Affluence in the United States

While income is often seen as a type of wealth in colloquial language use, wealth and income are two substantially different measures of economic prosperity. Wealth is the total value of net possessions of an individual or household, while income is the total inflow of monetary assets over a given time period. Hence the change in wealth over that time period is equal to the income minus the expenditures in that period. Income is a so-called "flow" variable, while wealth is a so-called "stock" variable.

Breakdowns of individuals and households with incomes exceeding $60,000 (2005 data)[4][5]

The image contains several charts related to U.S. wealth inequality. While U.S. net worth roughly doubled from 2000 to 2016, the gains went primarily to the wealthy.

Affluence in the United States has been attributed in many cases to inherited wealth amounting to "a substantial head start":[6][7] in September 2012, the Institute for Policy Studies found that over 60 percent of the Forbes richest 400 Americans had grown up with substantial privilege.[8]

Income is commonly used to measure affluence, although this is a relative indicator: a middle class person with a personal income of $77,500 annually and a billionaire may both be referred to as affluent, depending on reference groups. An average American with a median income of $32,000[9] ($39,000 for those employed full-time between the ages of 25 and 64)[10] when used as a reference group would justify the personal income in the tenth percentile of $77,500 being described as affluent,[9] but if this earner were compared to an executive of a Fortune 500 company, then the description would not apply.[11][12] Accordingly, marketing firms and investment houses classify those with household incomes exceeding $250,000 as mass affluent, while the threshold upper class is most commonly defined as the top 1% with household incomes commonly exceeding $525,000 annually.

According to the U.S. Census Bureau, 42% of U.S. households have two income earners, thus making households' income levels higher than personal income levels;[13] the percent of married-couple families with children where both parents work is 59.1%.[14]

In 2005, the economic survey revealed the following income distribution for households and individuals:

• The top 5% of individuals had six figure incomes (exceeding $100,000); the top 10% of individuals had incomes exceeding $75,000;[9]
• The top 5% of households, three quarters of whom had two income earners, had incomes of $166,200 (about 10 times the 2009 US minimum wage, for one income earner, and about 5 times the 2009 US minimum wage for two income earners) or higher,[13] with the top 10% having incomes well in excess of $100,000.[15]
• The top 0.12% of households had incomes exceeding $1,600,000 annually.[16]

Households may also be differentiated among each other, depending on whether or not they have one or multiple income earners (the high female participation in the economy means that many households have two working members[17]). For example, in 2005 the median household income for a two income earner households was $67,000 while the median income for an individual employed full-time with a graduate degree was in excess of $60,000, demonstrating that nearly half of individuals with a graduate degree have earnings comparable with most dual income households.[10]

By another measure – the number of square feet per person in the home – the average home in the United States has more than 700 square feet per person, 50% – 100% more than in other high-income countries (though this indicator may be regarded as an accident of geography, climate and social preference, both within the US and beyond it) but this metric indicates even those in the lowest income percentiles enjoy more living space than the middle classes in most European nations. Similarly ownership levels of 'gadgets' and access to amenities are exceptionally high compared to many other countries.[18][19]

Overall, the term affluent may be applied to a variety of individuals, households, or other entities, depending on context. Data from the U.S. Census Bureau serves as the main guideline for defining affluence. U.S. government data not only reveal the nation's income distribution but also the demographic characteristics of those to whom the term "affluent", may be applied.[13]

Wealth in the United States is commonly measured in terms of net worth, which is the sum of all assets, including the market value of real estate, like a home, minus all liabilities.[20] The United States is the wealthiest country in the world.[21]

U.S. Household and non-profit Net Worth 1959 – 2016, nominal and real (2016 dollars). It reached a record $93 trillion in Q4 2016.

For example, a household in possession of an $800,000 house, $5,000 in mutual funds, $30,000 in cars, $20,000 worth of stock in their own company, and a $45,000 IRA would have assets totaling $900,000. Assuming that this household would have a $250,000 mortgage, $40,000 in car loans, and $10,000 in credit card debt, its debts would total $300,000. Subtracting the debts from the worth of this household's assets (900,000 − $300,000 = $600,000), this household would have a net worth of $600,000. Net worth can vary with fluctuations in value of the underlying assets.

