Americans Now Need at Least $500k a Year to Enter Top 1%(bloomberg.com)
bloomberg.com
Americans Now Need at Least $500k a Year to Enter Top 1%
https://www.bloomberg.com/news/articles/2019-10-16/americans-now-need-at-least-500-000-a-year-to-enter-the-top-1
244 comments
This is clearly not true - if you are making that much and are a constant (but not even especially frugal) saver you will have 10M by the time you retire. The top 1% includes people of all ages - including people collecting paychecks their whole life - not just people who are in their 30s.
Of course, in 20 years 10M will not mean as much, but nonetheless it is important to remember 20% of the population is at or near retirement age.
https://www.nerdwallet.com/investing/retirement-calculator
Of course, in 20 years 10M will not mean as much, but nonetheless it is important to remember 20% of the population is at or near retirement age.
https://www.nerdwallet.com/investing/retirement-calculator
You can't fast-forward your net worth and leave everyone else's frozen in place. If 10M is the bottom of the top 1% now, In 20 years 10M won't be enough to be in the top 1%.
Assuming most of those people are 65+, wouldn’t most of them be dead in 20 years?
And passed that wealth along to their descendants?
Valid point. The counter-points I most often come across are:
- Estate taxes: the government wants its pound o' flesh
- Squandering: the wealth is generally gone by the 2nd or 3rd generation. I remember this from The Millionaire Next Door (W. Danko), which is from the 90's, but I haven't come across anything to date stating that the trend has been reversed.
- Estate taxes: the government wants its pound o' flesh
- Squandering: the wealth is generally gone by the 2nd or 3rd generation. I remember this from The Millionaire Next Door (W. Danko), which is from the 90's, but I haven't come across anything to date stating that the trend has been reversed.
But typically more than one descendant. That divides the pie.
Just because it's possible doesn't mean it's common. So OP is correct.
I ran the math -- If you are a married couple who earn $500k/year in California, you'd have to save 40% of your post-tax income at a 7% rate of return for 27 years to accumulate a net worth of $10M. It's exceedingly rare to make that much money for that long of a period of time.
And if they're making a 7% rate of return for 27 years, how's the person who already had $10 million in wealth and earning 7% per year ($700k per year in wealth appreciation alone from year 1) changing during those 27 years?
I take it you are assuming wealth appreciation in a way that doesn't create income, or at least isn't predominantly treated as income?
Honestly, I'd assume both income and wealth are part of an abstract concept I'd call, in this instance, 'capital'.
The specific ways both are taxed or regulated depend too much on individual circumstances and governments, but the main point is you can't use a simple model that shows a 'well-off' income earner can make it into the top n% in 27 years, if the assumptions required to get that to work also gives the n% a greater or equivalent benefit.
The specific ways both are taxed or regulated depend too much on individual circumstances and governments, but the main point is you can't use a simple model that shows a 'well-off' income earner can make it into the top n% in 27 years, if the assumptions required to get that to work also gives the n% a greater or equivalent benefit.
Investments are usually taxed at long term capital gains rates and only when you realize them.
So someone with 500k income can be putting away 250k a year into investments, while someone with a 10 million dollar portfolio can be having 700k in gains each year, only getting taxed when they sell something.
So someone with 500k income can be putting away 250k a year into investments, while someone with a 10 million dollar portfolio can be having 700k in gains each year, only getting taxed when they sell something.
That was my point. You are assuming the wealth appreciation is mostly asset value appreciation that is not realized as a gain every year. Otherwise, this household would also be in the top 1% of incomes, and this thread started by talking about the distinction between top 1% incomes and top 1% wealth.
It's not the norm, but it's also not especially rare. A doctor married to a lawyer (or a big tech engineer) will easily clear that for most of their careers.
So, what is the income of a household sitting on $10MM+?
Precisely the correct question - cap gains at that same 7% would yield $700k/year and be taxed at a rate of less than half the income tax rate.
Cap gains of $700k per year would mean this household had an income of $700k per year, and so be in the top 1% of incomes.
And no inflation.
The 30 year inflation adjusted return on the S&P 500 is 6%, and if dividends are reinvested, 8%. Retrospectively, a long term 7% return would be unremarkable. I wouldn't bet those numbers will be quite as strong going forward.
... and by then $10M is worth $1M
If you assume 2% inflation (relatively high by current standards), $10M will actually be worth $5.85M.
Isn't wealth the red herring, and income the proper measure? After all, the median (50%tile) wealth is nearly zero. Amongst those with zero wealth, the top income earners clearly have better lives than the low income earners, since the top income earners can consume more.
The ultimate measure of resources is how much a person can consume a year. Income is equivalent to what you can steady-state consume. Wealth is just what you happened to save up to that point in time.
Since the wealth gap is larger than the income gap (since wealth is saved past income), the wealth gap tends to be pointed out by people who want to overemphasize inequality.
The ultimate measure of resources is how much a person can consume a year. Income is equivalent to what you can steady-state consume. Wealth is just what you happened to save up to that point in time.
Since the wealth gap is larger than the income gap (since wealth is saved past income), the wealth gap tends to be pointed out by people who want to overemphasize inequality.
A person with $10M in wealth should be earning $500k a year taxed at capital gains rates. This person does not and will not ever live like a mere mortal (unless for show or sport). Assuming he's not an idiot, the $10M guy would have to try reasonably hard to become broke.
A person earning $500k/yr is reasonably likely to be a normal guy--maybe semi talented business person or tech exec paying regular income taxes (at least partly) that could quickly become broke or at least become a mere mortal again if he stopped working. I don't really have anything against this guy. He's not a pervasive driver of inequality. He's not at the tier of wealth where you're buying influence. He's likely stuck in an expensive COL place. Unlike Mr. $10M, he probably hasn't carefully shielded his funds from divorce, family, etc.
>Wealth is just what you happened to save up to that point in time.
Nobody just "happens to save up" $10m. You either inherited it, lucked into it or grinded for years or (more likely) decades with the express aim of a payday (and you got lucky enough to get one).
A person earning $500k/yr is reasonably likely to be a normal guy--maybe semi talented business person or tech exec paying regular income taxes (at least partly) that could quickly become broke or at least become a mere mortal again if he stopped working. I don't really have anything against this guy. He's not a pervasive driver of inequality. He's not at the tier of wealth where you're buying influence. He's likely stuck in an expensive COL place. Unlike Mr. $10M, he probably hasn't carefully shielded his funds from divorce, family, etc.
>Wealth is just what you happened to save up to that point in time.
Nobody just "happens to save up" $10m. You either inherited it, lucked into it or grinded for years or (more likely) decades with the express aim of a payday (and you got lucky enough to get one).
> the median (50%tile) wealth is nearly zero
That sounds way more alarming than whatever the median income is.
> the top income earners clearly have better lives than the low income earners, since the top income earners can consume more.
The top wealth owners clearly have better lives than low wealth owners because the former don't have to work, yet make more money and pay less in taxes than everyone else.
You haven't made a convincing case for why wealth shouldn't get more attention than income (or at least why it shouldn't get more attention, since the dialogue among politicians and in the media seems to exclusively focus on income despite income taxes being significantly higher than capital gains taxes).
That sounds way more alarming than whatever the median income is.
> the top income earners clearly have better lives than the low income earners, since the top income earners can consume more.
The top wealth owners clearly have better lives than low wealth owners because the former don't have to work, yet make more money and pay less in taxes than everyone else.
You haven't made a convincing case for why wealth shouldn't get more attention than income (or at least why it shouldn't get more attention, since the dialogue among politicians and in the media seems to exclusively focus on income despite income taxes being significantly higher than capital gains taxes).
It also seems that the title is misrepresenting the facts. Needing more to reach the top one percent of an arbitrarily separated population should suggest that the rest of the population is also benefiting.
E.g. if you needed less to join the top 1%, then it could be suggested that the gap is increasing. If you need more... well, it could just as easily follow that the bottom 99% percent have merely moved closer to the top 1%, effectively raising the bar (which, as an arbitrary point, shifts all the time anyways).
That said, it could be argued the other way - but the evidence for either direction is lacking. Because the issue is being raised by people who tend to overemphasize inequality, I tend to lean the opposite direction - perhaps we should re-evaluate the way we define upper and lower class.
E.g. if you needed less to join the top 1%, then it could be suggested that the gap is increasing. If you need more... well, it could just as easily follow that the bottom 99% percent have merely moved closer to the top 1%, effectively raising the bar (which, as an arbitrary point, shifts all the time anyways).
That said, it could be argued the other way - but the evidence for either direction is lacking. Because the issue is being raised by people who tend to overemphasize inequality, I tend to lean the opposite direction - perhaps we should re-evaluate the way we define upper and lower class.
No, because 10M generates a steady return in a growing economy. So the steady-state consumption of someone with a net worth of $10M is much greater than someone with $0, all other things (e.g., income) being equal.
> After all, the median (50%tile) wealth is nearly zero
Median wealth in the US ~97k. It’s quite stunning one could think a society would work with the 50-percentile being zero.
Median wealth in the US ~97k. It’s quite stunning one could think a society would work with the 50-percentile being zero.
Median income in the US is much lower than 97k. It's around 65k. Median net worth is about 68k. Mean is slightly higher because the top .001 makes so much more than everyone else. It's definitely higher than zero. Not sure where your numbers came from?
