Have you ever driven down a nice neighborhood or beach and seen all the houses that must have cost millions of dollars? Do you even wonder who those people are that own them? I mean, there’s so many of those houses, what do all those people even do for a living? As a middle class child, and even a young adult I wondered this myself. Some people today in my adult life who are more knowledgeable in other matters continue to wonder this themselves.
So if you’re in that group allow me to provide some insight if I can. The secret to understanding who can afford all the luxury homes you see is in understanding how vast and diverse our economy truly is. Let’s start with a simple number:
That is the total number of people that reported $1 million or more in income in 2009. They collectively brought in $727 billion which works out to more than $3 million each. If you want to break down the population further think of it this way: 235,413 people is 4700 people for every state in the US. That’s almost 5,000 people that each made $3 million in 2009.
But what do these people do? There are a number of media segments out there like the shortly lived “How’d you get so rich?” . CNBC has a show called “How I made my millions”. This show goes a bit more in depth into the how instead of the Joan Rivers show which was more focused on displays of wealth. Some of the people they’ve featured have been integral to the success or founded companies like: P90X, Amy’s Kitchen, NERF, A10 Clinical Solutions, Two Men and a Truck, Miche Bag, TerraCycle, and Pillow Pets. I haven’t even heard of many of these companies and it’s likely you haven’t either.
Even the LA Times has a recurring series called “How I made it” (there’s clearly a trend here). Some examples of people they’ve featured:
- A TV movie and miniseries executive
- The guy that runs the ad agency that made the little Darth Vader VW ad from the Super Bowl
- Facebook engineer who created the news feed
- A theme park attraction designer
- Distributer of LED light fixtures
There’s a common thread among most of these people. They either started or built up companies. You could call them entrepreneurs. But most millionaires likely consider themselves small business owners.
There are collections of very wealthy individuals that have built their nest eggs as highly paid executives as well. You can add in doctors and lawyers to the mix. Keep in mind that 235k number is just the number of people that reported a million in income. Imagine how high the number is for people that made $500k or more. All these people make more than enough to comfortably live a life that makes the rest of us think “what do they do?”.
Does this mean that all doctors, lawyers, executives, and business owners are rich? Of course not. But when you think about the equivalent to the population of of Madison Wisconsin making a million dollars in just one year, the idea that people can afford all these homes becomes somewhat more realistic.