Right now, candidates like John Kerry and John Edwards are getting great mileage out of bashing the wealthy and those who live in a world of privilege and opulence at the expense of others. But they never explain exactly who these people are who are ruining America. I think someone should.
When I think of evil rich people, I think of characters like Enron exec Ken Lay, someone who has ruined the finances of many an honest man with a pittance in a 401K and hopes of an eventual retirement. People like Lay should be strung up by their toes, but hardly ever are, and that's not fair.
I also think of corporate raiders who set themselves up with multi-million dollar golden parachutes, star athletes, Hollywood types and old money. But what about the rest? It seems to me that if we're going to despise them, we should at least nail down precisely who they are.
One of the most in-depth demographic studies of millionaires ever done was by two PhDs who researched Americans who had accumulated $1 million or more in cold hard cash, a study which later appeared in the book The Millionaire Next Door. The folks in question are the ones who, after all their debt is paid off, are still capable of writing a check for $1 million or more. About 3.5 million American households fall into this category. Among them, the average household net worth is $3.7 million.
Demographically speaking, some of what Kerry and Edwards have alluded to on the campaign trail about these folks is true, and some is not. The overwhelming majority of American millionaires are white, and of course male. Minority groups in America have yet to crack the double digits as a percentage of America's millionaires. The average millionaire is a retired 57-year-old white male, married with three children. He comes from a slightly advantaged background (mostly middle and upper middle class), but not what could be described as a wealthy one.
About 19 percent of America's millionaires currently receive income from a trust fund or an estate and would seem to fall under Edwards' definition of privilege in his "Two Americas" speech. With his privileged background and marriage to one of the world's richest women, Kerry, it would seem, falls more into this category.
Most of the rest of America's millionaires do not. About 80 percent of them are first generation affluent and more than half never received a dime of inheritance money. Ninety-one percent never received ownership of all or part of a family business as a gift. Most, like Edwards, who made his millions as a trial attorney, came from middle class backgrounds where education was highly valued, and only about half had their college tuition paid for in part or full by their parents. Four-fifths of them have at least a college degree and 18 percent have masters degrees. Another 8 percent have law degrees, and 6 percent have medical degrees. And although 55 percent send their kids to private schools, only about 17 percent attended private schools themselves.
Unlike Ken Lay, most American millionaires aren't corporate hacks who've raided millions at shareholder expense. Sure, those guys fall into this category too, but their numbers are comparatively few. Instead, two-thirds are self-employed, with the majority owning service-oriented businesses of an everyday nature like dry cleaners, auto lots, construction companies, fast food franchises, or air conditioner repair companies. Or, like Edwards, they made their money in highly specialized professions like law, medicine or accounting.
In terms of income, few make the kind of big bucks we'd assume. Of the 3.5 million American millionaires, only 8 percent make between $500,000 and $1 million a year and only 5 percent make more than a million dollars a year.
What most of these individuals have in common is that they've accumulated their wealth over time by saving a significant portion of what they make and skillfully investing it.
The average American millionaire makes, on average, about $247,000 a year and keeps slightly less than half of it after taxes. The average value of their homes is $320,000.
By my calculations, then, it's probably worth your effort to resent only the 350,000 Americans who inherited some or all of their wealth and continue to live off old money, and maybe, just for spite, the 175,000 who make more than $1 million a year.
But it's not worth your effort to hate the rest since, at an average net worth of $3.7 million apiece, there's not a lot they could do to influence national politics, or significantly impact your life.
But if it makes you feel better, please, by all means feel free to flip off the guy working behind the desk the next time you're at the dry cleaners. It's just that you've got the wrong guy.
Contact Tara Servatius at [email protected]