According to Marketwatch [1] you are incorrect. The MEDIAN NET WORTH is $97,300. The MEAN is way higher at $692,100.
Also, note that this figure varies considerably by age and education, as you might expect.
[1] - https://www.nerdwallet.com/article/how-your-net-worth-compar...
Also, note that this figure varies considerably by age and education, as you might expect.
[1] - https://www.nerdwallet.com/article/how-your-net-worth-compar...
Yeah, everyone knows means are lying, especially in super-unequal societies. No-one cares about the mean, you want to look at the distribution
A single person in San Fransisco with an income of $500,000 and the standard deduction has a takes home $288,646.
A single person in San Fransisco has a cost of living of $1125.83 without rent, according to numbeo (whatever that is). Median rent in San Fransisco is $3700 for a one bedroom.
That leaves a measly $230,736 of post-tax, post-living expenses money. Assuming this person does nothing more than hide a monotonically increasing pile of cash under a mattress, it takes just over 43 years to amass $10,000,000.
Presumably this financial cretan started working right after college, at the age of 22. This means they've acquired the full sum at the age of 65, which is not an uncommon retirement age. Cuts close, but checks out.
A single person in San Fransisco has a cost of living of $1125.83 without rent, according to numbeo (whatever that is). Median rent in San Fransisco is $3700 for a one bedroom.
That leaves a measly $230,736 of post-tax, post-living expenses money. Assuming this person does nothing more than hide a monotonically increasing pile of cash under a mattress, it takes just over 43 years to amass $10,000,000.
Presumably this financial cretan started working right after college, at the age of 22. This means they've acquired the full sum at the age of 65, which is not an uncommon retirement age. Cuts close, but checks out.
More realistically, if you get a 5% return on your investments (or ~2% after inflation), in 43 years you'd have $14,663,123.
I'm lucky enough to be making ~$400k at 30. At 21, I was lucky enough to be making $65k. Virtually no one starts off making $500k. Even if you start at the top 1% of income earners and stay there your entire life, live relatively frugally, never have kids, never take a break from work, and invest well -- even then, you're still unlikely to accrue $10M in wealth.
I'm lucky enough to be making ~$400k at 30. At 21, I was lucky enough to be making $65k. Virtually no one starts off making $500k. Even if you start at the top 1% of income earners and stay there your entire life, live relatively frugally, never have kids, never take a break from work, and invest well -- even then, you're still unlikely to accrue $10M in wealth.
Geometric average returns for stocks are over 7%, and that accounts for inflation. The scenario presented to me included no investments, and a flat career.
I think the high cost of living in San Fransisco was a reasonable assumption for someone in the top 1% of income. I think the complete absence of investment in my analysis more than makes up for a flat career. It's not even clear that modeling a flat career growth increases the number, since income tends to peak around 48.
I think the high cost of living in San Fransisco was a reasonable assumption for someone in the top 1% of income. I think the complete absence of investment in my analysis more than makes up for a flat career. It's not even clear that modeling a flat career growth increases the number, since income tends to peak around 48.
Yes, because someone earning 500k totally started earning that sum right out of college and will never get married or have kids...
I didn't set the parameters of the question. I didn't consider investing the money either, proving that I was literally just responding to the scenario as presented. I chose San Fransisco, because it's close to home for posters here.
But if they were dual-income, no-kids (DINKs) they'd get there even faster.
I don't think many people should expect to get into the top 1% of assets by just sticking money under a mattress. Presumably most would invest it and expect an average rate of return of 7% or so from decades of investing. Eventually the investment grows more from compounding than new income.
The compound interest of saving 19k/month @ %7/yr rate results in 10 million after 21 years, which is under half of 43 years.
And you can get 7% per annum on a savings account... where, exactly? Back in 1985 via a time machine, maybe?
S&P 500 index fund will probably average you around 7%.
I happened to look this up earlier today for a completely different reason - S&P results to date since 1/1/2000 is 5.6% assuming dividends were reinvested.
Ah, I was off a bit then. Thanks for the update.
No you weren't. That period includes one of the worst recessions in recorded economic history. The other guy either intentionally picked and chose his years, or is simply bad at research.
An inflation adjusted long-term trend is over 7%.
An inflation adjusted long-term trend is over 7%.
That's a fair point, but I don't think it's ridiculous to choose the last 20 years as a discussion point.
I think the more interesting question is, how many San Franciscans earn $500,000/year?
Discounting the homeless? Lots.
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Exactly.
For example, if you have a $10M net-worth, according to Gabriel Zucman & Thomas Piketty, you get higher returns on average than the little guy. Not sure the exact number, but let's say an ~8% return on average (believe it's higher).
You would make ~$800K a year in "capital gains" and pay $133K in federal taxes. If you earned $500k in income, you'd pay ~$164K in federal taxes. You'd pay another ~$35k+ in states most people live in for about a 39.8% tax rate. Not to mention, your employer is paying another 5% in payroll taxes to employ you. So, really, it's a 44.8% tax.
But if your income comes from "capital gains" instead of working, you'd pay less than half that percentage in tax -- at 16.25%.
Why is there a distinction between "capital gains" and dividends and fixed income? Because only the very wealthy get most of their income from capital gains.
Even people with $1-5M in wealth... they're mostly the people that worked really hard and still got a little lucky with their investments. They're almost all old. They've paid off their house. So... 1) most of their wealth is tied up in their house, and 2) most of what's left over is tied up in fixed income like bonds -- which are taxed as "income" and not "capital gains".
For example, if you have a $10M net-worth, according to Gabriel Zucman & Thomas Piketty, you get higher returns on average than the little guy. Not sure the exact number, but let's say an ~8% return on average (believe it's higher).
You would make ~$800K a year in "capital gains" and pay $133K in federal taxes. If you earned $500k in income, you'd pay ~$164K in federal taxes. You'd pay another ~$35k+ in states most people live in for about a 39.8% tax rate. Not to mention, your employer is paying another 5% in payroll taxes to employ you. So, really, it's a 44.8% tax.
But if your income comes from "capital gains" instead of working, you'd pay less than half that percentage in tax -- at 16.25%.
Why is there a distinction between "capital gains" and dividends and fixed income? Because only the very wealthy get most of their income from capital gains.
Even people with $1-5M in wealth... they're mostly the people that worked really hard and still got a little lucky with their investments. They're almost all old. They've paid off their house. So... 1) most of their wealth is tied up in their house, and 2) most of what's left over is tied up in fixed income like bonds -- which are taxed as "income" and not "capital gains".
If you invested it in muni bonds, you would pay zero tax.
(Ignoring state incomes tax of course. Since I live in Texas, I’m lucky enough to do that).
(Ignoring state incomes tax of course. Since I live in Texas, I’m lucky enough to do that).
Your calculations are based on an erroneous model. Corporate profits are taxed twice. The effective tax rate of dividends can be as high as 39.8%. I'm not sure what typical numbers are, because I couldn't find 2018 data, and 2017 data predates significant tax cuts.
Did you read my comment? Dividends are considered income! Capital gains is a different thing, and the distinction exists largely because only a small subset of the population has the ability to make a lot of money from capital gains -- because, by its nature, it requires a lot of capital...
Qualified dividends are taxed as capital gains.
Capital gains are income and reported on Form 1040. What they are not is "ordinary income" subject to the income tax table. A person with $700k on capital gains is well inside the top 1% of income.
Capital gains are income and reported on Form 1040. What they are not is "ordinary income" subject to the income tax table. A person with $700k on capital gains is well inside the top 1% of income.
It doesn't really matter too much if it's taxed twice, the majority of people with 10 million dollars in a portfolio are passive investors of whatever liquid and hedgeable assets are available.
The complaint at issue is that a passive investor who happened to have 10 million dollars that they inherited at 30, sticks it in betterment for 50 years while drawing a top 1% of income 380k for expenses ( accounting for tax rate ) will eventually have 130 million dollars. They can easily pass this amount down to children at estate tax rates to enable the next generation to do nothing as well, or they could use any one of a number of tax sheltering methods to avoid or defray the estate tax as well.
Generational wealth, or "idle wealth" has been a concern in the US from Thomas Jefferson onward - capital gains taxes are merely one mechanism to restrict it.
The complaint at issue is that a passive investor who happened to have 10 million dollars that they inherited at 30, sticks it in betterment for 50 years while drawing a top 1% of income 380k for expenses ( accounting for tax rate ) will eventually have 130 million dollars. They can easily pass this amount down to children at estate tax rates to enable the next generation to do nothing as well, or they could use any one of a number of tax sheltering methods to avoid or defray the estate tax as well.
Generational wealth, or "idle wealth" has been a concern in the US from Thomas Jefferson onward - capital gains taxes are merely one mechanism to restrict it.
> It doesn't really matter too much if it's taxed twice, the majority of people with 10 million dollars in a portfolio are passive investors of whatever liquid and hedgeable assets are available.
I'm not wading into that debate. I'm just concerned with accurate use of terminology, as multiple people in this discussion seem to be playing fast-and-loose with it.
I'm not wading into that debate. I'm just concerned with accurate use of terminology, as multiple people in this discussion seem to be playing fast-and-loose with it.
lumost: Good idea: incentivize consumption.
[deleted]
I'm a bit confused as to what 'tax unit' mean here. Is that the amount of tax (in monetary unit like USD) one is supposed to pay if s/he hits certain percentage of wealth class? Thanks in advance for the reply!
