At the Money: The Data Behind America's Wealthy

SPEAKER_1 (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

Barry Ritholtz (0:14)

America is a rich nation, but I want to get granular as to exactly how rich, who is rich, and how they got that way.

The data is astounding.

To help us unpack all of this and what it might mean for your personal prosperity, let's bring in Owen Zidar and Eric Zwick. They're professors at Princeton and the University of Chicago respectively, and they are the authors of a fascinating new book, The Everywhere Millionaire, Who Is Really Rich in America, and How They Got There. And if you're listening to this, be sure and check out part one where we discuss a lot of the findings in the book. Today, I really want to talk about the data, which really is very mind blowing. Let's start out with the 1000 to 1 ratio, private owners versus public CEOs. For every wealthy CEO, there are more than a thousand private business owners worth at least $25 million in net worth. That blew my mind. Tell me a little bit about that.

Owen Zidar (1:19)

Yes. So it's a great statistic. It started out when we were thinking about the pass-through income and the growth of pass-throughs. Let's add up all the income for top 1 percent pass-through business owners.

What's a good reference for that to make the point that this is a huge, surprisingly huge group? Well, let's look at CEOs in the Execucomp data set, which is roughly the S&P 1500 It takes the CEOs and CFOs and adds up their salary plus at the market values of their options.

You say, okay, add that up. And it turns out, they're just swamped in size by the pass-through income flows for the pass-through business owners. Because they're just way more of them. And they're all across the industry, all across the country. You know, we're talking about 1500 CEOs plus another thousand CFOs or like top execs. And we're talking about like over a million of these top 1 to 0.5% business owners.

Barry Ritholtz (2:16)

A million and a half people worth $25 million or more who are not running public companies. It's amazing. Let's talk about something even more finite, the Forbes 400 You guys explain how much Main Street swamps the 400 The Forbes 400 list receives 50% of all news coverage on wealth.

Its members hold only 3% of total US household wealth. Meanwhile, Main Street millionaires are worth 13 times more the total combined wealth of the Forbes 400, accounting for 40% of all household wealth. That data is just mind-blowing, especially how lopsided the media coverage is on the billionaires in the Forbes 400

Eric Zwick (3:06)

To us, that's one of the main points of the book. When you think about how to get rich or the influence of the rich in America, there's just such a monopoly of un-attention on a very small handful of people. We want to broaden the aperture to say, look, there's a lot of money in America. It's a very rich place with a lot of opportunity and it's not just the Forbes 400 We need to broaden it when we're thinking about opportunity, tax policy, and just a huge range of issues that people care about. We really think the narrative needs to be reset.

Barry Ritholtz (3:44)

I want to really get granular with the data and just reveal how far off the narrative is. Five million households have over $5 million. That's the top 4%.

If you followed the fidelity 401k millionaire data, that really shouldn't be a terrible surprise. But then there are two million Americans who are worth $10 million or more. And then the number that I think could be the most shocking number in the entire book.

If you ask people how many people are worth $100 million or more in America, I know they'd say a few hundred, a few thousand. 65,000 Americans are Santa millionaires worth more than $100 million. I think that was the most shocking number in the entire book.

Owen Zidar (4:37)

It's a huge group of people. So Forbes 400 is 400 people. You had all the people in their families, their kids. Maybe it's like 1,500 people or 2,000 people.

Not 65,000? Not 65,000. Right. So we're talking about like 30 to 50 times the number of people here. That is why not only say there are a lot of three, $4 million houses, but there are a lot of like 10, $20 million houses. That's why like Aspen, the average house price is so high. It's not just like some tech people from Silicon Valley buying those houses. It's like car dealers and people running like manufacturing businesses, making inputs into production for construction and so on.