The Wall Street Journal's "Wealth Report" blog had an interesting post (free, I think) today about how rich is "rich."
Since $1 million barely buys a two-bedroom these days in Manhattan or San Francisco, being a multi-millionaire just doesn’t mean what it used to.
When most people try to define rich, however, they’re really after something different. What they really want to know is, “Where do I rank?”
The post has a link to an interesting website, the "Global Rich List." You put in your annual income and see how rich you are compared to the rest of the world.
For example, if you put in $1 million annual income, you are, according to the web site, 107,565th richest person in the world, and richer than 99.999% of everyone else.
Well, that's interesting, but let's try some real numbers.
The U.S. Median income for 2006 for a 4-person family, according to the Census Bureau, is $65,093 (that's higher than I thought it would be). Plugging that into the Global Rich List shows that the median 4-person family in America is richer than 99.12% of people on the planet.
The poverty level for that family of four (in 2005) is $19,350. Plug that into the Global Rich List and it shows the U.S. poverty level is more money thank 88.7% of people on Earth make.
"Poor" people in the U.S. are richer than almost 90% of everyone else?
Let's say you live alone, then your poverty level is an annual income of $9,570 (which at the current minimum wage of $5.15/hour would require working about 46.5 weeks a year). That makes you richer than 86.6% of humans on the planet.
If you worked 40 hours per week at the current minimum wage, you'd make $10,712. That more money than 86.84% of the rest of humanity makes in a year. At the new minimum wage (if it happens) working 40 hours per week you'd make $15,080 (assuming you kept your job) and make more money than 87.78% of the rest of the world.
Now the Global Rich List is supposed to make you feel guilty. I don't feel guilty. I feel glad that I live in a capitalist country where the poor are rich by the standards of most of the world. And we got that why by being free and capitalistic. The premise of the Global Rich List is that if you're richer, some one else is poorer. That's not true (see here and yes, I need to write the last of my "Wealth Matters" posts). Americans are rich because we are productive.
Now, you may have found the flaw in all of the above. Income is not wealth, per se. As someone pointed out in a comment to the Wealth Matters post, if you make $1,000,000 and year and spend $999,999 you do not have assets, you have income (if that income is the interest on a large amount of principle, yes, you are rich, but if it's pay from your job, you aren't building any wealth and will have to live off social security when you retire).
So the author of the blog did some calculations of his own on U.S. data (world data not available). So add up your assets, subtract your debts and figure out how rich you are:
WHERE DO YOU RANK IN WEALTH
(If you have a household net worth of X … you rank in the Y percentile):
$50,000 … 60th percentile
$93,000 … 50th percentile
$100,000 … 48th percentile
$200,000 … 34th percentile
$500,000 … 18th percentile
$750,000 … 12th percentile
$827,000 … 10th percentile
$1 million … 8th percentile
$1.4 million … 5th percentile
$6 million … 1st percentile
So 50% of Americans have less than $93,000 in assets? Better hope Social Security doesn't go broke.
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