You’ve all likely seen the dystopian sci-fi movies which depict a miserable future where
the majority-poor eke out a living underground and the rich live in high castles protected
by armed robots.
It’s the techno story of the darkest side of capitalism, in which most people are forgotten,
forsaken, while others who basically own this sad new world bask in their giant pools of
wealth.
In this highly automated future who owns the land, the technology, owns the world.
It’s a grim outlook, and perhaps hyperbolic.
But we do hear stories about the one percent, and people do fear a widening gap in the distribution
of wealth.
But are the rich becoming richer and the poor becoming poorer?
Is the middle class disappearing?
What does it mean for you?
First of all, are we talking about the one percent of the world or the one percent in
a certain country?
That’s an important question, because if you come from a wealthy nation, say the USA,
you are likely already better off than much of the world.
Here’s some evidence to back that up.
In 2018, a Credit Suisse Global Wealth Report told us that globally the one percent accounts
for 47 percent of global household wealth.
That means, many of you with jobs watching this might already be in the one percent.
What does this mean?
Well, according to Investopedia if you earn $32,400 a year you’re already in the top
one percent in the world.
That’s about 26,000 pounds, or 29,500 euros, or 2.3 million Indian rupees.
We won’t go through all the currencies, but you get the idea, some of you might already
hold a position in the top one percent.
You might be a teacher, a graphic designer, a journalist, a construction worker, and already
be there.
Nonetheless, as so many of our viewers don’t come from countries with high wages their
idea of the one percent might be different.
We might look at a 2017 Oxfam report that told us eight rich people, six of those folks
being Americans, own as much combined wealth as half the human race.
We are talking here only about wages, not what people own.
If you want to be in the top one percent in terms of what you have in your name you’d
have to have $770,000 in net worth.
This makes things a bit harder.
That ladder just got very difficult to climb.
This is because some people just have an insane amount of cash tied up in investments, properties,
etc.
Now we should look at the one percent in the USA.
A 2018 report by the Economic Policy Institute said that if you want to be in the top one
percent of that country last year you had to be earning $421,926.
Again, this is wages.
But if we look at the average wealth of someone in the United States its $403,974 according
to Credit Suisse.
Compare that to the average wealth in the continent of Africa which is $4,138.
That average wealth in the U.S seems pretty high right, but that’s because there are
a lot of extremely wealthy people living there.
It kind of skews the statistics.
Money doesn’t always trickle down.
For example, let’s look at median wealth.
If you don’t know, median means a number in which half have more and half have less.
In the USA the median wealth is $61,667.
That’s still pretty high in global terms.
Now let’s say you are American and you have dreams about wanting to walk in those hallowed
halls of the one percent.
How can that happen?
Well, according to the Economic Policy Institute that number of just over 400,000 bucks is
just threshold.
Earn that and you just get in, but in fact the average household earnings of the one
percent in the USA is more like 1.3 million bucks a year.
That same report said that the average earnings for the remaining 99 percent was $50,107.
Ok, so you want to crack into the top one percent but don’t come from a family that
is already there.
Let’s remember that money often passes down the family line, and let’s just say you
are not going to collect millions when your parents pass away.
We looked at 2019 data from the U.S. Bureau of Labor Statistics and saw which regular
jobs will give you the most cash.
By regular, we mean paid occupations rather than you tinkering away in your garage and
trying to come up with the next big app, or perhaps taking it upon yourself to form a
criminal cartel.
At the top spot were Anesthesiologists.
The average wage for those guys for 2019 was $267,020, so if you don’t go spending all
your money you could perhaps get into the top one percent in a few years’ time.
There are an estimated 31,000 anesthesiologists in the U.S., so it’s not beyond impossible
to land a job, but you will have to study for many years first.
Surgeons also earn top dollar at an average of $267,020 a year and there are around 34,000
of them in the U.S.
Other jobs with average wages over 200,000 a year are Obstetricians-Gynecologists, Orthodontists,
Psychiatrists, General Practice Physicians and CEOs of companies.
Now, we don’t want to sow seeds of negativity in your head, but these jobs are very difficult
to get and they are for a few exceptional people.
Statistically, having one of these jobs is likely out of your league.
On the other hand, you could become an attorney with an average wage of $144,230.
If you made some savvy investments or saved well you might be able to get into the top
one percent in terms of wealth, not wages.
You might be able to get that membership at the country club down the street, but you’ll
have to be clever about it.
If you want to get into the one percent of global wealth in terms of all assets and have
over $770,000 in net worth then you’ll really have to be good.
We looked at the distribution of wealth in the USA and found reports that told us the
gap was widening.
According to one report, one percent of folks in the USA account for 40 percent of the country’s
total wealth.