As one would expect, households with greater income often have the highest net worths, though high income cannot be taken as an always accurate indicator of net worth. Overall the number of wealthier households is on the rise, with baby boomers hitting the highs of their careers.[20] In addition, wealth is unevenly distributed, with the wealthiest 25% of US households owning 87%[22] of the wealth in the United States, which was $54.2 trillion in 2009.[23][24]

U.S. household and non-profit organization net worth rose from $44.2 trillion in Q1 2000 to a pre-recession peak of $67.7 trillion in Q3 2007. It then fell $13.1 trillion to $54.6 trillion in Q1 2009 due to the subprime mortgage crisis. It then recovered, rising consistently to $86.8 trillion by Q4 2015. This is nearly double the 2000 level.[25]

Affluence and economic standing within society are often expressed in terms of percentile ranking. Economic ranking is conducted either in terms of giving lower thresholds for a designated group (e.g. the top 5%, 10%, 15%, etc.) or in terms of the percentage of households/individuals with incomes above a certain threshold (e.g. above $75,000, $100,000, $150,000, etc.). The table below presents 2006 income data in terms of the lower thresholds for the given percentages (e.g. the top 25.6% of households had incomes exceeding $80,000, compared to $47,000 for the top quarter of individuals).[9][15]

Source: U.S. Census Bureau, 2006[9][15]

Income distribution over time

Relative income growth, organized by percentile classes, normalized to 1970 levels. Graph accounts for both income growth, and the hidden decline in the progressivity of the tax code at the top, the wealthiest earners having seen their effective tax rates steadily fall.[31]

Same data[31] as adjacent chart, but plotted on logarithmic scale to show absolute dollar amounts.

According to the Congressional Budget Office, between 1979 and 2007 incomes of the top 1% of Americans grew by an average of 275%. During the same time period, the 60% of Americans in the middle of the income scale saw their income rise by 40%. From 1992 to 2007 the top 400 income earners in the U.S. saw their income increase 392% and their average tax rate reduced by 37%.[32] In 2009, the average income of the top 1% was $960,000 with a minimum income of $343,927.[33][34][35]

During the economic expansion between 2002 and 2007, the income of the top 1% grew 10 times faster than the income of the bottom 90%. In this period 66% of total income gains went to the 1%, who in 2007 had a larger share of total income than at any time since 1928.[34] According to PolitiFact and others, the top 400 wealthiest Americans "have more wealth than half of all Americans combined."[36][37][38][39] Inherited wealth may help explain why many Americans who have become rich may have had a "substantial head start".[6][7] In September 2012, according to the Institute for Policy Studies, "over 60 percent" of the Forbes richest 400 Americans "grew up in substantial privilege".[8]

If a family has a positive net worth then it has more wealth than the combined net worth of over 30.6 million American families. This is because the bottom 25% of American families have a negative combined net worth.[40]

Net personal wealth in the U.S. since 1962

The average personal wealth of people in the top 1% is more than a thousand times that of people in bottom 50%.[48]

The logarithmic scale shows how wealth has increased for all percentile groups, though moreso for wealthier people.[48]

According to an analysis that excludes pensions and social security, the richest 1% of the American population in 2007 owned 34.6% of the country's total wealth, and the next 19% owned 50.5%. Thus, the top 20% of Americans owned 85% of the country's wealth and the bottom 80% of the population owned 15%. Financial inequality was greater than inequality in total wealth, with the top 1% of the population owning 42.7%, the next 19% of Americans owning 50.3%, and the bottom 80% owning 7%.[49] However, according to the federal reserve, "For most households, pensions and Social Security are the most important sources of income during retirement, and the promised benefit stream constitutes a sizable fraction of household wealth" and "including pensions and Social Security in net worth makes the distribution more even".[50] When including household wealth from pensions and social security, the richest 1% of the American population in 1992 owned 16% of the country's total wealth, as opposed to 32% when excluding pensions and social security.

