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Here’s How You Can Increase Your Chances of Joining the 1%
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What do George Soros and Sheldon Adelson have in common? They both overcame tremendous obstacles to become wealthy and join the Forbes 400 list of richest Americans.
Although they are extreme rags-to-riches examples, they are not alone — refusing to quit, in spite of adversity, failure or poverty, is only one of many traits shared by vast numbers of the wealthy elite.
Simply put, most very successful people simply don’t quit. But, as mentioned, there are other wealth-related traits as well. The top 1 percent of earners work tirelessly, invest wisely, make deals, innovate, create businesses and learn continuously along the way.
And there are other important factors as well: location, education, career field and social skills are just as important.
Along with surveys that show that a majority of people still feel that their children will climb the wealth ladder, data decisively shows that income mobility is alive and well. People can and often do overcome obstacles and improve their lives, but can they join the 1 percent?
Let’s explore further to learn who the 1 percent really are and how to join them.
Why the left is wrong to vilify the 1 percent
Liberals frequently demonize the rich, claiming that they are privileged, don’t pay their fair share of taxes and exploit the young and the poor. They claim that the poor are trapped in poverty and income mobility is down. They push government handouts like welfare, free college and a higher minimum wage as solutions to these problems.
But are they telling the truth, or spreading fake news for political gain?
According to a study by the Economic Policy Institute, nationally, one percenters made an average of $349,436. But, as of 2013, that number varied widely by state from $659,979 in Connecticut to $231,276 in New Mexico. That’s much more than the median 2015 family income of $56,516.
But although some billionaires were born rich from inheritance, according to Forbes, 69% of the billionaires on the Forbes 400 list of the wealthiest people in the U.S. were self-made, up from less than half in 1984.
Additionally, income mobility is not declining or stagnant as the left likes to claim; it is constant. So much for the left’s argument about income mobility.
And contrary to liberal talking points demanding that the rich “pay their fair share,” the 1% do pay their “fair share,” and more. Far left commentator (and tax delinquent) Al Sharpton has charged that “the top 1% in this country pays much less than 10% [of the income tax].” That claim is such a commonly repeated theme of liberal politicians that, like other fake news, many believe that it is true.
In fact, the rich not only pay their share, of taxes, they pay much more. According to IRS statistics, in 2011, the top 1 % of earners generated 19% of the income in the U.S. but paid 35% of all taxes. Furthermore, the top 10% of earners paid over 2/3 of the nation’s taxes while the bottom 50% pay only 3%.
Scott Hodge, president of the Tax Foundation agrees, saying “almost no other industrialized nation depends on the rich to pay bills more than the United States.”
In a recent article, economist and the Conservative Institute’s own Sven Larson, Ph.D., takes it even further. Larson presents a case that concludes that compared to a truly fair tax system, people earning over $200,000 pay an incredible 38% more in taxes than they should.
The majority of the 1% are self-made, and some were “dirt poor” to begin with. Furthermore, although they earn the majority of income, they also pay the lion’s share of taxes.
But how can one gain an edge in climbing the ladder to wealth, and what are the keys to that level of success?
Location matters — choose wisely if you can
Alfred Lord Tennyson reportedly said, “Don’t thou marry for money, go where the money is [and marry for love].” Tennyson’s advice still makes sense and according to studies, location matters in economic mobility, as well.
The New York Times reported on a recent study that shows that children growing up in the southeast and the rust belt have less opportunity to be successful than in other parts of the country. According to Harvard economist, and study co-author, Nathaniel Hendren:
Where you grow up matters … there is tremendous [geographic] variation across the U.S. in the extent to which kids can rise out of poverty.
That variation does not stem simply from the fact that some areas have higher average incomes [and] upward mobility rates, [mobility] often differ[s] sharply in areas where average income is similar, like Atlanta and Seattle.
Furthermore, the effect can be dramatic. Data shows that children growing up poor in Seattle do as well financially as middle-income children growing up in Atlanta.
