# Why will most Americans never become mega millionaires or billionaires? **URL:** \ **Category:** Great Debates\ **Created:** [January 23, 2016, 2:44pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969 "2016-01-23T14:44:33Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![coremelt](https://avatars.discourse-cdn.com/v4/letter/c/4491bb/32.png) [@coremelt](https://boards.straightdope.com/u/coremelt)\ **Post date:** [January 25, 2016, 8:16pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/81 "2016-01-25T20:16:32Z")
> [@Ruken](#): > > So we should disregard everything you wrote because it doesn’t apply here? I have friends who are US citizens and have corporations that they contract through. They’re doing pretty well. ---
**Author:** ![DrCube](https://avatars.discourse-cdn.com/v4/letter/d/a3d4f5/32.png) [@DrCube](https://boards.straightdope.com/u/DrCube)\ **Post date:** [January 25, 2016, 8:44pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/82 "2016-01-25T20:44:24Z")
> [@Kimstu](#): > > _ **Because being “exceptionally wealthy”, by definition, is something that most people cannot be** _. A person is only wealthy **relative** to the **non-wealthy majority**. That’s not exactly true. Well, it’s technically true, stipulating that “exceptional” means “to the specific people in that particular place and time”. But every one of us, from the homeless man in jeans in an alley to the drunks at the bar, are “millionaires” compared to most people in history. I mean, denim is a strong, durable, long-lasting fabric. To most people in history who wore undyed, coarsely-woven canvas tunics, blue jeans would have been an impressive space-age material, and would have fetched a very high price. The access to medical care, clean water, shelter and food that even the poorest person today has is unprecedented. Even kings and emperors in the past lacked vaccines, antibiotics or water that was safe to drink. So it is certainly possible, and indeed a realistic goal, for the majority of future Americans to live like millionaires do today, or have an even better lifestyle. It will take a lot of work, but it’s not economically impossible. In fact, it’s simply continuing the trend. ---
**Author:** ![coremelt](https://avatars.discourse-cdn.com/v4/letter/c/4491bb/32.png) [@coremelt](https://boards.straightdope.com/u/coremelt)\ **Post date:** [January 25, 2016, 9:09pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/83 "2016-01-25T21:09:57Z")
> [@DrCube](#): > > So it is certainly possible, and indeed a realistic goal, for the majority of future Americans to live like millionaires do today, or have an even better lifestyle. No its not because the two things that are not going to get cheaper is labor and physical space. There isn’t any more land being produced, real estate only gets more and more expensive as the population increases. Secondly automation can replace a lot of things, but it doesn’t replace being able to pay another person to do the shit things you don’t want to do, whether thats cleaning or accounting. Being rich nowadays should be defined as having a large amount of physical space that you own / control and having a staff to do all the unpleasant tasks you don’t want to do. No technology advance is going to make those things available to the majority of people. ---
**Author:** ![billfish678](https://avatars.discourse-cdn.com/v4/letter/b/7bcc69/32.png) [@billfish678](https://boards.straightdope.com/u/billfish678)\ **Post date:** [January 25, 2016, 9:14pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/84 "2016-01-25T21:14:12Z")
> [@coremelt](#): > > No its not because the two things that are not going to get cheaper is labor and physical space. There isn’t any more land being produced, real estate only gets more and more expensive as the population increases. Secondly automation can replace a lot of things, but it doesn’t replace being able to pay another person to do the shit things you don’t want to do, whether thats cleaning or accounting. Being rich nowadays should be defined as having a large amount of physical space that you own / control and having a staff to do all the unpleasant tasks you don’t want to do. No technology advance is going to make those things available to the majority of people. Good point. Which is why my earlier post mentioned magic robots. ---
**Author:** ![coremelt](https://avatars.discourse-cdn.com/v4/letter/c/4491bb/32.png) [@coremelt](https://boards.straightdope.com/u/coremelt)\ **Post date:** [January 25, 2016, 9:25pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/85 "2016-01-25T21:25:17Z")
> [@billfish678](#): > > Good point. Which is why my earlier post mentioned magic robots. Sure and 100 percent realistic virtual reality might enable us all to have virtual mega mansions and a virtual harem of 1000 women / men depending on your gender and the way you swing. But there will still be an elite who genuinely have a physical mansion, space, and a staff they can command. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [January 25, 2016, 9:25pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/86 "2016-01-25T21:25:19Z")
