The concept of the “one percent” has captured the American public’s imagination in the last few years. Everything from newspaper articles to policy proposals makes a point to highlight effects on this nebulous upper class. But precise as the phrase seems to be, the majority of folks don’t really know what the phrase “one percent” means. Let’s try to answer that today: who are the one percent?
Here on DQYDJ we’ve done a lot of work with income microdata. Most frequently, that means Current Population Survey data – usually through the ASEC or Annual Social and Economic Supplement, a March survey. The data in this section is from the 2018 survey, which means it is income earned between January and December of 2017.
There are still different ways to break it down. Let’s briefly look at individual income, household income, and income by sex.
Income of the Top 10% and Top 1%
You can find the original source (and methodology) in the calculators:
- Individual Income Percentile Calculator
- Household Income Percentile Calculator
- Individual Incomes for Males and Females Percentile Calculator
Individual, household, and sex isn’t the only way to break it down, however. Here are calculators on income differences by age, race and Hispanic or Latino origin, and geographic differences.
- Individual Income Percentile by Age Calculator
- (Household and Individual) Income Percentile by City
- (Individual and Household) Income Percentile by State
- (Household and Individual) Income Percentile by Race
Who Are the One Percent by Net Worth in America?
More useful, however, is looking at the one percent by net worth. If we had our way, a view of the top 10%, 1%, and .1% would concentrate on accumulated wealth not affluence.
Net worth tends to have an even more extreme spread than income does. While many households in the United States have zero or negative net worth, the same isn’t true for income. Household income reflects transfer payments, while the government isn’t (really) in the business of transferring wealth.
(Remember, you can’t pass Social Security to the next generation!)
This data comes from the 2016 Survey of Consumer Finances from the Federal Reserve, and we originally calculated these for our top American net worths and net worth percentiles article.
Net Worth of the 10%, 1%, and .1%
Does Top One Percent Mean by Income or by Net Worth?
Net worth is a better way to rank top one percent than income. If you do use income to determine the top one percent of individuals, individual income is the best choice for determining the one percent.
Using household income disguises the true income figure when there are multiple earners in a household. For example, a household may have two working spouses or a Millennial living at home. Household income also doesn’t account for the spending difference in household sizes.
Using net worth to decide on the one percent threshold is even better.
Household net worth sidesteps spending and cost of living questions because net worth is by definition not spent. Regardless of household size or location, net worth is always currently untapped. It’s a true measure of how much ‘extra‘ a household has accumulated. (Top one percent net worth households show up as a hockey stick in inequality, too.)
One interesting stat: going from the top 10% of wealth to the top 1% requires an large jump while income “only” requires a much smaller bump.
What’s your preferred measure? Who are the one percent? The highest earners, or the best accumulators? Make your case in the comments!