Who Makes the Really Big Bucks in America?
by
James P. Allen and Eugene Turner
California State University, Northridge
Many people are aware of the annual Forbes listing of the 400 wealthiest people in
America http://www.forbes.com/forbes-400/. The list is based on investigations and estimates of
the net worth of individuals. It’s obviously extremely selective; in 2013 a person had to be worth
a total of at least 1.3 billion to make the list.
Although the Forbes list is fascinating, determining key characteristics of the much larger
group who are also highly successful economically but not at the very top in wealth should
provide a good picture of these individuals and how they differ from the rest of us. The results
can also illuminate the more likely paths to economic success for those who aspire to this goal.
We have found no studies that did this. Accordingly, we take advantage of the Census
Bureau’s American Community Survey (ACS) data to select those individuals who reported
annual incomes of at least $400,000. We call these “high-income Americans”. Although most of
their income is derived from work, investment income is also included. Because annual
fluctuations in numbers and characteristics of this group should not be significant, we utilize the
aggregated ACS data for the years 2007 through 2011 to create a large sample of about five
percent of employed Americans.
Our analysis shows an estimated 711,472 persons with annual incomes of at least
$400,000. Although a seemingly large number, it represents only the top third of one percent of
employed Americans ages 16 and older with income. This is the group that we describe and, in
many cases, compare with other employed Americans in terms of ethnicity, gender, educational
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attainment, key employment characteristics, and state of residence. The patterns we present are
the result of complex causes that are difficult if not impossible to disentangle.
Characteristics of High-income Americans
Ethnic and gender composition. It may come as no surprise that men and non-Hispanic
whites are more likely than women and minorities to have high incomes, but the degree to which
they are over-represented is striking (Table 1). For example, whites represent 64 percent of all
employed Americans, but 87 percent of the high-income Americans.
Asians are also overrepresented among high-income Americans, though less so than
whites. On the other hand, blacks and Hispanics are both very much underrepresented in relation
to their total employment, with high-income blacks the least well represented. They number less
than a fifth of the total that might be expected based on their proportion among all employed
Americans.
Table 1. Ethnic and Gender Composition of High-income Americans
Percent of
Percent of
High-income Americans
All Americans
87.0
64.2
Black
2.3
12.2
Asian
6.0
4.7
Hispanic (Latino)
3.8
16.1
86.3
49.2
Group
Non-Hispanic White
Male
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Education, marriage, and place of birth. Americans with high incomes are about three
times more likely to be four-year college graduates than Americans with incomes of less than
$400,000 (Fig. 1). Of course, many high-income Americans also have professional degrees, such
as in law, business, and medicine, which often provide paths to high incomes. Among Asians,
having a bachelor’s degree is somewhat less important in achieving high income. For Blacks and
Hispanics, however, obtaining at least a bachelor’s degree is especially important. High-income
individuals with those two identities are more than four times more likely to be college graduates
than those with lower incomes. The graph clearly demonstrates the value of obtaining at least a
bachelor’s degree in the pursuit of incomes of at least $400,000.
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Americans who make the really big bucks tend to be married at the time they completed the
ACS questionnaire: 84 percent were married compared to only 52 percent of Americans with
lower incomes.
Most high-income individuals were born in the United States. Among whites, 91 percent
were U.S.-born while for blacks the figure was 81 percent, indicating the greater influence of
immigrants among blacks who have high incomes. But for Asians and Hispanics, whose growth
has been especially fueled by immigration, 47 percent of high-income Hispanics, and 78 percent
of high-income Asians were born in another country.
Self-employed or working for a private company or the government. Over two-thirds
of high-income Americans work for some private company, a proportion that varies little among
the four ethnic groups we studied (Fig. 2). Self-employment or entrepreneurship is also an
important path to success, but working for the government is generally not. Among whites,
Asians, and Hispanics, fewer than four percent of those with high incomes are employed by
government. High-income blacks are an exception in that 8 percent work for the government.
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Although not presented graphically, we also found that in all four groups self-employment
is three to four times more common among people with high incomes than among those with
lower incomes. And on the flip side, high-income people in all four groups are less than half as
likely to be employed by the government as those with incomes below $400,000.
Where Do People with High Incomes Live?
States vary a great deal in their numbers of high-income residents, with many states, such
as Arkansas, Vermont, and Utah, home to only about a thousand (Fig. 3). As one might expect,
people with high incomes tend more to be more numerous in the more populous states, with the
Northeast, Florida, Texas and Illinois particularly important. California and New York, each with
about 100,000 or more high-income residents, seem to stand out especially on the map. But
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because California’s total population is greater than all other Western states combined, its
contrast with surrounding states should not be too surprising.