After the Great Recession which started in 2007, the share of total wealth owned by the top 1% of the population grew from 34.6% to 37.1%, and that owned by the top 20% of Americans grew from 85% to 87.7%. The Great Recession also caused a drop of 36.1% in median household wealth but a drop of only 11.1% for the top 1%.[51][49]

According to the University of Chicago, the top 1% is primarily made up of owner-managers of small to medium-sized businesses of which the most profitable are physician's and dentist's offices, professional and technical services, specialty trade contracting, legal services. The typical business has $7 million in sales and 57 employees. With a 10% profit margin, this will place two business partners in the top 1%.

The remainder of the top 1% tends to be the classic professions: medicine, dentistry, law, engineering, finance, and corporate executive management.

A correlation has been shown between increases in income and increases in worker satisfaction. Increasing worker satisfaction, however, is not solely a result of the increase in income: workers in more complex and higher level occupations tend to have attained higher levels of education and thus are more likely to have a greater degree of autonomy in the workplace.[54] Additionally, higher level workers with advanced degrees are hired to share their personal knowledge, to conceptualize, and to consult. Higher-level workers typically suffer less job alienation and reap not only external benefits in terms of income from their jobs, but also enjoy high levels of intrinsic motivation and satisfaction.[12][54]

In the United States, the highest earning occupational group is referred to as white collar professionals. Individuals in this occupational classification tend to report the highest job satisfaction and highest incomes. Defining income based on title of a profession can be misleading, given that a professional title may indicate the type of education received, but does not always correlate with the actual day to day income-generating endeavors that are pursued.

Some sources cite the profession of physician in the United States as the highest paying,[12] Physician (MD and DO) and Dentist (DMD and DDS) compensation ranks as the highest median annual earnings of all professions. Median annual earnings ranged from $149,310 for general dentists and $156,010 for family physicians to $321,686 for anesthesiologists. Surgeons post a median annual income of $282,504.[55] However, the annual salary for Chief Executive Officer (C.E.O.) is projected quite differently based on source: Salary.com reports a median salary of $634,941,[56] while the U.S. Department of Labor in May 2004 reported the median as $140,350.[57] This is primarily due to a methodological difference in terms of which companies were surveyed. Overall annual earnings among the nation's top 25 professions ranged from the $70,000s to the $300,000s.

In addition to physicians, lawyers, physicists, and nuclear engineers were all among the nation's 20 highest paid occupations with incomes in excess of $78,410.[58] Some of the other occupations in the high five-figure range were economists with a median of $72,780,[59] mathematicians with $81,240,[60] financial managers with $81,880,[61] and software publishers with median annual earnings of $73,060.[62] The median annual earnings of wage-and-salary pharmacists in May 2006 were $94,520. The median annual earnings of wage-and-salary engineers in November 2011 were $90,000. The middle 50 percent earned between $83,180 and $108,140 a year (as in the Occupational Outlook Handbook, 2008–09 Edition by the U.S. Bureau of Labor Statistics).

Median household and personal income by educational attainment

Ivy-Plus admissions rates vary with the income of the students' parents, with the acceptance rate of the top 0.1% income percentile being almost twice as much as other students.[63]

Educational attainment plays a major factor in determining an individual's economic disposition. Personal income varied greatly according to an individual's education, as did household income.

Incomes for those employed, full-time, year-round and over the age of twenty-five ranged from $20,826 ($17,422 if including those who worked part-time[9]) for those with less than a ninth grade education to $100,000 for those with professional degrees ($82,473 if including those who work part-time[9]). The median income for individuals with doctorates was $79,401 ($70,853 if including those who work part-time[9]).[64]

These statistics reveal that the majority of those employed full-time with professional or doctoral degrees are among the overall top 10% (15% if including those who work part-time) of income earners. Of those with a master's degree, nearly 50% were among the top quarter of income earners (top third if including those who work part-time).[9]

Individuals of a broad variety of religious backgrounds have become wealthy in America. However, the majority of these individuals follow Mainline Protestant denominations; Episcopalians[65] and Presbyterians are most prevalent.[66] According to a 2016 study by the Pew Research Center, Jewish again ranked as the most financially successful religious group in the United States, with 44% of Jews living in households with incomes of at least $100,000, followed by Hindu (36%), Episcopalians (35%), and Presbyterians (32%).[67] Owing to their numbers, more Catholics (13.3 million) reside in households with a yearly income of $100,000 or more than any other religious group.[67]

According to the same study there is a correlation between education and income, about 77% of American Hindus have an undergraduate degree and according to a study in 2020, they are earning the highest with median income $137,000, followed by Jews (59%), Episcopalians (56%), and Presbyterians (47%).[68]

Percent of households with six figure incomes and individuals with incomes in the top 10%, exceeding $77,500

Recent U.S. Census Bureau publications indicate a strong correlation between race and affluence. In the top household income quintile (households with incomes exceeding $91,200), Asian Americans and Whites were over represented, whereas Hispanics and African Americans were underrepresented.