I'll just copy/paste from the source of the chart, but a tax unit is everyone on a single tax return where a household is everyone that lives in a house. So if an elderly parent who pays their own taxes moves into their adult children's household, that property would consist of 1 household but 2 tax units. The net worth of the household would increase, even though the net worth of those two tax units stayed the same.
> "For most people, their tax unit and household are the same. But there are cases where a household would include multiple tax units. When an elderly parent moves in with an adult child with kids filing taxes separately to form a three-generation household there would be multiple tax units exist in one household. The same is true when a child moves back in after college or an unmarried couple moves in together. These are groups that we probably want to think about together because they rely on each other economically. On the other hand, a group of unrelated adults living together as roommates would also count as a household."
> We might prefer tax units to households for income trend analysis because household structure is not independent of economic circumstances. For instance, adult children move back in with their parents (Gallup reported that 14 percent of 24 to 34 year olds lived with their parents in 2013 and a Pew Research Center study showed this to be increasing). Similarly, homeowners sometimes take in boarders for economic reasons. In each of those cases, the tax-unit data captures the deteriorating economic situation associated with these types of living arrangements.
> In contrast, household data captures more earners under one roof, which increases household income. Imagine a group of three graduate students living together where each makes $25,000. They would show up as three different tax units but one household making $75,000. Now image that they all got $5,000 raises and decided to get places on their own. This would show up as a 20 percent increase in their incomes by tax units, but their household incomes would have dropped by 60 percent.
> "For most people, their tax unit and household are the same. But there are cases where a household would include multiple tax units. When an elderly parent moves in with an adult child with kids filing taxes separately to form a three-generation household there would be multiple tax units exist in one household. The same is true when a child moves back in after college or an unmarried couple moves in together. These are groups that we probably want to think about together because they rely on each other economically. On the other hand, a group of unrelated adults living together as roommates would also count as a household."
> We might prefer tax units to households for income trend analysis because household structure is not independent of economic circumstances. For instance, adult children move back in with their parents (Gallup reported that 14 percent of 24 to 34 year olds lived with their parents in 2013 and a Pew Research Center study showed this to be increasing). Similarly, homeowners sometimes take in boarders for economic reasons. In each of those cases, the tax-unit data captures the deteriorating economic situation associated with these types of living arrangements.
> In contrast, household data captures more earners under one roof, which increases household income. Imagine a group of three graduate students living together where each makes $25,000. They would show up as three different tax units but one household making $75,000. Now image that they all got $5,000 raises and decided to get places on their own. This would show up as a 20 percent increase in their incomes by tax units, but their household incomes would have dropped by 60 percent.
i find it interesting that top 10%, 5%, 1% wealth are inversely proportional... 1 mil, 2mil, 10mil. Top 1%.
Interestingly, 0.1% 'only' owns $45mil, and 0.01% owns $111 mil. It sounds rare, until 1 out of 10,000 own $111 mil.
Interestingly, 0.1% 'only' owns $45mil, and 0.01% owns $111 mil. It sounds rare, until 1 out of 10,000 own $111 mil.
I think it's household, so maybe multiply by the number of average people in a household (say 2.6 is US average household size, so we can say 1 out of 26K owns $111m)?
Not to quibble, but this is household income, not necessarily a single individual's income.
In coastal cities, a two income household making 250k each is not absurd, and can certainly happen with two doctors, lawyers, or even software developers.
I'd much rather see metrics normalized by the local household income, which would be much more representative of relative inequality.
In coastal cities, a two income household making 250k each is not absurd, and can certainly happen with two doctors, lawyers, or even software developers.
I'd much rather see metrics normalized by the local household income, which would be much more representative of relative inequality.
>In coastal cities, a two income household making 250k each is not absurd, and can certainly happen with two doctors, lawyers, or even software developers.
This is why the 99% stuff misses the mark. That 1% is the best of us; our doctors, lawyers, successful small business owners, etc. People who drive the economy and create outsized value through specialized labor that is rightfully compensated. The true problem in our society is the 0.01%. There is a tiny portion of these that are the Bill Gates, and Mark Zuckerbergs who are self made. But the vast majority of them are the intergenerational wealth holders whose fortunes have simply continued to compound and provide them with an unnatural amount of power influence that is completely undeserved. It's why a wealth tax is so neccessary in this country, and if properly implemented could completely absolve the need for income tax.
This is why the 99% stuff misses the mark. That 1% is the best of us; our doctors, lawyers, successful small business owners, etc. People who drive the economy and create outsized value through specialized labor that is rightfully compensated. The true problem in our society is the 0.01%. There is a tiny portion of these that are the Bill Gates, and Mark Zuckerbergs who are self made. But the vast majority of them are the intergenerational wealth holders whose fortunes have simply continued to compound and provide them with an unnatural amount of power influence that is completely undeserved. It's why a wealth tax is so neccessary in this country, and if properly implemented could completely absolve the need for income tax.
In 2018 67% of the Forbes 400 were self made
https://www.forbes.com/sites/luisakroll/2018/10/03/the-forbe...
https://www.forbes.com/sites/luisakroll/2018/10/03/the-forbe...
Didn't they list Kylie Jenner, heir to and made famous by the Kardashians as 'self-made'?
This is not an authoritative list, and you can imagine that people with vast amounts of inherited wealth prefer to keep that non-public. It's easier to track wealthy people who created their own fortune, as it usually involves participating in the economy in some obvious way.
It is in fact an authoritative list. It's extraordinarily difficult to hide $3-$5 billion in personal wealth (enough to land firmly on the Forbes 400) in the US.
The companies - both public and private - that can contain or produce that level of wealth are very well known and almost impossible to hide. It's rare for Forbes or Bloomberg to find new stray billionaires that had been hiding for a long time. It does happen [1], it's just quite rare, especially versus the size of the known list. You don't magically quietly generate or inherit billions in wealth, you move things when you do that and it makes headlines (either over time or when a liquidity event occurs), it garners a lot of attention.
[1] https://www.forbes.com/sites/maddieberg/2019/02/19/the-great...
The companies - both public and private - that can contain or produce that level of wealth are very well known and almost impossible to hide. It's rare for Forbes or Bloomberg to find new stray billionaires that had been hiding for a long time. It does happen [1], it's just quite rare, especially versus the size of the known list. You don't magically quietly generate or inherit billions in wealth, you move things when you do that and it makes headlines (either over time or when a liquidity event occurs), it garners a lot of attention.
[1] https://www.forbes.com/sites/maddieberg/2019/02/19/the-great...
If this were true, then why is there so much genuine uncertainty over the net worth of a certain Donald J. Trump?
Am I missing something? There's nothing other than the top 10.
the money-quote from this article as it pertains to this discussion is: "In 1984, less than half the people on The Forbes 400 were self-made; in 2018, 67% of the 400 created their own fortunes."
here is the full list of the forbes 400: https://www.forbes.com/forbes-400/
here is the full list of the forbes 400: https://www.forbes.com/forbes-400/
How many of the 0.01% inherited their wealth, and how many have made it? Do you have any sources for that? Most people on Fortune 500 list, for example, didn't inherit any significant part of their wealth.
You aren't going to be showing up in the top few hundred against the people with recent brand new huge fortunes if you have generational wealth - note that 0.01% of a 300M population is population is 30,000 people. How many of those do we know much about?
A better question would be how many of the Forbes 500 started with significant inheritance?
An even better one would be how many people do the top 500 employ.
I don’t care what they started with - I care what they did with it.
For instance, if you started with 10MM and built a billion dollar company, great.
But if you started with 1MM and turned it into 1MM, then you really didn’t help out at all.
I don’t care what they started with - I care what they did with it.
For instance, if you started with 10MM and built a billion dollar company, great.
But if you started with 1MM and turned it into 1MM, then you really didn’t help out at all.
aye - but given that logic wouldn't it be beneficial to expand the talent pool of founders and innovators by building more efficient capital distribution mechanisms? A brilliant but rational founder may not be in a position to work without pay for years until well into their 40s, and by these statistics the top 1% of workers would lack capital to invest in their own businesses until they're in their 50s.
You make an interesting point.
But I wonder (and it's only a thought based on some observations that I've had over the years) how large the talent pool is. Because "talent" in starting a business is so much more than just the knowledge to do the work, or the capital to start it...
For instance, I've started a few businesses. All but the current one closed at roughly breakeven.
My current business has required my life savings and selling my house, but we are finally (more than 3 years!) starting to see the light at the end of the tunnel. We're profitable, but I'm not making 6-figures yet. I should be by tax day next year, and hopefully between 150-200K by the end of next year. But interestingly, based on our trajectory, the growth curve is getting steeper, which is awesome, and should top out in the low 7 figures within 5 years or so.
However, there have been several (more than I can count) strong moments of doubt, where I've just wanted to quit. It's been really, really freaking hard. My wife works full time, and that's paid the bills, but the stress has been insane. (with kids, it's not just me - I have to make sure I don't tank the whole family)
This is just one data point (I'm skipping the others for brevity), but the stuff that it takes to start a business that actually generates free cash flow is really unusual. I know other people who've started businesses and shut them down because they didn't want to make the sacrifices. Our cars are old, we sold our house, I dipped into my IRA even. Most people don't have that kind of drive (or is it insanity?). Heck, there have been days recently where I question if I can get through the next 6 months.
