Being in the highest percentile of wealthiest Americans sure sounds great, if you’re given to capitalist viral content: You can roll around in 400-foot yachts, buy vintage Ferraris, poop into gold toilets. But, according to a new analysis, the lives of America’s upper crust are so surprisingly plebeian, it’ll make your monocle pop out.
In a paper for Business and Society, Michael Carney and Robert Nason, both management scholars at Concordia University in Montreal, analyzed the Survey of Consumer Finance, a survey done every three years by the Federal Reserve, which gives fine-grained detail of household income and assets. Importantly, the survey excludes people featured on rich lists like the Forbes Billionaire List, in order to protect privacy. The researchers used the most recent available data, from 2013, which drew from 6,015 households.
To Nason, the most surprising finding was that 75 percent of the one-percenters actively owned and managed a private business — a way different lifestyle than the Wall Street fat cats or old-money heiresses you’ve heard so much about. “Our research suggests that on a day-to-day basis the one-percent are busy running their businesses, not indulging lavish lifestyles,” he explained to Science of Us in an email. “They certainly represent an elite class and are likely to have wealthy tastes, but one-percenters are more likely to be spending more time in the office with their employees than lounging on yachts or buying and selling stocks.”
From their analysis, the researchers put the total population of one-percenters at 1.6 million people, with wealth ranging from from $8.5 million to $1.3 billion. Over half of their wealth, on average, was invested in a private business, rather than the exotic, high-end instruments that the researchers suspected.
The finding helps give a more nuanced understading of the financial elite. Nason says that the real driver of inequality is the extreme wealth of the 0.1 percent, a trend pilloried by everyone from Thomas Piketty to Occupy Wall Street and Bernie Sanders. The key is to target “dormant and unproductive wealth,” he argues, rather than the wealth that’s been put into active use, like in all those private businesses. Therein lies another wrinkle: Lots of these business owners are graying baby boomers, who are going to need to sell their businesses to retire in the lifestyles they’ve grown accustomed to. Because of this, Nason says, policy needs to not just encourage the founding of sexy start-ups, but entrepreneurs who will acquire a business rather than starting from zero. “Entrepreneurial acquirers are definitely necessary to enable the massive transfer of economic control of our business infrastructure that is looming in the economy,” he says. That’s life’s great equalizer: Even if you’re rich, you still get old.