Put even more basically: it is nearly impossible, or at least very difficult, to actually get “rich” by working at a job for a salary - even the best salaried jobs, aside from a small number of exceptions, will only get you, if you are clever, skillful and lucky, to upper-middle-classdom.
This uncomfortable fact goes against the grain of deeply held notions about social mobility, particularly in the US. The idea that “you” will very likely never be rich unless you were born that way, have some exceptional entreprenureal skills, or are able to achieve celebrity status or fall into another unusual exception, is very discouraging - plus, if someone earning two or three times more than “you” isn’t “rich”, what does that make you? Hence the pressure to re-define “rich” downwards so that it is a status actually potentially attainable.
I think that’s overstating it somewhat. There are still plenty of reliable ladders to being rich for the bright and hard-working–the kind of people who are the best and brightest of their elementary school classrooms, say. Anyone with high intelligence and a strong work ethic can become a partner at a big law firm, or a director at an investment bank, or a doctor in a lucrative specialty. And that’s just the fields I’m familiar with that can get you seven figures, there are probably others.
I think it’s the ladders into upper middle class status for the only moderately bright and/or mostly-hard-working (or who, for whatever reasons, cannot work the requisite 2,750 hours a year, that are dwindling). But I don’t know how much the existence of such ladders was a mid-twentieth-century fluke.
The number of (say) lawyers who actually make it to partnerdom at a major law firm is a fairly small fraction of the total number of lawyers. It’s a potentially attainable goal - along with becomming (say) a CEO of a big company - but it is notoriously difficult to achive: it usually requires putting together a “partner’s practice” which requires considerable entreprenureal skills. Merely putting in hard hours and knowing how to do the work isn’t usually enough, you have to be able to attract clients.
The attrition rate for associate lawyers at major law firms is huge - an average annual 20% - and given that it takes around 6-10 years to put together a “partner’s practice”, chances of becomming a partner at a major law firm, for those comming out of law school, are not high. It is not the case that “anyone” can do it with hard work - it takes entreprenurial ability an lots of luck (on top of the skills and work necessary to do the actual job).
Can’t comment on becomming a physician in a lucrative specialty.
I’m familiar with those opinions, and I disagree. I am in the industry, and have many friends in the industry–60% of my law school class is working in biglaw in NYC. I don’t know a single one who is smart and puts in the time who is not on the partnership track or is a partner. I do know a ton of associates who have left because they don’t want to work 2,750 hours a year, or don’t like being a lawyer.
It is true that being a partner at many (not all) firms requires some degree of business ability. But being a good lawyer is still a huge part of that aspect. You impress clients with your skill, and cultivate those relationships. It doesn’t require a huge amount of luck at all. And plenty of people still make partner with atrocious social skills.
Partners at big firms are a small percentage of overall law school grads, but that’s because there are far too many law schools and there is a high attrition rate for reasons having nothing to do with merit.
Once you’ve paid enough of the house etc etc you can sell it for a gain. Once your kids are old enough etc etc you can ask them to help pay for your retirement, take you on vacation, and so forth.
Confession time: I am a lawyer at a big firm, albeit in Canada. It isn’t a question of “social skills” necessarily, but of ability to attract, for whatever reason, the right types of clients. There is a considerable degree of luck involved, and ability to work contacts.
First, there is the ability to get into a major law firm. They form a tiny part of the lawyer market–according to this article, 10-15% in the US.
Then, assuming that you get in, you have to survive the periodic culls during downturns or from inability or unwillingness to put in the commitment (the afore-mentioned 20% attrition rate), and cultivate a “partner’s practice”. This isn’t easy to do, because clients large enough to afford big-law rates do not grow on trees, and they tend to go to people who have serious contacts, and clients overall have become much more cost-concious since the recession.
I have no real idea of the actual percentage of law school grads who go on to become partners at major law firms, but it must be rather small. Particularly in this economy, it is not the case that someone can go into law school and rationally expect that merely my working hard, they can make partner at a major law firm, and be in line for the truly big bucks. It could happen, but the chances are against it - again, absent entreprenureal ability, good contacts, or luck.
Not to say these figures invalidate your anecdotes - but it could be the case that your friends are from an exceptional group.
It is unusual in this culture for children to be net contributors to their parent’s financial well-being.
They would have to pay a lot to their parents to make them an “investment”, considering the high costs of raising them - estimated for middle-class at being around $240K.
