The Working Rich
The wealthiest Americans work for their money, and the poor could learn from them.
Comments
1332

There is in Dallas an establishment called the Idle Rich Pub, where you can find an excellent plate of fish and chips but few if any actual idle rich folk, who seem to be scarce as hen’s teeth. There are plenty of rich people in and around Dallas, as a walk down Euclid Avenue in Highland Park will confirm, but unlike in New York City’s Upper East Side or San Francisco’s Mission District, Dallas’s outdoor cafes and boutiques are deserted on a typical weekday afternoon: Dallas’s rich are in the main the working rich. Dallas is no longer the Dallas of Dallas, but it still is a city in which the very well off are not at all shy about their money — there are plenty of Bentleys parked in front of the Mansion at Turtle Creek, because Dallas is the sort of place where rich people drive Bentleys and call their nicest hotel “the Mansion.” Those Bentleys belong to energy traders, hedge-fund geeks, restaurateurs, real-estate developers, dentists, importers, exporters — to the extent that there are trust-funders, they’re keeping a relatively low profile everywhere but the charity circuit. The Idle Rich Pub is owned by a man with a classic American success story — an immigrant who launched another pub that became so successful that it was too crowded for his taste, inspiring him to open a new place partly as an act of self-indulgence, thus the self-deprecating name.

The Idle Rich Pub is not the first Dallas drinking establishment by that name. As the Dallas Observer points out, there was another bar called the Idle Rich some years back, a hangout for newspaper reporters and “cops who, once over-served, would empty their revolvers into the moose head above the bar.” In a city of up-and-comers such as Dallas, it is hard not to see the professionals drinking $21 glasses of Macallan as the cultural (and perhaps in some cases literal) heirs of the blue-collar crowd at the old Idle Rich.

Advertisement
Rich America is a lot more like Dallas — and even more like relatively understated Houston — than it is like Fifth Avenue. Rich America is working America: Wealthy households contain on average more than four times as many full-time workers as do poor households, and, surprisingly, inherited wealth constitutes a smaller share of their assets than it does for middle-class and poor households. They live modestly relative to their means and for the most part do not work on Wall Street or as corporate executives. The caricature of the rich American as a child of privilege who inherited a fortune and spends his days shuttling between mansions in a private jet is largely a product of the imagination of such would-be class warriors as Elizabeth Warren and Robert Reich, neither of whom lives in Section 8 housing, or even downwind of it.

The relatively minor role of inherited money in the lives of wealthy Americans is worth examining in some detail. Senator Bernie Sanders, the self-described socialist from Vermont, has been known to complain indignantly that “today the Walton family of Walmart own more wealth than the bottom 40 percent of America.” But that fact is rather less telling than Senator Sanders imagines it to be. Never mind the Waltons: If you have a net worth of $0.01, then your wealth exceeds that of the poorest quarter of Americans combined — their net worth begins in negative territory and tops out at $0.00.

The Waltons are not typical of rich America. Wealth transfers — inheritances and gifts combined — constitute a small part of the holdings of the rich, whether you define “rich” in terms of income or net worth. For the top income quintile, gifts and inheritances amount to 13 percent of household wealth, according to research published by the Bureau of Labor Statistics. For the top wealth quintile, they amount to 16 percent. For the hated “1 percent,” inherited wealth accounts for about 15 percent of holdings. Contrary to the story the Left likes to tell about economic inequality in the United States, those numbers have gone down over recent decades — by almost half for the wealthiest Americans. Meanwhile, inherited money makes up 43 percent of the wealth of the lowest income group and 31 percent for the second-lowest. In case our would-be class warriors are having trouble running the numbers here, that means that inherited money on net reduces wealth inequality in the United States (measured as a ratio) rather than exacerbating it; eliminating inherited wealth would have approximately twice as much of a negative effect on modest households as on wealthy ones.