{"id":255,"date":"2016-03-02T13:03:00","date_gmt":"2016-03-02T18:03:00","guid":{"rendered":"https:\/\/www.tameri.com\/wordpress\/almostclassical\/?p=255"},"modified":"2025-01-11T16:53:06","modified_gmt":"2025-01-11T22:53:06","slug":"in-the-one-percent-probably-not-for-long","status":"publish","type":"post","link":"https:\/\/www.tameri.com\/almostclassical\/2016\/03\/02\/in-the-one-percent-probably-not-for-long\/","title":{"rendered":"In the One Percent? Probably not for long…"},"content":{"rendered":"

My wife and I have been in the top ten percent of household incomes<\/a> off and on for a few years. We’ve even made it, briefly, into the top five percent. And, like most people in those upper-class categories, we quickly fell back out of the top tier<\/strong> of households.<\/p>\n

How and why is that?<\/p>\n

For one thing, high incomes tend to be temporary blips related to good years for some professions<\/strong>. The highest earners are not salaried workers with steady, predictable incomes. Instead, the highest earners are glorified freelancers: doctors, lawyers, consultants, and other specialists.<\/p>\n

Some years are great for professionals. You might have an unusual number of surgeries if you’re a doctor. Maybe you win a windfall case if you’re a lawyer. A consultant lands one great contract. The money flows in for that year and you stash some away. Because, as the upper-middle knows, that one year is pretty rare.<\/p>\n

Eleven percent, slightly more than one out of every ten adults in the United States, will be in the One Percent for at least one year. Think about that. That’s a lot of people making it to the highest income bracket. Though the top tenth of a percent of wealthy<\/strong>\u00a0(not earners) are much wealthier than the top one percent of earners, we’ll stick to income<\/strong>\u00a0for this discussion.<\/p>\n

As CNN reported in January 2016:<\/p>\n

No one stays in the Top 1% for long<\/a>
\nby\u00a0Tami Luhby; @Luhby
\nJanuary 7, 2016: 8:15 AM ET<\/p>\n

Made it into the Top 1%? Congrats!<\/p>\n

Just don’t expect to stay there for very long.<\/strong><\/em><\/p>\n

The\u00a0Top 1%\u00a0is often considered an exclusive, monolithic group, but folks actually rise up into it and\u00a0fall out of it quite often. That’s because their incomes can vary widely year to year.<\/p>\n

Some 11% of Americans will join the Top 1% for at least one year during their prime working lives<\/strong>\u00a0(age 25 to 60), according to research done by Thomas Hirschl, a sociology professor at Cornell\u00a0University. But only 5.8% will be in it for two years or more.<\/p>\n

As for holding onto this status for at least 10 years? Only a miniscule 1.1% of Americans are this\u00a0fortunate.<\/p><\/blockquote>\n

So, the One Percent this year isn’t the one percent of next year. In ten years, nine out of ten of the current one percent won’t be in that category. Welcome to mobility: it goes both directions.<\/p>\n

\"\"<\/a><\/p>\n

We have a dynamic economy. There is mobility, though that mobility is obscured by the much wider range of income in the United States<\/a> versus Europe. Reaching our “upper-middle” would be like reaching the top one percent of most European nations<\/a>. And, for something to consider, the “wealthy” of Greece rank just below the median income in Alabama. That’s right, Alabama’s middle-class residents are much better off than Greece’s middle class.<\/p>\n

Dynamic income brackets, especially at the top, are an American phenomena. Most of our economic mobility<\/a> is up and down between the four top quintiles since 2007. The bottom hasn’t fared so well. Still, the top is dynamic, contrary to what many people assume.<\/p>\n

“Affluence is dynamic, said Hirschl, who calculated that it took $332,000 to get into the Top 1% in\u00a02010<\/strong>. “The 1% really isn’t the 1%. People move around a lot.”<\/p><\/blockquote>\n

Think of it this way. Ninety-seven percent of the One Percent won’t be there in ten years<\/strong>. Creative destruction at work.<\/p>\n

The IRS looked at how frequently the same Top 400 taxpayers appeared on the list over a 22-year\u00a0period ending in 2013. Some 72% ranked that high for just one year. Only 3% were listed for a\u00a0decade or more.<\/p>\n

“People feel it’s a fixed club and no one else can get in, but that’s not the case,” said Mark Perry,\u00a0resident scholar at the American Enterprise Institute<\/a>. “Once you get there, it’s not easy to stay\u00a0there.”<\/p><\/blockquote>\n

Lots of research reveal that those great years of income are rare. If you make it to the top, save that money!<\/p>\n","protected":false},"excerpt":{"rendered":"

My wife and I have been in the top ten percent of household incomes off and on for a few years. We’ve even made it,…<\/p>\n","protected":false},"author":5,"featured_media":1533,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"iawp_total_views":5,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[18,5,34,30],"tags":[64,58,59,377,63],"class_list":["post-255","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-data","category-econ","category-media","category-taxes","tag-class-mobility","tag-income","tag-inequality","tag-one-percent","tag-wealth","entry"],"yoast_head":"\nIn the One Percent? 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