The American Gift & Curse — Non Generational Millionaires are making the United States Poorer than the rest of the world
Interesting discoveries, tantalizing facts, robust economies and new wealth creation are characteristics of America. The characteristic that eludes Americans is generational wealth. Approximately 80% of millionaires are first generational millionaires. This fact of non generational millionaires was based on the published book “The Millionaire Next Door” which is one of my favorite books.
Interesting enough millionaire dynamics changed over the last one hundred years. In the year 1900, there were only 5,000 millionaires in the United States. In 2000, there were more than five million. Before the Great Recession, there were 9.2 million households worth $1 million or more. In 2008, there were 10 million people who classified as millionaires in U.S. dollars. These statistics were compiled on the “The Wealth Report. The Wall Street Journal. April 11, 2012”.
While we certainly observe millionaire numbers numerically increasing do these numbers reflect proportionately? I mean do we really have more millionaires? Is the increase a false sense of fact? Was 1% of people back in 1900 the same as 1% making it today?
Well today we have 328,960,469 (as of 6/10/2019 Worldometers). In 2000 we had approximately 281,982,778 people. The twelfth United States Census was conducted by the US Census office on June 1, 1900. The Census office determined the resident population of the United States was 76,212,168 in 1900.
The millionaire ratio in 1900 was .00006561% of the population. That is pretty low. In 2008 with a standing population of 303,374,067 (thanks Worldometers) approximately 3.296% classified as millionaires. What about inflation? Is today’s millionaire worth a millionaire of the past? We all know about inflation. So the question answers itself; however, it’s worth reading about.
What is a millionaire in 1900 worth in today’s dollars? More importantly what would be the status of millionaire today back in 1900? A really nifty calculator and tracking the Consumer Price Index (CPI) from the Bureau of Labor Statistics states that 2019 prices are 2,942.24% higher than the average prices throughout 1900.
In simple terms $1 in 1900 is equivalent to $30.42. This means the value of today’s money is a whopping 3.287% of 1900 money.
The net worth of a millionaire in 1900 is equivalent to $30,422,380.95 in today’s dollars. The millionaire of 2019 is worth approximately $32,873.11 in 1900.
Less than 10% of the top 1% has net worth that approach a 32mm level. Analyzing these statistics we become enlightened. Most people are not as wealthy as they believe. In order to understand the lack of wealth the real question that needs to be answered is,
“Why are so many Americans first generational millionaires?”
I’ll explain the correlation to first generational millionaires and poverty shortly. It seems counter intuitive but it positively correlates.
The statistic reflects consumerism and lack of planning. I’ll explain. Let’s start with a simple article about very wealthy people. A news article from Business Insider has very compelling context. The article was published by Katie Warren and her original purpose was to discuss taxes. The article centered around Rich New Yorkers fleeing to Miami to purchase 58 million dollar homes. These moves save New Yorkers on income taxes. So the focus was on tax but I discovered something better. The most interesting part of this article is not tax savings.
The most interesting part is the mind state of these people. It is a common accepted idea that sea levels are rising. Miami should be partially underwater when my grand children reach my age (around 34ish) according to scientific data published by NOAA (assuming the same carbon footprint for the world). The attitude of these people is captured in a quote from a real estate broker featured in the article.
“My clients are not making their home purchasing decision on what may or may not be 100+ years out. They want to enjoy their wealth now with their families in their homes”. Dina Goldentayer, the executive director of sales at Douglas Elliman in Miami Beach.
What this woman captures is that a US person in today’s environment is willing to put 58mm into a piece of real estate that most likely becomes worthless in 50 years. Most importantly these people prepare to put money into something that has high likelihood to vanish beneath the ocean.
At least people from Atlantis had an excuse…they had no science to tell them about sea level changes.
A great deal of people despite access to knowledge, decide to consume their resources in manners that leave no sustainable wealth. I understand the statement “It’s your money spend it how you want.” Anyone who earns money has the right to spend it. The point I draw is this truly a beneficial mind set? If this mind set is so productive the United States should be the richest country in the world…right?
Actually the answer is the United States does not make the top 10 richest countries.
According to data published by the USA Today the United States ranks number 11 on the richest country list. Ahead of the United States (in this order) is: 10 — Ireland, 9 — Norway, 8 — Hong Kong, 7 — Switzerland, 6 — Luxembourg, 5 — United Arab Emirates, 4 — Kuwait, 3 — Brunei Darussalam, 2 — Singapore, 1 — Qatar.
Interesting enough the richest countries are countries steeped in tradition of legacy, lineage, and long term thinking. The point of this article is to show how the country with the 2nd Gross Domestic Product is poorer than a country that ranks 123rd out of 185 countries in Gross Domestic Product. The largest wealth transfer in history is occurring by our country spending it. A sad proposition for those participating in these activities. Discover tangible knowledge, ways to create sustaining wealth, and more by following me on Medium or signing up for my quarterly newsletter.
To your knowledge success!
About Christopher: Christopher Knight Lopez is a Professional Entrepreneur. Christopher has opened over 7 businesses in his 14-year career. Christopher’s purpose is to take advantage of various market-driven opportunities. Christopher is a certified Master Project Manager (MPM) and Accredited Financial Analyst (AFA). Christopher previously held his Series 65 securities license. Christopher also has his General Lines — Life, Accident, Health & HMO. Christopher has managed a combined 286mm USD in reported Assets Under Management & Assets Under Advisement. Christopher has work experience in 29 countries, raised over 50mm USD for various businesses, and grossed over 7.5mm in his personal career. Christopher worked in the highly technical industries of: biotechnology, finance, securities, manufacturing, real estate, and residential mortgages. Christopher is a United States Air Force Veteran. Christopher has a passion for family, competitive sports, fishing, martial arts and advocacy for entrepreneurs. Christopher provides self-help classes for up-and-coming entrepreneurs. Christopher’s passion to mentor comes from belief that entrepreneurs need guidance. The world is full of conflicting information about entrepreneur identity. See more at www.christopherklopez.com.