Although circle sizes for New York and California appear roughly similar, California has
146,000 high-income residents while New York only 97,000. The fact that high-income residents
of California number 50 percent more than the total in New York state is due a great deal to the
fact that California’s total population is nearly twice that of New York. If people with high
incomes in New York state and California are added together, they constitute one-third of all
individuals with high incomes in the entire country. This is a powerful concentration to keep in
mind when thinking about where high-income people live.
Another way of looking at the distribution is to compare the proportion of high-income
persons in each state to the proportion for all America. This eliminates having to keep in mind
state differences in population as a factor when interpreting the map. Thus, a state with 0.34
percent high-income persons (the same as the value for the nation as a whole) would receive a
score of 1.0 (Fig. 4). In this technique, called a location quotient, ratios above 1 -- in brown and
red colors -- show states with higher proportions of high-income people than the national
average. In states colored dark blue, high-income people are less frequently found.
Most dramatic on the map are key states in the Northeast – New York, New Jersey,
Connecticut, and Massachusetts. In three of these four states people with high incomes are found
twice as frequently as in the U.S. as a whole. We can see also that California, Colorado, Florida,
and several other states are above the national average whereas the proportion of people with
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high incomes is especially low in Maine, West Virginia, Iowa, and the several other states shown
in dark blue.
What Industries Are Best For High Incomes?
Achieving high incomes also depends partly on people’s occupation and the industry they
work in. The leading occupation of high-income people is a chief executive officer, followed by
a physician or surgeon, then a lawyer. It is also clear that being a manager of some sort can often
lead to high incomes. All leading high-income occupations are strongly dominated by men
although in some occupations, such as accountants and auditors, women are found somewhat
more frequently than the 13 percent that we previously found was the average (Table 1)
Although there is some overlap between occupation and industry in these census data, we believe
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the industries in which high-income people work is more illuminating of their relative
opportunities.
There is a great deal of diversity in the industries in which high-income people are
employed, but high incomes are much more common in some industries than others (Fig. 5). The
largest industry for such individuals is financial investments, a category that includes securities,
commodities, funds, and trusts. Nationally, over 78,000 people with high incomes work in this
industry, representing 11 percent of all high-income individuals. Moreover, 6 percent of all
individuals employed in financial investments have incomes of at least $400,000, making this the
industry with the highest percentage of high-income workers. Many people refer to this industry
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as “Wall Street” although less than half the high-income Americans in the industry work there or
even in New York City. The next most common industries were the law (legal services) and
medicine (physician services).
State Variations in Leading Industries for High-income Persons
There are substantial variations among states in their leading industries supporting highincome residents (Fig. 6). In the great majority of states scattered across the U.S., physicians
(including surgeons) constitute the largest group of high-income individuals. Several highly
populated states in the Northeast are distinctive in that the financial investments industry is their
leading source of high-income residents. Although the work location for many of these people is
Manhattan’s Wall Street, many choose to live in attractive suburbs outside New York City,
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including parts of Connecticut and New Jersey, from which they can commute by train or car to
the City.
In Maryland, Virginia, and the District of Columbia the leading industry for high-income
people is legal services – lawyers. In fact, in Washington, DC, itself, not visible on the map, 42
percent of people with high incomes work in legal services, many probably as lobbyists. The fact
that this is also the leading industry in adjacent states suggest that, although the work of most
lawyers in these states may be connected directly or indirectly with the federal government, the
actual residential locations chosen by many such high-income people are in the most attractive
sections of those adjacent states.
The left side of the legend shows that more intensive colors indicate states where at least 15
percent of high-income people are connected with the leading industry. Note the special
concentration in the financial investments industry in New York and adjacent states. It is
particularly powerful in New York, where 22 percent of all high-income residents are in
financial investments. Twenty-two percent of high-income residents of Alaska and South Dakota
are physicians, and in Hawaii the construction industry employs the same high percentage of all
high-income workers.
So Who Gets the Big Bucks?
This exploration of the over-700,000 individuals with incomes of at least $400,000 has
provided a good statistical look at some of their most important characteristics. Many people
have probably thought that men and white people are overrepresented in this group, and we’ve
been able to measure precisely the extent to which this is the case. But, we have also discovered
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that Asians are similarly overrepresented compared to their percentage of the total employed
population.
Those who have attained the big bucks exhibit certain personal characteristics. Most are
US-born college graduates who are now married. Most individuals with high incomes are
privately employed. They and others who are self-employed have assumed a greater risk than
those who have sought the greater security of government employment.
There are more high-income Americans in financial investment than in any other industry.
Nationally, 11 percent of all people with high incomes work in that industry. Physician services
is the second leading industry and leads in many states away from the coasts.
People who make the really big bucks tend to be more concentrated in some states than
others. New York and California stand out. Together they are home to one third of all highincome persons in America.
While there are many paths toward the big bucks, this research has shown the personal
characteristics of those who have achieved this, and the industries and states where that success
is more probable.
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