So "talent" in starting a business is very different from talent in being good at work. And that kind of talent I think is rare, probably because the risks and sacrifices in many cases are just several standard deviations from the norm. Or maybe I've been doing this long enough where I've become deluded - I don't really know anymore.
Anyway, hope this adds to the conversation somewhat.
But I wonder (and it's only a thought based on some observations that I've had over the years) how large the talent pool is. Because "talent" in starting a business is so much more than just the knowledge to do the work, or the capital to start it...
For instance, I've started a few businesses. All but the current one closed at roughly breakeven.
My current business has required my life savings and selling my house, but we are finally (more than 3 years!) starting to see the light at the end of the tunnel. We're profitable, but I'm not making 6-figures yet. I should be by tax day next year, and hopefully between 150-200K by the end of next year. But interestingly, based on our trajectory, the growth curve is getting steeper, which is awesome, and should top out in the low 7 figures within 5 years or so.
However, there have been several (more than I can count) strong moments of doubt, where I've just wanted to quit. It's been really, really freaking hard. My wife works full time, and that's paid the bills, but the stress has been insane. (with kids, it's not just me - I have to make sure I don't tank the whole family)
This is just one data point (I'm skipping the others for brevity), but the stuff that it takes to start a business that actually generates free cash flow is really unusual. I know other people who've started businesses and shut them down because they didn't want to make the sacrifices. Our cars are old, we sold our house, I dipped into my IRA even. Most people don't have that kind of drive (or is it insanity?). Heck, there have been days recently where I question if I can get through the next 6 months.
So "talent" in starting a business is very different from talent in being good at work. And that kind of talent I think is rare, probably because the risks and sacrifices in many cases are just several standard deviations from the norm. Or maybe I've been doing this long enough where I've become deluded - I don't really know anymore.
Anyway, hope this adds to the conversation somewhat.
Well, no. These people, with their outsize influence, have aligned themselves with the wealthiest for political reasons: when they're grouped together, it's easier to fend off attacks on their income and wealth.
The fact is that the vast majority of people in above the 5% mark come from comfortable families. This would be fine, except that 1) they live in and influence a society where many live in exceedingly uncomfortable circumstances, and 2) instead of recognizing this as a moral travesty and acting accordingly, they hoard not only resources but the opportunity to better oneself.
We passed the point where "personal responsibility" was a reasonable justification for systemic suffering when we stopped hunting with rocks. Much of civilized history has been marked by the apparent ability to provide generally for the populace and the baffling decision not to. I don't think it's radical to say that we're discussing a manifestation of this phenomenon, more than anything else.
The fact is that the vast majority of people in above the 5% mark come from comfortable families. This would be fine, except that 1) they live in and influence a society where many live in exceedingly uncomfortable circumstances, and 2) instead of recognizing this as a moral travesty and acting accordingly, they hoard not only resources but the opportunity to better oneself.
We passed the point where "personal responsibility" was a reasonable justification for systemic suffering when we stopped hunting with rocks. Much of civilized history has been marked by the apparent ability to provide generally for the populace and the baffling decision not to. I don't think it's radical to say that we're discussing a manifestation of this phenomenon, more than anything else.
Another way the 99% stuff misses the mark is the fact that most of the 1% is closer in wealth to those of top 10% than the top 0.1%. I read an article a while back that suggested the best way to look at tiers of wealth is to consider the bottom 90%, the top 0.1%, and the 9.9% between those.
Any smaller grouping than the 1% is irrelevant. The 0.01% (which starts roughly at the secondary characters from Big Bang Theory) earns 5% of all income. They’re rich individually, but aren’t monopolizing a large fraction of society’s production.
Doctors and lawyers aren't "the best of us." Those would be teachers and firefighters and social workers and the rank and file who work at charitable foundations.
> In coastal cities, a two income household making 250k each is not absurd,
In the San Francisco area, a bit over $500k is the mean income of the top 5% of households, so while it's not too 1% locally, it still in a fairly narrow slice at the top.
https://statisticalatlas.com/metro-area/California/San-Franc...
In the San Francisco area, a bit over $500k is the mean income of the top 5% of households, so while it's not too 1% locally, it still in a fairly narrow slice at the top.
https://statisticalatlas.com/metro-area/California/San-Franc...
>In coastal cities, a two income household making 250k each is not absurd
I guess you would have to define the threshold of “absurd,” but It’s a pretty big deviation from the median in Los Angeles and New York, where the median incomes are between 60-65K. In SF, you’re talking two people both making more than double the median (about 110K)
Considering things like the cost of things like housing in these places, the inequality seems massive anyway you slice it.
https://www.census.gov/quickfacts/fact/table/losangelescount...
https://www.baruch.cuny.edu/nycdata/income-taxes/med_hhold_i...
https://fred.stlouisfed.org/series/MHICA06075A052NCEN
I guess you would have to define the threshold of “absurd,” but It’s a pretty big deviation from the median in Los Angeles and New York, where the median incomes are between 60-65K. In SF, you’re talking two people both making more than double the median (about 110K)
Considering things like the cost of things like housing in these places, the inequality seems massive anyway you slice it.
https://www.census.gov/quickfacts/fact/table/losangelescount...
https://www.baruch.cuny.edu/nycdata/income-taxes/med_hhold_i...
https://fred.stlouisfed.org/series/MHICA06075A052NCEN
> the median incomes are between 60-65K
The median income, for a college graduate, nationally is >$90K. A lot of the median income stats are meaningless once you consider only the educated slices of the workforce.
source: https://en.wikipedia.org/wiki/Household_income_in_the_United...
The median income, for a college graduate, nationally is >$90K. A lot of the median income stats are meaningless once you consider only the educated slices of the workforce.
source: https://en.wikipedia.org/wiki/Household_income_in_the_United...
Close to 2/3 of Americans over 25 don’t have college degrees, so how is that meaningless? The educated slices of the workforce aren’t the majority and we’re talking about income inequality generally.
Interesting. Seems like education inequality given the (implied) causation.
Yeah just get rid of all those people not making money and the stats all align with your preconceived notion. Brilliant!
It’s not necessarily absurd, just rare. 1 in 100 rare to be precise.
It’s not really relative. $500k HHI in Manhattan is a ridiculous amount of money that lets you live a ridiculous life of luxury, whether you realize it or not.
Wealthy elites really like to make this false “relativity” argument, where $500,000 isn’t “that much” because everything in New York is so expensive… but they ignore the simple fact that they get to live in New York and have access to everything that entails. Being able to live in New York at all is something many fantasize about. It’s part of why so many TV shows are based in New York. For most, it’s a fanciful life beyond their reach.
$500k is $500k. It gets you $500k worth of stuff. That $500k of stuff may be in the form of material items, access or lifestyle (e.g. weather). The fake relatively argument comes in when you only compare material items and selectively ignore everything else to make a false argument and appear like less of an elitists than you are. But $500k will get you EQUALLY absurd lifestyles in Manhattan or Kansas. In one, you get to live the high life in the middle of New York, with access to basically everything. In the other, you live in the midst of nothing, but with a pool that might qualify as a theme park and a fleet of exotic cars.
In either case, these are lifestyles only available to the 1%.
It’s not really relative. $500k HHI in Manhattan is a ridiculous amount of money that lets you live a ridiculous life of luxury, whether you realize it or not.
Wealthy elites really like to make this false “relativity” argument, where $500,000 isn’t “that much” because everything in New York is so expensive… but they ignore the simple fact that they get to live in New York and have access to everything that entails. Being able to live in New York at all is something many fantasize about. It’s part of why so many TV shows are based in New York. For most, it’s a fanciful life beyond their reach.
$500k is $500k. It gets you $500k worth of stuff. That $500k of stuff may be in the form of material items, access or lifestyle (e.g. weather). The fake relatively argument comes in when you only compare material items and selectively ignore everything else to make a false argument and appear like less of an elitists than you are. But $500k will get you EQUALLY absurd lifestyles in Manhattan or Kansas. In one, you get to live the high life in the middle of New York, with access to basically everything. In the other, you live in the midst of nothing, but with a pool that might qualify as a theme park and a fleet of exotic cars.
In either case, these are lifestyles only available to the 1%.
Many of the people I know who make $500k+ in Manhattan are in relatively unstable careers. Finance comes to mind. If you take a snapshot of them in the moment they may seem to have substantial purchasing power, but the smart ones realize the music could stop at any moment and their primary indulgence is saving up enough money to retire early (on much much less than $500k/year).
The ability to retire at all without welfare is a fantasy for most people, let alone retire early.
So I should ask for a raise AND find someone to marry me who makes $250K a year.
You can marry more money in 5 minutes than you could earn in a lifetime... (I tried to find the original source/author for this and couldn't.)
WrtCdEvrydy(2)
> , or even software developers.
lol. really? what software devs are making 250k a year?
lol. really? what software devs are making 250k a year?
Don't forget, this is HN. I'm with you: where I live it's very typical for a software developer to cap in the mid-$100k range. I would wager that the eye-watering numbers you see from FAANG developers is atypical for _most_ software developers in the country. And that's totally fine.
This is very common in SV. Many junior/mid-level engineers at FAANG companies beat this figure (when accounting base + stock + bonus).
I did HR at one of the FAANGs (the alphabet one). This is not true.
What is not true? That new employees make this much? The standard new grad offer at Google is about 180k (and you can negotiate 50K+ more with the right counter offers) for your first year and average L3 makes 210k.