In order for the average middle-class kid to be like unto a house as an investment, they’d have to fork over at least that much to their parents. This does not happen, on average.
When you sell the house, you need somewhere to live.
And I sure the hell hope I’m not asking my kids to pay for my retirement. They need to be saving for theirs so they aren’t a financial burden on my grandkids!
I know that in other cultures its completely normal to sell the family home and move in with your kids at some point in time, which makes both of these things workable. But it isn’t the long term norm in the U.S. Perhaps as a country we are too rich, we are used to having our homes be our nuclear families - not having to put up with our mother in law living with us. But if that is a luxury, it is a luxury Americans are pretty used to throughout our class structure.
Well, yes, in the sense that I have never been talking about lawyers or bankers or doctors as a whole. I have no doubt that only a tiny percentage of lawyers or MBAs become partners or directors making seven figures. But only a tiny percentage are the group I was talking about: “the kind of people who are the best and brightest of their elementary school classrooms, say”–in other words, the top 2-3% or so if all the relevant factors for high salary jobs were combined in a single index.
My point was simply that for bright people who are very hard-working who are willing to put in the time, most of them can choose to work at a big law firm and become partners if they want (indeed, there are very few students at the top five law schools that wanted to work in biglaw and could not get a job). The factors that contribute to the attrition rate of such associates are not principally luck or entrepreneurial skill, but instead willingness to grind out the hours and deal with the law firm environment. That’s not to say that some people don’t pick the wrong horse practice-wise (e.g., tobacco defense) and find that their mentors were the last ones to make partner with those clients, or just get unlucky (I’m looking at you, Dewey Lebouf associates), but those are the exceptions I think.
And I would add that there are still firms with 1MM+ PPP that are making equity partners of people without big books of business simply because they are good lawyers. Rarer these days, for sure, but not completely extinct.
The bottom line point I was trying to make is that for these bright workhorses, the ladders still exist and luck is not the principal factor.
We both agree that only a tiny number make it into those positions. Your origina point was that going for them is a reliable ladder to being rich for the bright and hard-working.
I guess we will have to agree to disagree on this point. I see it as a highly unreliable ladder, with many a slip for even the bright and hard-working - unless you choose to define “bright and hard working” radically upwards. To my mind, being bright and hard-working are necessary, but not sufficient, criteria for big-law partnership.
Perhaps our disagreement is merely semantic rather than empirical.
If I am the best basketball player in my medium-sized town, my making it to the NBA even if I really want it and work as hard as possible is still very unlikely and highly contingent on factors outside my control.
If I am the best actor in my medium-sized town, my making it as a Hollywood movie star even if I really want it and work as hard as possible is still very unlikely and highly contingent on factors outside my control.
But if I am merely the tenth smartest person in my reasonably-sized high school, my making it to the elite levels of a profession that pays enough for me to be rich, is more likely than not if I really want it and work as hard as possible.
So while we rightly characterize becoming a sports star or celebrity as “impossible or very difficult,” I think such terms overstate the difficulty of how hard it is to get rich on a salary.
You are right that US culture doesn’t encourage parents to bum off their kids in old age.
But we are still encouraged to look out for our parents. As stingy and miserly as I am, if my parents ended up being kicked out of their home, I would let them have my bed. Even if I hated my parents, I would feel the cultural pressure to do this. I am also expected to chip in when they are unable to take care of themselves. (My brother has already felt the beginning stages of this since he has been called in to handle home repairs).
People without adult children lack this built-in safety net. Though, I suppose, it can be argued that the money they would have spent on keeping a kid fed, clothed, and educated should be going into a retirement account.
That’s true if you’re counting success as being some sort of super-rich person. The likelihood is probably not much larger than becoming a rock star, movie star or famous athlete.
The difference is, if you try to become one of those, it’s an all-or-nothing type situation for the most part. It’s not like there’s a pyramid of musicians, actors and sports stars all making a good living at it- you either succeed wildly(movie star; LOTS of money and fame), succeed at all (theater actor; unlikely, and not terribly lucrative), or you fall flat on your face (wait tables and say you’re an actor).
If you’re smart and hard working in business (or law, or whatever), you can aspire to be named partner, CEO, etc… and if you don’t ever make it, you’re still likely to end up well advanced past entry level and be “successful” in some sense anyway.
Look at it this way- you graduate from college and want to be an actor. You go to Hollywood, and you never get cast in anything. You’re spectacularly unsuccessful, and probably are doing something else to pay the bills while you pursue your dream.