The household income for Asian Americans was, at $61,094, by far the highest,[69] exceeding that of Whites ($48,554) by 26%.[70] Over a quarter, 27.5%, of Asian American households had incomes exceeding $100,000, and another 40% had incomes of over $75,000.[71]

Among White households, who remained near the national median, 18.3% had six figure incomes, while 28.9% had incomes exceeding $75,000.[70] The percentages of households with incomes exceeding $100,000 and $75,000 were far below the national medians for Hispanic and African American households.[72] Among Hispanic households, for example, only 9% had six figure incomes, and 17% had incomes exceeding $75,000.[73] The race gap remained when considering personal income. In 2005, roughly 11% of Asian Americans[74] and 7% of White individuals[75] had six figure incomes, compared to 2.6% among Hispanics[76] and 2.3% among African Americans.[77]

The racial breakdowns of income brackets further illustrate the racial disparities associated with affluence. in 2005, 81.8% of all 114 million households were White (including White Hispanics),[70] 12.2% were African American,[72] 10.9% were Hispanic[73] and 3.7% were Asian American.[69][78]

While White households are always near the national median due to Whites being by far the most prevalent racial demographic, the percentages of minority households with incomes exceeding $100,000 strayed considerably from their percentage of the overall population: Asian Americans, who represent the smallest surveyed racial demographic in the overall population, were found to be the prevalent minority among six figure income households.

Among the nearly twenty million households with six figure incomes, 86.9% were White,[70] 5.9% were Asian American,[69] 5.6% were Hispanic[73] and 5.5% were African American.[72] Among the general individual population with earnings, 82.1% were White,[75] 12.7% were Hispanic,[76] 11.0% were African American[77] and 4.6% were Asian American.[74]

Of the top 10% of income earners, those nearly 15 million individuals with incomes exceeding $77,500, Whites and Asians were once again over-represented with the percentages of African Americans and Hispanics trailing behind considerably. Of the top 10% of earners, 86.7% were White.[75] Asian Americans were the prevalent minority, constituting 6.8% of top 10% income earners, nearly twice the percentage of Asian Americans among the general population.[74]

Hispanics, who were the prevalent minority in the general population of income earners, constituted only 5.2% of those in the top 10%,[76] with African Americans being the least represented with 5.1%.[77]

Source: U.S. Census Bureau, 2006[79]

Economic well-being is often associated with high societal status, yet income and economic compensation are a function of scarcity and act as only one of a number of indicators of social class. It is in the interest of all of society that open positions are adequately filled with a competent occupant enticed to do his or her best.[12] As a result, an occupation that requires a scarce skill, the attainment of which is often documented through an educational degree, and entrusts its occupant with a high degree of influence will generally offer high economic compensation.

To put it another way, the high income is intended to ensure that the desired individuals obtain the necessary skills (e.g. medical or graduate school) and complete their tasks with the necessary vigor[80] but differences in income may, however, be found among occupations of similar sociological nature: the median annual earnings of a physician were in excess of $150,000 in May 2004, compared to $95,000 for an attorney.[55][58] Both occupations require finely tuned and scarce skill sets and both are essential to the well-being of society, yet physicians out-earned attorneys and other upper middle class professionals by a wide margin as their skill-sets are deemed especially scarce.

Overall, high status positions tend to be those requiring a scarce skill and are therefore commonly far better compensated than those in the middle of the occupational strata.[12][80]

...It is essential that the duties of the positions be performed with the diligence that their importance requires. Inevitably, then, a society must have, first, some kind of rewards that it can use as inducements, and, second, some way of distributing these rewards differently according to positions. The rewards and their distribution become part of the social order... If the rights and perquisites of different positions in a society must be unequal, then society must be stratified... Hence every society... must differentiate persons... and must therefore possess a certain amount of institutionalized inequality.