Juniors definitely don't make ~250k. Mid level, maybe. Senior, definitely.
L3 won't, but L4 at Google will easily. And you can get promoted from L3 to L4 in a year in ideal circumstances.
Actually with another FAANG offer L3 can pull that salary if they compete hard enough
Well, Amazon and MSFT will not provide offers for new grads that will even match the entry level Google offer. So that leaves FB who isn't paying new grads as much as they used to. There aren't too many companies that will give offers that will allow you to negotiate to 250 which is really high.
Meanwhile, I got an L4 offer from Google last year that was below that.
Some junior engineers do (most don't). There was this thread from a while ago [0] where someone negotiated a 300k offer. I believe they were a new/recent grad.
Most of the time it's due to having some leverage (multiple FAANG+ offers).
[0] https://news.ycombinator.com/item?id=19057514
Most of the time it's due to having some leverage (multiple FAANG+ offers).
[0] https://news.ycombinator.com/item?id=19057514
If your not incompetent, its pretty much guaranteed you will reach sr in 5-8 years. It's the levels after sr that are the hard part.
L4 to L5 is no cakewalk. you have to be rock solid in the core SWE disciplines and have excellent communication, organization skills, and very good leadership skills too. looking at the stats, promoted as a % of total for L4 to L5 just makes it into the double digits and only a little over a quarter of all SWEs are L5.
the SWE ladder requires/expects for an L3 to get to L4 by makes no such requirement to ever get to L5.
the SWE ladder requires/expects for an L3 to get to L4 by makes no such requirement to ever get to L5.
That is why you don't play the promo game and get promoted via interviews at other companies. When you reach staff, that is usually when you have to practically start playing promo games. Not everywhere is google with their slow promo processes.
Also career and personal skill wise, it's good to see how other companies work. Pay is in many ways determined by your negotiation skills, and that is empowered by creating better BATNAs via interview skill.
Also career and personal skill wise, it's good to see how other companies work. Pay is in many ways determined by your negotiation skills, and that is empowered by creating better BATNAs via interview skill.
How big is stock though?
In NYC a senior dev makes that much or more in finance, and in a startup probably closer to 140-160 with bonus and fuzzy-numbered stock options. I don't count my stock options ("units") as anything worth anything at this point, not because I'm cynical but because there's no clear valuation.
All things considered I'm suddenly feeling underpaid - I know many quite senior folks barely breaking that.
In NYC a senior dev makes that much or more in finance, and in a startup probably closer to 140-160 with bonus and fuzzy-numbered stock options. I don't count my stock options ("units") as anything worth anything at this point, not because I'm cynical but because there's no clear valuation.
All things considered I'm suddenly feeling underpaid - I know many quite senior folks barely breaking that.
>fuzzy-numbered stock options
We aren't talking about stock options, we are talking about concrete RSUs with real valuations.
A Staff Engineer at Google can easily be vesting $200k in stocks alone each year.
We aren't talking about stock options, we are talking about concrete RSUs with real valuations.
A Staff Engineer at Google can easily be vesting $200k in stocks alone each year.
Staff is even one level above senior.
It's true that they make a lot of money, so do the owner of a SME or a director in a large organization. It's not a position most employees will ever attain in their lifetime.
It's true that they make a lot of money, so do the owner of a SME or a director in a large organization. It's not a position most employees will ever attain in their lifetime.
Directors are equivalent to staff +1 or staff +2. Staff engineers are usually equivalent to 2nd level middle managers, with 1st level are managers of teams that are just ICs). Jr Engineers can be 30-50% of an engineering organization. So it's not that impossible.
Director (L8) is two levels above staff engineer (L6) in Google. But promotions get exponentially more difficult after L5, particularly if you intend to stay as an IC.
I meant director as a general title in corporations, not google specifically.
> fuzzy-numbered stock options
That's true for non-public companies, but stock options at a publicly traded company like Google or Apple are much easier to value.
That's true for non-public companies, but stock options at a publicly traded company like Google or Apple are much easier to value.
RSUs are easily going to be half or more, unless large bonuses are involved (which does happen). Keep in mind RSUs aren't options.
I wouldn't say "easily". The shit offer I got from Google past year was about 60% base salary. The non-shit offer I took from Twitter is about 55% base.
Stock options are distinct from units. They have a clear value, current market value, discounted by your fear of the future.
$250k total comp is pretty common for software engineers with a bit of experience. I’ve found Blind is the best place to get actual TC numbers. But even outside of the Bay area and outside of faang $250k should be your target at this point if you’re software engineer with ~5 years of experience.
Whoa, so I have about 20 years professional experience (19-39), 10 years non-professional (ages 8-18), what should I be making right now? Because it's not 250
Experience matters (much) less than being able to survive a day or more of whiteboard algorithm questions. The other option is sliding into something development-adjacent that's paid better than developers almost everywhere except FAANG (management, software architecture, that kind of thing) so might pull almost that much comp, and has interviews that are more about speaking well and job-relevant experience & knowledge than memorizing Introduction to Algorithms and operating for hours on end under a microscope. Also don't be old (30+) and without some existing FAANG or otherwise "impressive" employers, or it'll be assumed you've been wasting your life, your experience must just be "one year repeated x times", and you don't belong.
I'm trying to work toward the tech-adjacent side because developer comp tops out around 150k or 160k total in my area—and the top end of that's usually got one foot in management. Remote comp seems similar, unless you can do the hardcore algo interview thing—and even some of those don't pay especially well, if they're offering remote and feel like they're already doing you some kind of favor.
I'm trying to work toward the tech-adjacent side because developer comp tops out around 150k or 160k total in my area—and the top end of that's usually got one foot in management. Remote comp seems similar, unless you can do the hardcore algo interview thing—and even some of those don't pay especially well, if they're offering remote and feel like they're already doing you some kind of favor.
In my experience remote jobs (especially at smaller companies) seem to care more about your experience and ability to do the job than the Leetcode trivia questions. And although "impressive" employers might help, they're definitely not a prerequisite. Most engineers working remotely have never worked at a FAANG type company.
Yeah that parent comment was highly delusional. That’s not Sr. Dev money in northern Virginia / MD / DC which is definitely above median across US.
Honestly it really depends on skillset, location, company, project history.
You've got 10yrs exp, I'm guessing you're a strong senior engineer (which again, overloaded term, but IMO it means you can solve problems on your own and can unblock your teammates vs. block them) - I'd ballpark 175 -> 225. Go to a FAANG and you can stretch total comp up into the mid-250s.
If your skills and what's shiny in the market right now are all concentric, you can add 100k's on top. (Just left FB on the internal React team? Been on Netflix's recommendation model team? SRE working with core Kubernetes? Cha-ching!)
If your skills and what's shiny in the market right now are all concentric, you can add 100k's on top. (Just left FB on the internal React team? Been on Netflix's recommendation model team? SRE working with core Kubernetes? Cha-ching!)
At Google or FB you’d earn upwards of 300-400K in a senior role. I don’t think being on the shiny stuff t your previous company will help unless you’re known in the industry, as in you’re brought out as a Distinguished engineer or similar VP/ equivalent IC role - source: I interview at a FANG.
You should. I had the same realization not long ago. Small
companies and start ups will have a hard time getting there but any publicly traded tech company should definitely be giving you total comp approaching that range.
You could easily touch around 250k total comp at one of the FAANGs. Depending on location and company:
~150k salary
~15k bonus
~100k stock
Good 401k match
This is the average of anecdotal evidence I have seen from friends and acquaintances with around your experience.
~150k salary
~15k bonus
~100k stock
Good 401k match
This is the average of anecdotal evidence I have seen from friends and acquaintances with around your experience.
Yeah, same here (nowhere near 250). This thread is depressing. ;_;
That money does not come without cost: competitiveness at work, imposter syndrome, unreasonable deadlines, on-call rotations. Not to mention that you'll very likely be working for a mega-corp trying to improve some abstract metric for your division by 4% so they can sell more ads for more dollars. I don't know what your current situation is, but consider carefully what you would be giving up to get those dollars.
That's good perspective, thank you. <3
I used to see salary threads like this and be depressed too, but don't be. You not getting paid what you're worth does not mean you are not worth more. Next time you go out and interview be bold. Absolutely some companies will balk at a high salary requirement, but others will take it seriously. Even if you don't get $250k you'll get closer than you think and do much better than you are right now.
I was making a lot less not long ago. Then I went to an interview, knocked it out of the park, and when the ask TC reqs I just said $250 would work, and they made it happen. This is not in SF-area or NYC either.
I was making a lot less not long ago. Then I went to an interview, knocked it out of the park, and when the ask TC reqs I just said $250 would work, and they made it happen. This is not in SF-area or NYC either.
Thanks, and good advice about being bolder with future salary asks. :)
If you manage to get a job at Google, Facebook, Apple etc, you should expect to be making north of $200k.
[deleted]
What is "Blind"?
The Blind app used for anonymous work discussions: https://apps.apple.com/us/app/blind-anonymous-work-talk/id73...
https://www.levels.fyi/
Get promoted once at google / Facebook and you should be there. Promoted again and you’ll be 300-350k
Get promoted once at google / Facebook and you should be there. Promoted again and you’ll be 300-350k
$320K at Amazon this year. I’m 32 and have been here 7 years.
> $320K at Amazon this year. I’m 32 and have been here 7 years.