If you want to be CEO, and fail, you’re still likely to be some sort of management person and make $75k per year or more. Only so much is luck, after all.
I think that’s where Richard Parker’s going - that 10th most smart person in the high school is likely to be more successful than the best basketball player is likely to be, if only because if he fails to become CEO or named partner, he’s probably already become pretty successful in getting to a point to aspire to that.
Say your reasonably-sized high school has 1000 students. Perhaps 100 of them are clever and hard-working enough to get through university, graduate from law school, and pass the bar if they wanted to - that’s pretty generous, no?
Assume everyone in this group wants to go into law and chase the partnership rainbow.
Let’s make the math simple and assume everyone who passes the bar gets hired somewhere, although the real figure is much lower.
Then, we know that only 10-15% of the group that lands jobs gets hired by big law. So, 10-15. Just to make the math simple again, let’s assume its 10%, or 10.
If you were the 10th smartest person in that high school, you would likely be hired, according to this math. You’d be one of the 10 happy big-law associates.
But we know that the vast majority of people hired do not become partners - given the high attrition rates, 20% per year, and given it takes say 8-10 years to make partner, maybe only 1 or 2 will. So, you’d have to be pretty well the smartest and hardest-working person in your high school to make it - asuming it went by smarts and hard work alone. More likely than not, if you were the 10th smartest in that school, you would not make partner.
It isn’t as unlikely as making it as a sports or movie star, but it is still I would say “very difficult”.
That’s a faulty analysis precisely because it assumes that if the people in law school were all the brightest people in our society that the outcomes would be the same.
In truth, a lot of the people in law school were not in the top 100 brightest people in their high school class, and most big law associates were not in the top 10. Fortunately, a lot of bright people choose to build businesses, become teachers, etc.
So you can’t just use the existing statistics to try to prove what would happen in the counterfactual (and horrible!) world in which all the bright hardworking people want to become law firm partners.
Well, sure. I have never disputed that pursuing this type of career is a good road to upper-middle-classdom. In fact, that’s my starting position.
There is absolutely nothing wrong with achieving that.
My dispute with Richard Parker is all about the chances of getting rich by pursuing such a career. I hold it to be an unlikely outcome, or “very difficult”, based on the statistics, and he disputes that.
To put the thesis briefly: if you pursue this type of professional career, and have the smarts and work ethic to do the work, whay can you reasonably expect as an outcome? My position: you can reasonably expect to become upper-middle-class. Becomming truly rich is exceptional as an outcome - very difficult.
Yes, I know. But I’m saying that assumption means you cannot use those statistics, because those are the statistics that apply when you can get into law school with a 155 LSAT score and a 3.1 from SHSHWU.
For the subset of people we’re talking about, the odds of partnership are much much higher (is my thesis).
I agree this is the axis of dispute. And I think where we differ is why big law associates do not become partners. In my view, the principal factors are the time requirements; the work environment; and how much they enjoy actually practicing law. Much more minor factors are their entrepreneurial ability and luck. This at least is an empirical question to some extent, so I’ll see if I can find something beyond mere anecdote to support my opinion.
I do know that desire has a lot to do with it; I was fairly ambitious for the first 12 years or so out of school, but the realization that it didn’t really matter how well I do my job, and that the old saw about “not what you know but who you know” is far more true and relevant than I wanted to admit, caused me to lose a lot of career motivation.
I’m certainly smart enough to be a CEO, but I don’t think I want to be one. Working twice as much, and having the knowledge that dozens (hundreds? thousands?) of people’s livelihoods and family well-being rests on the outcome of my decisions is something that I wouldn’t want to deal with.
I grew up poor, am poor, and probably won’t have a chance to not be poor until after my kids are grown. I agree with almost everything else you said, except for this.
When I was growing up (and now, AFAIK), if I was invited to a kid’s birthday party, I brought a present. I think that was the expected etiquette. I’m sure some kids and their parents invite kids just to get presents, but that’s how it works. I have found it stressful but never unreasonable.
My 6 year-old daughter just went to a birthday party. She took a present. It was a party for twins (1 is in her class, both are neighbors but they aren’t close friends). I think my wife felt some pressure/expectation over the idea of 2 presents but got something they both could use. I think it was $15. When I was a kid, I’m sure most of the presents I gave to kids (fortunately/unfortunately I was invited to that many) were around 10 bucks, inflation adjusted.