90 percent of families there account for one quarter of all wealth and 25 percent of families
have only $10,000 in wealth.
A report by Equitable Growth tells us that the gap has widened quite dramatically over
recent decades.
It said this: “Wealth disparities have widened over time.
In 1989, the bottom 90 percent of the U.S. population held 33 percent of all wealth.
By 2016, the bottom 90 percent of the population held only 23 percent of wealth.
The wealth share of the top 1 percent increased from about 30 percent to about 40 percent
over the same period.”
Have things changed suddenly in the last three years?
It seems not, and from what we can see the wealth gap is just going to get bigger.
In fact, if you look at a forecast made by the Boston Consulting Group by the time we
hit 2021, 70 percent of the U.S. wealth will be in the hands of billionaires and millionaires.
According to those guys, things are only going to get worse for the small players.
We also found reports that told us Americans often overestimate their ability to make more
money, to climb that ladder, something called upwards mobility.
So, if you’re born without much cash can you climb the ladder and make a lot of cash?
Or, does cash beget cash and those that have it just get richer or stay rich while the
other stay the same?
Forbes wrote in 2018 that in terms of upwards mobility the USA was not in good shape at
all.
It cited a World Bank report that looked at upwards mobility in 148 countries across the
globe.
This wasn’t just about cash, though, but also in terms of graduating from university
when parents did not, buying your own house, etc.
Quite a few developing nations showed positive signs of upwards mobility, and we can just
look at some nations and see success stories.
Still, in many wealthy nations things are different.
It’s a complicated report, but Forbes wrote this about the U.S., “The U.S. is one of
only four high income economies amongst 50 economies with the lowest rates of relative
upward mobility.”
In 2018 the Economist asked this question, “HOW likely is someone to move up the economic
ladder?”
It said that in the USA many people perceive they have a good chance of this, but the reality
is different.
In the USA data showed the probability of remaining in the group of the fifth lowest
earners was about 33 percent.
But there was some hope, because the probability of moving from the bottom fifth to the top
fifth was about 7.8 percent, so some people do make the top fifth.
That’s not the one percent, though, just the top 20 percent.
The results were a bit more promising for people in the UK, although British people
tended to be pessimistic about moving up and Americans were more optimistic.
We looked at more depressing data, because to be frank, there is not much out there that
tells you that income inequality is suddenly going to be much better in the USA.
One report told us that the Millennial generation is the “student debt generation.”
They have taken on more debt than Generation X did.
So, with all this debt around life becomes much harder.
That same report told us that the top 20 percent of folks held about 77 percent of the wealth,
but that was in 2016.
It didn’t give the data for 2019, but it said the forecast wasn’t good.
That report also said this, “This has not always been the case.
Before 2010, the middle class owned more wealth than the top one percent.
Since 1995, the share of wealth held by the middle class has steadily declined, while
the top one percent’s share has steadily increased.”
This is why people for a while have talked about the shrinking of the middle class.
Surely there is some good news, relating to more recent reports?
Sorry to say, but Market Watch ran this headline in 2019, “The richest 10% of households
now represent 70% of all U.S. wealth.”
It said the rich are indeed getting richer.
But the USA might not be the best example, because data shows that this country has the
worst disparities between rich and poor than any other developed nation.
The OECD countries of Mexico and Chile are worse, but they are not considered as developed.
If we look at the entire world and a 2018 Credit Swisse report, Thailand took the number
one spot for wealth disparity after overtaking Russia.
The one percent in Thailand accounted for 66.9 percent of the country’s wealth.
Russia, India and Turkey made up the other worst nations.
You can look at other interesting statistics, such as Inequality.org telling us that three
men alone in the USA have as much wealth as 50 percent of Americans.
Those guys are Jeff Bezos, Bill Gates and Warren Buffet.
That same report shows how wealth concentration in the US over the last three decades has
spiked massively.
It wrote, “Over the past three decades, America’s most affluent families have added
to their net worth, while those on the bottom have dipped into ‘negative wealth,’ meaning
the value of their debts exceeds the value of their assets.”
It also said the one percent own more than half of the stock in the country.
If we asked these statisticians how hard it would be to get into the one percent from
being middle class or working class, the answer would be “VERY HARD.”
To reiterate what we said at the beginning, even if you are a fair wage earner in a developed
nation you are already doing ok in global terms.
But if you want to become the one percent in a developed nation and don’t already
come from money the task will be hard.
Just about every source we looked at showed data that the global elite are just getting
richer and the poor are not moving upwards in vast numbers, far from it.
It all sounds quite negative, so we’d now like to ask you if you agree with this.
Tell us what you think in the comments.
Also, be sure to check out our other video How Is Life Different for Billionaires?
Thanks for watching, and as always, don’t forget to like, share and subscribe.
See you next time.