.

  • robertjberger

    I would like to the same excellent analysis on the 0.1 or 0.01% of the US wealth. The bottom part (the vast majority) of the 1% are mostly honest hard working folks who in general should be applauded for building real businesses as you describe. But the very top, like 0.01% has a huge mulitple of wealth over even the bottom 1% and 100’s of times more wealth than the middle class from what I understand. That 0.01% are the New Elite and our overlords. They own and operate both parties and most of the bodies of state and federal government, most of the media and all the top financial institutions that are their main mechanism for stealing money from the rest of us. They are above the law, too big to fail, etc. The gaps between the 0.01% and every other person are obscenely huge and growing. They are first decimating the poor and middle class and will next go after the class you describe in this great article. As far as I can tell they create nothing and are pure parasites on society. Wish I could do the numbers as well as you to determine the validity of my assertions.

  • Dan Mahoney

    Spoiled elite mom’s son represent!

  • ljcevc

    The data stated in this article are completely in line with my experiences knowing many, many of the “new elite” — some (10% – 20%) definitely are complete asses, growing up pampered, incredibly arrogant…but the huge huge majority are folks who are from middle class families (Dad was a salesman, or teacher, or whatever) which highly valued education and helping “the kids be better off than we are”, who either worked like heck to earn top grades in college and then continued to work like heck, or who lived on “beans” for years while building incredibly successful small, totally unknown businesses (unless you were a customer) — from machine shops to multi-franchises to small manufacturers.