People who are in the top 1 percent in income receive far more than 1 percent of the attention in the media. Even aside from miscellaneous celebrity bimbos, the top 1 percent attract all sorts of hand-wringing and finger-pointing.
A recent column by Anna Quindlen in Newsweek laments that “the share of the nation’s income going to the top 1 percent is at its highest level since 1928.”
Who are those top 1 percent? For those who would like to join them, the question is: How can you do that?
The second question is easy to answer. Virtually anyone who owns a home in San Francisco, no matter how modest that person’s income may be, can join the top 1 percent instantly, just by selling their house.
But that’s only good for one year, you may say. What if they don’t have another house to sell next year? Well, they won’t be in the top 1 percent again next year, will they? But that’s not unusual.
Americans in the top 1 percent, like Americans in most income brackets, are not there permanently, despite being talked about and written about as if they are an enduring “class” – especially by those who have overdosed on the magic formula of “race, class and gender,” which has replaced thought in many intellectual circles.
Recent data from the Internal Revenue Service show that more than half the people who were in the top 1 percent in 1996 were no longer there in 2005. Among the top 100th of 1 percent, three-quarters of them were no longer there at the end of the decade. These are not permanent classes but mostly people at current income levels reached by spikes in income that don’t last.
These income spikes can occur for all sorts of reasons. In addition to selling homes in inflated housing markets like San Francisco, people can get sudden increases in income from inheritances or from a gamble that pays off, whether in the stock market, the real estate market or Las Vegas.
Among corporate CEOs, those who cash in stock options that they have accumulated over the years get a big spike in income the year that they cash them in. This lets critics quote inflated incomes of the top-paid CEOs for that year. Some of these incomes are almost as large as those of big-time entertainers – who are never accused of “greed,” by the way.
Just as there may be spikes in income in a given year, so there are troughs in income, which can be just as misleading in the hands of those who are ready to grab a statistic and run with it.
Many people who are genuinely affluent, or even rich, can have business losses or an off year in their profession, so that their income in a given year may be very low, without their being poor in any meaningful sense. This may help explain such things as hundreds of thousands of people with incomes below $20,000 a year living in homes that cost $300,000 and up. Many low-income people also have swimming pools or other luxuries that they could not afford if their incomes were permanently at their current level.
Most income statistics do not follow given individuals from year to year, the way Internal Revenue statistics do. But those other statistics can create the misleading illusion that they do by comparing income brackets from year to year, even though people are moving in and out of those brackets all the time.
That especially includes the top 1 percent, who have become the focus of so much angst and so much rhetoric.