If you don't mind, can you please share how much net you project to save this year after all taxes and expenses? Sorry if this is a little weird but as a poor person I'd imagine expenses to go up with higher income for ordinary people resulting in not that much (proportionately) savings.
If you don't mind, can you please share how much net you project to save this year after all taxes and expenses? Sorry if this is a little weird but as a poor person I'd imagine expenses to go up with higher income for ordinary people resulting in not that much (proportionately) savings.
Somewhere between $150-160K.
My salary is $160K (that’s the max your salary can be at Amazon). The rest of my compensation (remaining ~$160k) is in restricted stock unit vests. I save 100% of that $160K after taxes. I max out my 401K from my salary. I also save 30-40% of each paycheck.
My husband and I don’t eat out 11 months of the year. The 12 month is a vacation where we travel within the US for a week vacation. Even then, we don’t go to expensive restaurants and will look for good deals... I mean my husband will open the McDonalds app on his phone to get a buy 1 get 1 Big Mac coupon. We don’t spend eating out... it is unhealthy and a bad habit.
We don’t have a car - so living in downtown Seattle, no expensive car tabs or parking. Also no fuel costs or car insurance payments. We paid off student loans and so there’s no debt. We pay for that with high rent ($2400/month excluding utilities).
Our only splurge is we have Netflix, Amazon Prime, Spotify, and we might get Disney’s new service. Our apartment is upscale (by our standard). Our furniture is nicer.
You called yourself a poor person - I’m sure you know this, but income is not a measure of wealth. We’ve built up some investments and liquid savings over the years, but I know coworkers from previous teams and other friends who earn just as much or more than us but also have $15K/month mortgages and are house broke or have expensive drinking or general spending habits where they end up saving practically nothing.
My salary is $160K (that’s the max your salary can be at Amazon). The rest of my compensation (remaining ~$160k) is in restricted stock unit vests. I save 100% of that $160K after taxes. I max out my 401K from my salary. I also save 30-40% of each paycheck.
My husband and I don’t eat out 11 months of the year. The 12 month is a vacation where we travel within the US for a week vacation. Even then, we don’t go to expensive restaurants and will look for good deals... I mean my husband will open the McDonalds app on his phone to get a buy 1 get 1 Big Mac coupon. We don’t spend eating out... it is unhealthy and a bad habit.
We don’t have a car - so living in downtown Seattle, no expensive car tabs or parking. Also no fuel costs or car insurance payments. We paid off student loans and so there’s no debt. We pay for that with high rent ($2400/month excluding utilities).
Our only splurge is we have Netflix, Amazon Prime, Spotify, and we might get Disney’s new service. Our apartment is upscale (by our standard). Our furniture is nicer.
You called yourself a poor person - I’m sure you know this, but income is not a measure of wealth. We’ve built up some investments and liquid savings over the years, but I know coworkers from previous teams and other friends who earn just as much or more than us but also have $15K/month mortgages and are house broke or have expensive drinking or general spending habits where they end up saving practically nothing.
You don't sound like you have children which means you save a lot of money that way and you guys together make a metric crap ton of money compared to the average person. Sounds like you're trying a mustachioed lifestyle. I wish you all the best. $2400/mo isn't a huge housing cost btw. Especially when living in a city.
I’m not the grandparent commenter, but my total compensation this year is roughly the same, so I thought I’d chime in with my savings:
$28.6k - 401k contributions & match
$112k - RSUs after tax
$14k - Monthly emergency fund contributions from paycheck (yearly total)
~$16k - Bonus after tax
My expenses really haven’t increased in line with the compensation. The picture would look different if I had a family, but I’m in my late 20s. I suppose I could eat high quality sushi daily, but I’ll settle for weekly.
$28.6k - 401k contributions & match
$112k - RSUs after tax
$14k - Monthly emergency fund contributions from paycheck (yearly total)
~$16k - Bonus after tax
My expenses really haven’t increased in line with the compensation. The picture would look different if I had a family, but I’m in my late 20s. I suppose I could eat high quality sushi daily, but I’ll settle for weekly.
This is at Silicon Valley/software companies like Google, Amazon, Apple, Facebook, Facebook, etc. Most developers will be above 150k-200k there, especially accounting for bonuses and stock which are considered as part of compensation.
But this is actually rare across the industry as a whole in the US, and extremely rare when considering other countries. It's nowhere near as common as the heavily skewed HN comments will make you believe.
But this is actually rare across the industry as a whole in the US, and extremely rare when considering other countries. It's nowhere near as common as the heavily skewed HN comments will make you believe.
FAANG? It's actually pretty common to get compensation packages in that range
565k salary+bonus. Java/c++ dev at HFT in Chicago.
The FAANGs are starting new grads at these levels now. 150K base salary, 100K+ RSUs vesting per year, 30K+ bonus targets per year will get you there and then some.
That's too high for Google at least, that's L4 level salary/stock.
Most senior+ level engineers at top tech companies (ie FAANG but not exclusive to those companies at least in total comp).
I was offered 300k to work at a hedge fund in Connecticut a couple years ago. It's not unheard of.
[deleted]
The good ones are making that when you account for compensation, perks, and stock grants.
This isn't unusual at all for top talent.
This isn't unusual at all for top talent.
[deleted]
[deleted]
Ask your recruiter, you'll be surprised.
The 1%.
levels.fyi
These numbers are self reported so I wouldn’t index on them that much - most numbers I see there for Amazon are on the higher end and give the appearance the higher end of the scale is the median... which is inaccurate given that some of the pay bands are pretty wide.
I've found levels.fyi to be pretty accurate. For hard numbers you can compare with salaries reported on green card PERM applications (which exclude stock amounts.) Netflix pays all cash and only hires at senior and above so should be comparable:
http://visadoor.com/greencards/index?company=Netflix&job=&co...
https://www.levels.fyi/?compare=Netflix&track=Software%20Eng...
http://visadoor.com/greencards/index?company=Netflix&job=&co...
https://www.levels.fyi/?compare=Netflix&track=Software%20Eng...
I wouldn’t trust online, voluntary, self-reported salary “data” even a little. No more than any other form of e-bragging. Everyone who posts online makes $350k, drives a Ferrari, and has a supermodel romantic partner.
Netflix is known to pay at the top of market, so the highest few compensations there being >$350k make at least a little sense.
Netflix is known to pay at the top of market, so the highest few compensations there being >$350k make at least a little sense.
> I wouldn’t trust online, voluntary, self-reported salary “data” even a little. No more than any other form of e-bragging. Everyone who posts online makes $350k, drives a Ferrari, and has a supermodel romantic partner.
Filter the visadoor results with job=software to see only the software developer salaries. These range from $280K to $850K, have a mean of $373K, a median $370K, 24 of 66 are at $400K and above.
This is very much the same ballpark as the self reported average salary of $433K on levels.fyi (I'd expect PERM figures to be slightly lower than average for the company as a whole since I presume they would normally be filed in the first year of employment.)
This strongly suggests to me that the levels.fyi self reported salaries for other companies are also ballpark correct.
> Netflix is known to pay at the top of market, so the highest few compensations there being >$350k make at least a little sense.
47 of 66 in the visadoor figures make $350 and above. While I would expect Netflix's average to be higher than other comparable companies this is because it hires only at Senior Software Developer level and above. Facebook and Google certainly pay their senior and above developers in the Bay Area similarly, albeit with a different RSU/salary mix.
Filter the visadoor results with job=software to see only the software developer salaries. These range from $280K to $850K, have a mean of $373K, a median $370K, 24 of 66 are at $400K and above.
This is very much the same ballpark as the self reported average salary of $433K on levels.fyi (I'd expect PERM figures to be slightly lower than average for the company as a whole since I presume they would normally be filed in the first year of employment.)
This strongly suggests to me that the levels.fyi self reported salaries for other companies are also ballpark correct.
> Netflix is known to pay at the top of market, so the highest few compensations there being >$350k make at least a little sense.
47 of 66 in the visadoor figures make $350 and above. While I would expect Netflix's average to be higher than other comparable companies this is because it hires only at Senior Software Developer level and above. Facebook and Google certainly pay their senior and above developers in the Bay Area similarly, albeit with a different RSU/salary mix.
I get the sense that those numbers might include the value of stock increasing, but that's the only site that's had numbers within 10% of the offers I actually got after negotiation.
What is your academic bg or experience that you are getting such amazing offers?
The numbers are actually a low for Google in MTV.
Average junior devs in Bay Area.
A lot, especially on the West Coast.
Who _isn’t_ at this point?
(Well not me, but..)
(Well not me, but..)
You don't need an "absurd" amount of income to be in the top 1%.
Isn't this subjective. For someone who has a pathway to earning 500K (they and there spouse both work at FAANG) its not that absurd, but for 99% of people it is because almost everyone has no path to earning that much.
This incidentally seems roughly around the income needed to afford a mortgage on a single family home in the Bay Area.
Basically, only the top 1% can buy homes in the Bay Area.
Basically, only the top 1% can buy homes in the Bay Area.
I think it's also important to distinguish by age. For instance, I'm 27. I likely do not make as much nor have I amassed as much as a 45 year old.
This is a good comparison for this:
https://dqydj.com/income-percentile-by-age-calculator/
People at age 25 year olds are likely to make half of 35 year olds. But 45 year olds in the top 1% are roughly equal to the 35 year olds (no real increase).
