What does Wealthy Mean

 

I hear the term wealthy used so frequently, mostly with a derogatory connotation, I thought why not take a shot at defining it from an ordinary person’s perspective.  Certainly not the first nor the last to attempt this but I have always thought there was a certain level of unfairness in how this topic has played out in the broad media.

From a working-class perspective the “wealthy” are the enemy, right?  Or are they the envy, or both? I suppose the view from the top, or even the ultra-wealthy, this topic receives little air play. Yet from the middle to upper middle, there is a wide perspective with many variables that must be considered.

To be clear, I am not wealthy, not in the terms of the way I define it. Eldest of five and son of a carpenter, we did not have much. I did learn work ethic and how to be a man from my father during the early years. But I did everything else the hard way. No money for college I went mostly part time at night for years. My jobs as a young man were widely varied and low level. Until I found employment with Digital Equipment Corporation in 1973.   Starting in the warehouse, it was the very early days of the micro-computer revolution. It changed my life.

Growing up near Princeton New Jersey I was exposed to plenty of wealth. Working with my father during the summers, as a “finish” carpenter he had work in the homes of the wealthy. The area had much of it, executives who commuted to New York’s Wall Street and the like.   Those with family wealth. It is an entirely different, almost alien, world to the one our family shared.

Geographic and Markets

The U.S. Census Bureau reported in September 2017 that real median household income was $59,039 in 2016, exceeding any previous year. This was the fourth consecutive year with a statistically significant increase by their measure.[1] This generally implies that half the households earned less and the other half earned more. I don’t know about how you view it but, to me, here in 2018, $5,000 a month is certainly a livable wage. Yet, its probably okay in Pittsburgh or Des Moines but not in New York City or Washington, DC. In those markets you need two $60,000 incomes to live reasonably well for a family of four.

The View from the Left

I’ve heard some on the left describe $120,000 annual income as wealthy (Barrack Obama for one). Others a bit higher but very few on the left will acknowledge that real wealth is either possessed or accumulated at much higher income rates (either from capital gains or salary and benefits/stock). The reason is simple, numbers, the pinnacle of importance is numbers of voters. Once you reach those six figure incomes and above, either as small business owners, professionals (doctors, lawyers, accountants, et al) or those in the corporate world, their perspective begins to change. Managing their tax liability is a higher priority in conjunction with how to accumulate wealth (family nest egg) through investments and the like. The neighborhood their children play in and the schools they attend (and the type of classmates they experience) become a significant priority. Status symbols come into view, the home they own, the car they drive and the clothes they wear.

Not that these early stage upper middle-income citizens are not a target for the left, they are, with a strategy that leans more heavily on social issues. Different for the much more numerous middle, lower middle and lower income strata of population where economic justice is the battle cry. It’s a delicate balance seeking the votes from the upwardly mobile on social issues while calling them wealthy (and therefore part of the economic justice imbalance so often touted) to the lower income voters.

The view from the right

Much like the left, Conservatives depend heavily on the wealthy. The Conservatives freely admit it. The Liberals consistently publicly deny it but privately know they cannot compete politically without huge donations from the wealthy (the height of hypocrisy). The wealthy, knowing this, hedge their bets by donating to the left and the right.

Conservatives are all about the American dream. How hard work, integrity and education can take you to any level you desire. And there are many, many examples of the truth in this proclamation over centuries. The stark differences come in where the right starts to define wealth. The right knows a household income of $150,000 doesn’t indicate the possession of wealth. Far more likely this is a hard-working household with the goal of some day accumulating enough wealth (maybe two million in today’s dollars) to lively reasonable well after educating their children, managing their tax burden, investing wisely and, hopefully, surviving the financial ravages of the healthcare system. Knowing they are attentive to these topics, Conservatives see upper middle-income earners as prime potential voters, regardless of what their political inclinations may have been prior.

What Conservatives see in this scenario are reasonably intelligent potential voters who will be interested in messages about limiting the size of government, its ever growing cost and intrusions in their business; ensuring we are not truly threatened by foreign powers by maintaining a superior military capability; support for government functions that serve to protect our citizens at home; and support for institutions that serve to sustain the Judeo-Christian principals upon which this country was founded.

The problem with this approach is there are more voters attuned to the message of the left than those attuned to the messages of the right. And, quite frankly, until every American citizen considers themselves upwardly mobile, upper middle-income members of American society, there must be a voice for those who have not been able, for any reason, to achieve that status.

Although I believe something approaching an upper middle-income lifestyle for every family of American citizens is someday possible, this will certainly not occur in the Boomer generation’s life span. Not until automation fully reaches the point where the grass is mowed, the crops are picked, sheetrock is hung, etc., without manual labor, will the need for uneducated and untrained workers disappear. As workers begin to achieve the dream, and move out of the left’s sphere of influence, the left continues to replenish their numbers with actions supporting open borders.

So What is Wealth

I have quite a bit of experience in the world of upper middle income living and I can tell you those families are far from wealthy. Even if they have lived reasonably well, educated their children and saved diligently, it’s likely that they are still exposed to the vagaries of market forces, increasing taxes and government fees (the new “tax” machine), a personal healthcare debacle, among other dangers, well into retirement, that could have devasting financial effects on their lives.

So once again I digressed a bit. But, the point is, many will define wealth to serve their purposes. To me, if you have enough money accumulated to have an annual income of a half million dollars or more from the interest alone on 30-year Federal government bonds (approximately 22 million in principal is necessary at today’s rates), you are wealthy. Someone with that kind of money can probably survive almost anything the American government, healthcare system or financial markets can throw at them. Obviously, there are those who earn much, much more on their accumulated wealth. Short of that minimum threshold I described, you are potentially exposed because you have to invest in riskier instruments to achieve the level of income you desire. Or, a health catastrophe could decimate your savings. In my humble opinion the ability to solely, safely live on the income generated by your very safely invested money, never touching the principal, for generations, is the definition of the entry point of true wealth.

 

(1)^ “U.S. Household Incomes Rose to Record in 2016 as Poverty Fell”. Bloomberg.com. September 12, 2017. Retrieved October 14, 2017.

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