The top income mobility cities in the U.S. include Seattle, Pittsburgh and Salt Lake City, which compare to the world’s highest mobility countries like Norway and Denmark. In contrast, Atlanta, Indianapolis, and Cincinnati lagged well behind.
As some people in the market innovate and create businesses and others stagnate, the economy generates more labor demand in certain geographic areas. If you can respond to these needs, you can produce value, and be well-positioned to potentially create your own business or innovate with your own ideas where the market for your goods or services will be in highest demand.
Education remains a key factor to success
The studies also show that high mobility areas typically have strong school systems, which likely contributes to high economic mobility. In a recent speech on economic mobility, William C. Dudley, CEO of the New York Federal Reserve, emphasized that importance, saying:
[T]here exists a large literature that has established the importance of high-quality education as a key determinant of economic mobility. While there are differences of opinions on the most relevant measures of school quality, there is ample evidence that children who attend better schools on average end up with better outcomes later in life—such as higher levels of educational attainment and higher earnings.
To further emphasize the importance of good schools, a recent article by the Conservative Institute highlighted the importance that school choice plays in the success of poor and minority students.
Not surprisingly, higher education also matters a great deal. College graduates with professional degrees earn 3 times the income of high school dropouts.
But to really break into the 1% quickly, the elite eastern schools, as well as Oxford and Cambridge in the U.K., provide an enormous edge. In her highly acclaimed book Pedigree: How Elite Students Get Elite Jobs, Lauran Rivera shares the hard facts on getting into the highly elite consultancies, investment banks, and law firms offering six figure starting salaries.
The elite firms spend literally millions recruiting, wining and dining top students at those schools, but even an Ivy League degree is not enough. The firms still reject the majority of the elite applicants.
Rivera argues that it all boils down to the elite applicant being a good fit and convincing the interviewer that they will fit in well, as a team member, colleague, and friend.
Career choice and economic mobility
Choosing a well-paying career is also important to one’s chances of joining the elite 1%. According to Forbes, nearly 70% of the one percenters were in one of four job areas:
- Executives and managers, including business owners 31.0%
- Medical, including doctors and dentists 15.7
- Financial professions; CPAs, actuarial, etc. 13.9
- Technical, engineering, computers, math 8.4
Total = 69.0%
One does not have to be an Ivy League graduate to get into these fields. Demand for qualified applicants is steady. Clearly, although one can get rich in almost any field, some stand out much more than others.
Community, relationships, and family
A Pew Foundation Initiative titled, “Pathways to Economic Mobility,” emphasized the importance of social interaction in the community as an enabler of economic mobility, essentially saying that a family’s social and business connections can provide an edge in career success.
Jobseekers and recent hires also agree that a strong business and social networking background is key to finding a well-paying job. According to a recent article in The Balance:
- 70 percent of people in 2016 were hired at a company where they had a connection.
- 80 percent of professionals consider professional networking to be important to career success.
- 35 percent of surveyed professional say that a casual conversation on LinkedIn Messaging has led to a new opportunity.
In short, unsurprisingly, social skills and networking are important in economic mobility.
Economic mobility is alive and well — learn how to get an edge
So economic mobility is alive and well. In spite of what class warriors say, getting rich is still possible, even for those who start out poor. The majority of the wealthy are self-made and, in many cases, had to overcome obstacles to get there. Today, they also pay most of our federal income tax revenue, and increasingly invest in the markets and their own businesses.
Certain regions and cities have a higher rate of economic mobility than others and, as expected, strong schools are a key factor in the success of those regions. And although it helps greatly, one does not have to go to an elite university to get rich. Instead, he or she can choose the right career and through hard work, persistence, solid social skills and business contacts, gain an edge to get good jobs and business opportunities.
The free market will continue to provide opportunities to achieve the American dream. It remains up to the individual to climb the ladder.
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