This is a good comparison for this:
https://dqydj.com/income-percentile-by-age-calculator/
People at age 25 year olds are likely to make half of 35 year olds. But 45 year olds in the top 1% are roughly equal to the 35 year olds (no real increase).
I'm sure ageism is at play. Given the choice between a 30-something and a 40-something applicant, the job markets with 1%-level salaried positions tend to prefer hiring younger, because they can pay less, all other things being equal.
Am I the only one that reads that and thinks “Cool, that’s a good goal to shoot for!” ?
And this is a bad thing because...?
Let me put this in a way that a HNer can understand:
It's bad because happiness has a logarithmic dependence on income. A system that permits this amount of wealth concentration is isomorphic to one that actively creates misery.
It's bad because happiness has a logarithmic dependence on income. A system that permits this amount of wealth concentration is isomorphic to one that actively creates misery.
I don’t think that’s necessarily true. Wealth is not zero sum. It’s possible for one person to make a billion dollars of wealth without taking it from someone else (increase in stock price, leverage for investment, etc etc).
There are other factors to consider, mean wealth, median wealth, quality of life, etc.
I’d rather live in a hypothetical country with $1M of purchasing power where 1% had $1B than a hypothetical country with $500k where 1% had $1M.
High inequality does not mean low quality of life. Just take a look at the inequality of the US vs the inequality of third world countries. The US has higher inequality but also higher quality of life.
There are other factors to consider, mean wealth, median wealth, quality of life, etc.
I’d rather live in a hypothetical country with $1M of purchasing power where 1% had $1B than a hypothetical country with $500k where 1% had $1M.
High inequality does not mean low quality of life. Just take a look at the inequality of the US vs the inequality of third world countries. The US has higher inequality but also higher quality of life.
Wealth is zero sum, only economic growth is not zero sum. If
your stock goes up by a billion because you made it possible for the economy to produce an extra billion worth with the same resources, then sure. If you just bet on the market and win, or an angel drops one billion dollars on you from the sky, everything you buy with it is taken from someone else.
Money is just an accounting for the actual goods and services the economy provides. There are only so many materials and laborers available at any one time and your wealth determines who gets access to them. If you buy $1 billion in chairs, other people will have to forgo things made from wood (or forgo other things to attract new lumberjacks). Your wealth represents your power to bid against them and win.
Money is just an accounting for the actual goods and services the economy provides. There are only so many materials and laborers available at any one time and your wealth determines who gets access to them. If you buy $1 billion in chairs, other people will have to forgo things made from wood (or forgo other things to attract new lumberjacks). Your wealth represents your power to bid against them and win.
I’m not sure how to teach this directly through comments as there are so many ways to create wealth to increase the overall value. Khan academy has a decent series on microeconomics [0] that will take an hour or so to view.
I think the simple view is wealth is zero sum. I have a pie and there’s only eight pieces. If I have seven pieces then you can only have one. Easy enough to split the pie and we both have equal amounts. But it’s not possible for you to have more pie without me having less.
In the real world it is possible to create value. And the things human value are intangible. So if you paint pictures and I sing songs, you paint 5 pictures, I sing you five songs we are both happier and have more value. I can’t paint so I value a painting at 100 whuffie. You can’t sing so you value songs at 100 whuffie.
In economics they can this guns and butter and use it as an example of trade increasing wealth.
If country X is really good at making guns but marginal at making butter and country Y is really good at making butter but marginal at guns they have to allocate labor to make both since everyone needs guns and butter. So each country makes $100 worth of goods at the total value of $200. However if country X only made guns and Y only made butter they could exert the same labor but have $400 in total value. Neither country is worse off.
This works in part because money is imaginary to reflect how people value things.
This works more with no tangible things that can be reproduced so it’s quite possible for someone to make a trillion dollars worth of software without taking a trillion dollars away from somewhere.
[0] https://www.khanacademy.org/economics-finance-domain/microec...
I think the simple view is wealth is zero sum. I have a pie and there’s only eight pieces. If I have seven pieces then you can only have one. Easy enough to split the pie and we both have equal amounts. But it’s not possible for you to have more pie without me having less.
In the real world it is possible to create value. And the things human value are intangible. So if you paint pictures and I sing songs, you paint 5 pictures, I sing you five songs we are both happier and have more value. I can’t paint so I value a painting at 100 whuffie. You can’t sing so you value songs at 100 whuffie.
In economics they can this guns and butter and use it as an example of trade increasing wealth.
If country X is really good at making guns but marginal at making butter and country Y is really good at making butter but marginal at guns they have to allocate labor to make both since everyone needs guns and butter. So each country makes $100 worth of goods at the total value of $200. However if country X only made guns and Y only made butter they could exert the same labor but have $400 in total value. Neither country is worse off.
This works in part because money is imaginary to reflect how people value things.
This works more with no tangible things that can be reproduced so it’s quite possible for someone to make a trillion dollars worth of software without taking a trillion dollars away from somewhere.
[0] https://www.khanacademy.org/economics-finance-domain/microec...
I think you are missing the point. Wealth is almost only restricted by natural and human resources.
However, getting paid in a currency is directly limited by total currency in circulation. Of the total items of wealth in the world, if more and more currency is hoarded at the top 1%, only the top 1% can afford the wealth created by the rest.
In other worlds, wealth is increasing but the purchasing power of it is not reaching everyone proportional to the wealth they are creating.
However, getting paid in a currency is directly limited by total currency in circulation. Of the total items of wealth in the world, if more and more currency is hoarded at the top 1%, only the top 1% can afford the wealth created by the rest.
In other worlds, wealth is increasing but the purchasing power of it is not reaching everyone proportional to the wealth they are creating.
I think if you watch those videos you will learn that getting paid is not limited by total currency in circulation both due to velocity of money [0] and due to non-currency assets that people get paid in (IP, stock, etc).
In the scenario I described above each country could spend all their wealth if they do desired. Nations constantly create money and handle deposits so even if they wanted it all in cash that they never spend (which no one does) they could do that in both the $100 and $200 scenario because as nations they can create currency. If the currency is backed by wealth of nations then inflation is less (ie, a country printing $100 with $1 in wealth is in trouble, but a country printing $100 with $100 in wealth is less in trouble).
Fortunately, while these concepts are a little non-intuitive, it’s possible to study, learn, and use them to influence our decision. Or to help me decrease confusion on the relationship of purchasing power and wealth.
[0] https://en.wikipedia.org/wiki/Velocity_of_money
In the scenario I described above each country could spend all their wealth if they do desired. Nations constantly create money and handle deposits so even if they wanted it all in cash that they never spend (which no one does) they could do that in both the $100 and $200 scenario because as nations they can create currency. If the currency is backed by wealth of nations then inflation is less (ie, a country printing $100 with $1 in wealth is in trouble, but a country printing $100 with $100 in wealth is less in trouble).
Fortunately, while these concepts are a little non-intuitive, it’s possible to study, learn, and use them to influence our decision. Or to help me decrease confusion on the relationship of purchasing power and wealth.
[0] https://en.wikipedia.org/wiki/Velocity_of_money
You need to think a little beyond velocity of money. Velocity of money causes inflation/deflation. Printing currency reduces interest rates which indirectly causes more borrowing which indirectly causes more spending, thus increasing velocity of money.
All of this still isn't related to the article which is talking about unequal distribution of wealth.
Sure one way to solve this unequal distribution is handing more money to poor directly by printing, but thats bound to cause inflation.
All of this still isn't related to the article which is talking about unequal distribution of wealth.
Sure one way to solve this unequal distribution is handing more money to poor directly by printing, but thats bound to cause inflation.
The point of saying that wealth is not zero sum is that it can be created, by using the available materials and laborers in different ways. This phenomenon also causes economic growth.
> High inequality does not mean low quality of life.
There's research to indicate that it does, once you've surpassed a certain level of wealth. I've been reading Utopia For Realists, which does a very readable job of summarizing work on the topic, and one publication cited that is available online is:
https://www.jrf.org.uk/sites/default/files/jrf/migrated/file...
I'd also suggest Sapolsky's work on the physiological effects of poverty.
There's research to indicate that it does, once you've surpassed a certain level of wealth. I've been reading Utopia For Realists, which does a very readable job of summarizing work on the topic, and one publication cited that is available online is:
https://www.jrf.org.uk/sites/default/files/jrf/migrated/file...
I'd also suggest Sapolsky's work on the physiological effects of poverty.
This I don’t understand. If I make $100k, my happiness doesn’t change if some guy is making $1M per year vs $10M per year.
>It's bad because happiness has a logarithmic dependence on income
I think the Buddhists might disagree.
I think the Buddhists might disagree.
BurningFrog(1)
[deleted]
Because even a fraction of it is out of reach for the vast majority of people, even folks that do “everything right”.
There is no such thing as doing "everything right" a capitalist society is a zero sum game.
You only make money by taking it from someone else. Sure the reserve can print more money but that only leads to currency devaluation on a macro level which on a whole reduces purchasing power of the society.
You can't really address income inequality without fundamentally reshaping society.
You only make money by taking it from someone else. Sure the reserve can print more money but that only leads to currency devaluation on a macro level which on a whole reduces purchasing power of the society.
You can't really address income inequality without fundamentally reshaping society.
Please read this article about how wealth is not zero sum
http://www.paulgraham.com/gap.html
http://www.paulgraham.com/gap.html
A millionaire would try to argue this.
