They are CEOs and money managers, doctors and lawyers, as might be expected. But they are also computer technicians, scientists and even farmers. Some are singers and movie stars (even though they may not like to admit it) and the rest of them are spread among various professions.
These days they are also the most vilified members of American society – also known as the 1 Percenters, who control about two-fifths of the country’s wealth and fuel nearly 100 percent of the protests around Wall Street, through the rest of the country and around the world.
“We are the 99 percent!” is the favorite refrain of the protesters, who believe they are being cheated out of the lifestyle they deserve by the elite ruling class.
A look at who constitutes the 1 Percenters is at once instructive, disturbing and a bit surprising.
It is instructive in that the greatest number do not appear to be the bankers and traders at the center of the Occupy Wall Street movement’s ire. It is disturbing in that such a small group can control so much wealth and power. And it is a bit surprising in that while the protesters make it sound as if concentration of wealth is a relatively new phenomenon, it in fact has been pretty much this way for going on a century now.
Getting to know the 1 Percenters is no easy task. The data base is limited and even the Census does not go that deep into the weeds to break down income and profession to that extent.
The most reliable numbers are from a November 2010 paper written by researchers Jon Bakija, Adam Cole and Bradly T. Heim, using data that go back only to 2005. Obviously, the American economy has seen a tremendous disruption since then, so those findings are likely skewed.
Still, they help provide a guidepost.
According to their research, the top 1 percent of workers earn about 17 percent of the total wages.
A category called “executives, managers and supervisors (non-finance)" make up the greatest concentration in this group at 6.35 percent. Financial professionals are next at 2.77 percent, while doctors make up 1.85 percent and lawyers 1.22 percent.
The rest of the table shows a wide variety of skills, from real estate professionals to celebrities, from government workers to farmers and pilots, each comprising about 0.5 percent of the 1 Percenters.
As for what will get you in this category, the yardstick varies as well.
Broadly speaking, you need to make about $500,000 a year, though one study – from G. William Domhoff, a sociology professor at the University of California at Santa Cruz– pegged the top rung at $1.3 million a year.
CEO salaries, according to the AFL/CIO labor union, are $3.9 million overall, but $10.6 million for those whose companies are listed in the Standard & Poor’s 500 and $19.8 million for companies in the Dow Jones Industrial Average .
But figuring out who the 1 Percenters are doesn’t stop simply at salary.
There’s a difference between income – how much one makes in salary as well as dividends, interest and rents or other payments from real estate – and wealth, which is defined in “marketable assets,” such as real estate, stocks and bonds, as well as what you’ve squirreled away from your income. Your house is wealth, your car is not; your shares of Apple are wealth, your personal computer is not.
In fact, according to Domhoff, most really rich people – the 1 percent of the 1 percenters – only get 19 percent of their income from working. The rest comes from investment income.
That’s why billionaire Warren Buffett can make his claims about his secretary getting taxed at a higher rate than he does. Buffett’s wealth comes mostly from items that are taxed at a different rate than regular income.
Who Pays Taxes?
The 1 Percenters, in fact, actually pay a disproportionate amount of their incomes to taxes, something that is especially true for the 5 percenters – for whom there is an abundance of Census data but who don’t come in for as much criticism as their more elite brethren. Perhaps “We are the 95 percent!” isn’t as melodious a chant.
Economists Kyle Mudry and Justin Bryan estimate that 1 Percenters paid 40 percent of total federal personal income taxes in 2006 and the 5 Percenters paid 60 percent. (Politifact puts a finer point on the various contributionsone makes toward the tax burden and finds that 1 Percenters actually pay 28.1 percent of total federal tax dollars. The point remains that the notion that rich people don’t pay taxes is bogus.)
There’s also a popular conception that there’s something new about the 1 Percenters controlling a large portion of the nation’s wealth. This, too, is not so.
In 1922, 1 Percenters controlled 36.7 percent of the nation’s wealth, and that number jumped to 44.2 percent by the time the stock market crashed in 1929. The total hit a low of 19.9 percent in 1976 but has been on a steady uptrend since. In fact, there is a pretty direct correlation between the fortunes of the stock market and the amount of wealth the 1 Percenters control.
The stock market-wealth control, though, leads also to why the 1 Percenters have found themselves under such scrutiny.
From Manufacturers to Financiers
Before the market crashed again with the onset of the financial crisis in 2008, 1 Percenters owned 38.3 percent of stocks, while the top 20 percent controlled fully 91 percent of the stock market. Nine in 10 1 Percenter households held more than $10,000 worth of stock.
While the percentages of wealth controlled by the top of the top hasn’t changed much over a long historical spectrum, it has intensified over the past 30 years, which coincided with America’s change from manufacturing leader to financial services powerhouse.
Over that time, according to Dumhoff, 42 percent of wealth created from 1983 to 2004 went to the 1 percenters. The bottom 80 percent received just 6 percent of the new wealth.
Dumhoff’s study is filled with fascinating facts as well as the occasional dose of incendiary political rhetoric. He labels those who want to eliminate the estate tax as “ultra-conservatives,” a term he uses at least four times. Otherwise, though, it is a sobering study of American disparity.
“Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10 percent of the people own the United States of America,” Dumhoff writes.
It’s About More Than Income and Wealth
In short, the “Occupation” protesters have it at least thematically right about wealth control, though none of these numbers say a thing about the root of their discontent and whether the wrath should be directed towards Wall Street or Washington.
Moreover, while the protesters are at least in the right ballpark about the 1 percenters, their chants that “We are the 99 percent” don’t appear quite accurate.
A telling op-ed piece in the Wall Street Journal this week by Douglas Schoen, former pollster for President Bill Clinton, disclosed some important findings in a survey done of the Occupy Wall Street crowd.
In warning Democrats to avoid a close alignment with OWS, Schoen describes a crowd that “comprises an unrepresentative segment of the electorate that believes in radical redistribution of wealth, civil disobedience and, in some instances, violence.”
Indeed, the protesters’ embrace of 1 Percenters such as actress Susan Sarandonand hip-hop mogul Russell Simmons shows that it’s not easy these days to pinpoint who is really a 1 Percenter and who is not.
Economist Joseph Stiglitz, writing in Vanity Fair in May, predicted that whatever the faces of the opposing sides, the symbolic battle of rich versus poor will continue.
“The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: An understanding that their fate is bound up with how the other 99 percent live,” Stiglitz wrote. “Throughout history, that is something that the top 1 percent eventually do learn. Too late.”
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