— Kingsley Davis & Wilbert E. Moore, "Some Principles of Stratification", republished in Social Class and Stratification[80]

It is important to note that the above is an ideal type, a simplified model or reality using optimal circumstances. In reality other factors such as discrimination based on race, ethnicity and gender as well as aggressive political lobbying by certain professional organizations also influence personal income. An individual's personal career decisions, as well as his or her personal connections within the nation's economic institutions, are also likely to have an effect on income, status and whether or not an individual may be referred to as affluent.[11]

In contemporary America it is a combination of all these factors, with scarcity remaining by far the most prominent one, which determine a person's economic compensation. Due to higher status professions requiring advanced and thus less commonly found skill sets (including the ability to supervise and work with a considerable autonomy), these professions are better compensated through the means of income, making high status individuals affluent, depending on reference group.[12]

While the two paragraphs above only describe the relationship between status and personal income, household income is also often used to infer status. As a result, the dual income phenomenon presents yet another problem in equating affluence with high societal status. As mentioned earlier in the article, 42% of households have two or more income earners, and 76% of households with six figure incomes have two or more income earners.[13] Furthermore, people are most likely to marry their professional and societal equals.

It therefore becomes apparent that the majority of households with incomes exceeding the six figure mark are the result of an economic as well as personal union between two economic equals. Today, two nurses, each making $55,000 a year, can easily out-earn a single attorney who makes the median of $95,000 annually.[58][81] Despite household income rising drastically through the union of two economic equals, neither individual has advanced his or her function and position within society. Yet the household (not the individual) may have become more affluent, assuming an increase in household members does not offset the dual-income derived gains.

The wide income discrepancies within the top 1.5% of households

As of 2002, there were approximately 146,000 (0.1%) households with incomes exceeding $1,500,000, while the top 0.01% or 11,000 households had incomes exceeding $5,500,000. The 400 highest tax payers in the nation had gross annual household incomes exceeding $87,000,000. Household incomes for this group have risen more dramatically than for any other. As a result, the gap between those who make less than one and half million dollars annually (99.9% of households) and those who make more (0.1%) has been steadily increasing, prompting The New York Times to proclaim that the "Richest Are Leaving Even the Rich Far Behind."[82]

The income disparities within the top 1.5% are quite drastic.[83] While households in the top 1.5% of households had incomes exceeding $250,000, 443% above the national median, their incomes were still 2200% lower than those of the top 0.1% of households.

• Family net worth
• 
  U.S. mean family net worth by percentile of net worth (1989–2007)
• 
  U.S. median family net worth by percentile of net worth (1989–2007)

The total value of all U.S. household wealth in 2000 was approximately $44 trillion. Prior to the Late-2000s recession which began in December 2007 its value was at $65.9 trillion. After, it plunged to $48.5 trillion during the first quarter of 2009. The total household net worth rose 1.3% by the fourth quarter of 2009 to $54.2 trillion, indicating the American economy is recovering.

• Poverty in the United States
• Social programs in the United States
• Wealth inequality in the United States
• Redistribution of wealth#Public opinion
• States of the United States of America by income

Wealth:

• Donor Class
• Irrational exuberance
• The Affluent Society
• Affluenza

Tax avoidance:

• Panama Papers
• Paradise Papers

General:

• Economy of the United States
• Household income in the United States
• International Ranking of Household Income
• List of Average Wages per Country
• List of countries by total wealth
• List of U.S. states by savings rate

• Frank, Robert L. (2007). Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich. Crown Publishing Group. pp. 277. ISBN 978-0-307-33926-3.

• Alternate income measures forum.
• Americans Underestimate U.S. Wealth Inequality (audio – NPR).
• 15 Mind-Blowing Facts About Wealth And Inequality In America (charts – The Business Insider).
• It's the Inequality, Stupid: 11 Charts that Explain Everything that's Wrong with America (Mother Jones – March 2011).
• US Census Bureau, personal income forum.
• US Census Bureau, household income forum.
• Introducing the Distributional Financial Accounts of the United States (Federal Reserve – March 2019)