I believe your post is an ad hominem
https://en.wikipedia.org/wiki/Ad_hominem
https://en.wikipedia.org/wiki/Ad_hominem
> you only make money by taking it from someone else
This is false. Money is an expression of labor and is exchanged in return for labor or the product of someone else’s labor. Totally dismissing that the exchange of money requires both parties to gain something is a deceptive (and in my opinion, immoral) trend.
When my money “grows” in the stock market. It isn’t because I took money from another person. It is not a zero-sum game.
This is false. Money is an expression of labor and is exchanged in return for labor or the product of someone else’s labor. Totally dismissing that the exchange of money requires both parties to gain something is a deceptive (and in my opinion, immoral) trend.
When my money “grows” in the stock market. It isn’t because I took money from another person. It is not a zero-sum game.
A retail investor in the stock market is playing an almost entirely zero-sum game. You're not supplying valuable information about which companies deserve capital. You're not providing scarce savings to stimulate investment. You're simply laying claim to the future earnings of society by bidding against others.
It's like buying a home in San Francisco -- it's not adding value that makes your wealth go up, it's the fact that other people want what you have and you got there first. And there's a healthy helping of government interference making sure that your stake is protected against outsiders.
It's like buying a home in San Francisco -- it's not adding value that makes your wealth go up, it's the fact that other people want what you have and you got there first. And there's a healthy helping of government interference making sure that your stake is protected against outsiders.
Actually... you are providing liquidity to the market.
Until recently, there was no easy way to transfer wealth intertemporally -- livestock died, grain spoiled, precious metals got stolen, land got invaded, etc.
The faith that people have in the stock market -- that they can buy something now and sell it in 50 years with very low frictional costs, allows the market to function, which ultimately lowers the cost of acquiring and deploying capital. This also ensures that capital is matched to risk tolerance, and that capital is deployed most effectively.
Imagine if each VC individually had to find a retail buyer for their shares.
Until recently, there was no easy way to transfer wealth intertemporally -- livestock died, grain spoiled, precious metals got stolen, land got invaded, etc.
The faith that people have in the stock market -- that they can buy something now and sell it in 50 years with very low frictional costs, allows the market to function, which ultimately lowers the cost of acquiring and deploying capital. This also ensures that capital is matched to risk tolerance, and that capital is deployed most effectively.
Imagine if each VC individually had to find a retail buyer for their shares.
Are we not talking about income inequality? Fact is hard currency is finite, perceived wealth or value is something else entirely.
Income is typically tied to hard currency.
When you make money in the stock market, you invested in a business, one that would supply a goods or services (or a derivative), of which requires taking someone else's money in exchange for that good or service.
Income is typically tied to hard currency.
When you make money in the stock market, you invested in a business, one that would supply a goods or services (or a derivative), of which requires taking someone else's money in exchange for that good or service.
[deleted]
No one who has to actually work for a living, even if they're earning near 1% in salary, is ever going to be 1% in wealth.
Even in Silicon Valley, being a top manager, developer, etc. is only going to get you a very nice, comfortable life. '
The 1% wealthy you think of when you think "1%" have all gotten it the usual ways: got lucky, inherited, or shadier methods.
Even in Silicon Valley, being a top manager, developer, etc. is only going to get you a very nice, comfortable life. '
The 1% wealthy you think of when you think "1%" have all gotten it the usual ways: got lucky, inherited, or shadier methods.
Some of this increase is attributable to lowering taxes brings more income out of the shadows and on to the tax return. If we lowered the marginal rate to 1% I think we’d see a lot more income appear on tax returns that is either unreported or creatively expenses at present tax rates.
This is such a pessimistic take, on what in my opinion is a positive development. It means a segment of Americans are wealthier than they used to be.
This isn’t really news. Just a numerological milestone. So more people are getting rich than ever. Hopefully we can make that number even higher.
> So more people are getting rich than ever.
No, the top percentile is, not everyone. That's the problem. Income inequality is getting worse.
No, the top percentile is, not everyone. That's the problem. Income inequality is getting worse.
This is correct. Additionally, the median net worth is actually dropping slightly. If the USA has 300m people, the person ranked 150,000,000 had roughly 50k in 2015. Now that ranked person has 48k in 2019.
Out of curiosity does that take inflation into account? i.e. is it even lower than 48k in 2015 dollars?
That's correct, a value of 48k in 2019 dollars is even lower than a value of 50k 2019 dollars.
This one single piece of data confirms the "stagnating feeling" of many people who are not rapidly expanding their net worth-- even just maintaining it is good work these days in the face of rising costs of living.
This one single piece of data confirms the "stagnating feeling" of many people who are not rapidly expanding their net worth-- even just maintaining it is good work these days in the face of rising costs of living.
No, previously some of the top percentile was below $500k. Now they’re all over. And beyond that statistic, the middle class is shrinking because more of them are getting wealthier. This makes incomes more unequal, yes, and it is a good thing.
Ok, I'll bite: how is increasing income inequality a good thing?
Situation A: You have 1 guy making $100K and 99 guys making $25K.
Situation B: You have 10 guys making $100K and 90 guys making $25K.
Situation B is better and it has more inequality. That's what we're seeing the past few decades, as people leave the middle class (in an upward direction).
Situation B: You have 10 guys making $100K and 90 guys making $25K.
Situation B is better and it has more inequality. That's what we're seeing the past few decades, as people leave the middle class (in an upward direction).
That's incorrect although an intuitive mistake.
The situation A is actually better, for 90% of the people.
The single outlier is not relevant when it comes to buying power, he doesn't move the market upward. Housing, food and commodities are needed by everyone so it's fixed by the 99% and accessible to everyone.
On the other hand, that's a new market class when there are enough participants like example B. They're going to compete with one another to get all the nicest houses, locations, cars, food, etc... that will be adjusted higher in proportion to what they can pay.
The situation A is actually better, for 90% of the people.
The single outlier is not relevant when it comes to buying power, he doesn't move the market upward. Housing, food and commodities are needed by everyone so it's fixed by the 99% and accessible to everyone.
On the other hand, that's a new market class when there are enough participants like example B. They're going to compete with one another to get all the nicest houses, locations, cars, food, etc... that will be adjusted higher in proportion to what they can pay.
But that’s not observed at all. Despite the fact inequality is increasing, the average purchasing power is increasing overall.
Sure, in some markets (limited supply of housing) more money just increases prices, but that’s an exception, not the rule.
Sure, in some markets (limited supply of housing) more money just increases prices, but that’s an exception, not the rule.
The people making more are producing more housing, food, and commodities.
They are not. The idea that they would be is called "Trickle-Down Economics" and it's been thoroughly debunked.
I think that highly depends on if the half a mil figure is the average of all top 1% or the income at 99th percentile. With extreme income inequality the income for 99th percentile could get lower
As usual, nationwide statistics always seem kind of dumb. OK, I'm only in the 5th percentile, but I live in a very rural area, in a state with very low taxes where real estate is still reasonable. So yeah, I'm not in the 1%, but I bet my buying power is at least on par with a 1% living in NYC, SF, etc.
A friend worked in the national statistics org in France (INSEE). There were internal fights about separating statistics about Paris (stupid expensive, lots of growth) vs the rest of France (not expensive, slow growth). The unifiers won, unfortunately.
Same thing with London vs the UK.
There is so much difference between some capitals and their countryside nowadays, they could be different countries.
There is so much difference between some capitals and their countryside nowadays, they could be different countries.
Indeed.
I had high hopes that the advent of the Internet would allow me to go live in cheap places and still earn a comfortable income from top-tier companies.
But silly me, I work in embedded, where being close to the hardware you're developing is practically mandatory :p
I had high hopes that the advent of the Internet would allow me to go live in cheap places and still earn a comfortable income from top-tier companies.
But silly me, I work in embedded, where being close to the hardware you're developing is practically mandatory :p
what does buying power mean? like, you're able to buy some house on your not 1% salary in your rural area, and a person on a 1% salary in nyc/sf could not buy an equivalently nice house?
"buying power. the ability to purchase goods and services" (https://www.dictionary.com/browse/buying-power)
So yes. With a lower salary in a specific area, I can probably buy the same goods and services as someone with a higher salary in a different area.
So yes. With a lower salary in a specific area, I can probably buy the same goods and services as someone with a higher salary in a different area.
Next thing, you will claim your stress level is lower .. jk
Nah I won't go there, I'm always stressing about things :) That's why I need to be surrounded by trees!
my family makes more than that but we still can’t afford a single family house where we live (DC area, within beltway)
I see plenty of SFRs inside the beltway for $500-800K (and loads in the just over a million range). I'm not sure what other debt service you have that might be limiting your back-end ratios, but on a front-end ratio (house only), you should qualify for a mortgage of $2MM or more. (Whether that's a good idea or not is perhaps a different question.)
https://www.zillow.com/homedetails/2614-22nd-St-NE-Washingto...
https://www.zillow.com/homedetails/2614-22nd-St-NE-Washingto...
You can, you just might have to settle a little bit. Falls Church has the lowest poverty levels in the US, so there really isn't a bad neighborhood. There are currently 106 homes in Falls Church with 3+ beds and 2+ baths priced under 1.5 million which should easily be doable for a household making $500,000+.
dfilppi(1)
https://equitablegrowth.org/wp-content/uploads/2019/03/table...