> [@adaher](#): > > There is one path to mega riches that way: move up the ranks of a big company until you get to a high executive position. Quite doable for top performers with political skills. Not billionaire riches, but certainly in the 7 figure salary range. Most high executive positions aren’t going to pay THAT much. It’s not enough to be an executive; you’d have to be a chief executive, or at least a high ranking chief officer, in a very large company indeed. Most company executives won’t make a million dollars a year. If you wanna make that kind of money you usually need to OWN the company. ---
**Author:** ![coremelt](https://avatars.discourse-cdn.com/v4/letter/c/4491bb/32.png) [@coremelt](https://boards.straightdope.com/u/coremelt)\ **Post date:** [January 25, 2016, 9:38pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/87 "2016-01-25T21:38:42Z")
> [@RickJay](#): > > Most high executive positions aren’t going to pay THAT much. It’s not enough to be an executive; you’d have to be a chief executive, or at least a high ranking chief officer, in a very large company indeed. Yep, a VP at Apple probably makes around $200K a year and doesn’t get much in stock options unless they joined very early. And companies like Apple have a shit load of VP’s. Its only the division heads or celebrities like Jony Ives that are making the really big money, and their salaries are very much tied to performance. If your department tanks you get fired… $200k a year in the SF Bay area makes you comfortable, it doesn’t make you rich. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [January 25, 2016, 9:59pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/88 "2016-01-25T21:59:13Z")
> [@coremelt](#): > > Yep, a VP at Apple probably makes around $200K a year and doesn’t get much in stock options unless they joined very early. And companies like Apple have a shit load of VP’s. Its only the division heads or celebrities like Jony Ives that are making the really big money, and their salaries are very much tied to performance. If your department tanks you get fired… $200k a year in the SF Bay area makes you comfortable, it doesn’t make you rich. I rather suspect it is more than that, given my non-VP salary. New PhDs in CS and engineering are getting over $100K these days. They might not get stock options, since a change in the tax law makes them not as attractive, but I’m sure they do get stock grants that vest over time. Now, Apple might be cheap, but I’ve heard lots of bad things about working there but never that. ---
**Author:** ![DrCube](https://avatars.discourse-cdn.com/v4/letter/d/a3d4f5/32.png) [@DrCube](https://boards.straightdope.com/u/DrCube)\ **Post date:** [January 25, 2016, 10:14pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/89 "2016-01-25T22:14:19Z")
> [@coremelt](#): > > No its not because the two things that are not going to get cheaper is labor and physical space. There isn’t any more land being produced, real estate only gets more and more expensive as the population increases. Secondly automation can replace a lot of things, but it doesn’t replace being able to pay another person to do the shit things you don’t want to do, whether thats cleaning or accounting. Being rich nowadays should be defined as having a large amount of physical space that you own / control and having a staff to do all the unpleasant tasks you don’t want to do. No technology advance is going to make those things available to the majority of people. Remember that recession thingy we had a few years ago? Lots of people lost a shitload of money on real estate, because it got cheaper. In fact, I’m not sure real estate prices are back to their 2006-ish peak yet. In real terms the minimum wage has been going down for decades. In 1998, I got a job at McDonald’s as a high schooler after a five minute interview, starting at a quarter over minimum wage. Nowadays, McDonald’s requires personality tests, references, 24-hour availability, etc. And they pay _exactly_ minimum wage, and lower where possible (for example, minimum wage in Missouri is $7.50 for the first six months, then they have to pay you $8). Real estate can and does get cheaper. Labor can and does get cheaper. Oil can and does get cheaper. Energy can and does get cheaper. Also, what is a smartphone but an assistant? Hell, before they had smartphones they had the same thing but without cell reception. They were called “Personal Digital _Assistants_”. What is plumbing and running water but an assistant? Used to be you had a servant fetch your water and empty your bedpan. Now you just flip a switch to do both. That’s extremely wealthy compared to almost anyone from the 18th century. And as technology progresses, we’ll get a lot more of these “assistants”. > [@coremelt](#): > > Secondly automation can replace a lot of things, but it doesn’t replace being able to pay another person to do the shit things you don’t want to do, whether thats cleaning or accounting. That’s _exactly_ what automation does. It replaces paying someone to do things you don’t want to do. Also, the fact that labor is getting more expensive is evidence that I’m right. You think anyone in 1935 would have turned down a $7/hr job? People today have more skills, more luxuries and more wealth than almost anyone who wasn’t rich had in 1935. Americans today won’t settle for 50 cents per hour anymore, precisely because we’re “rich”. But someone in Bangladesh might be pretty happy with that wage. Just because we’re poor compared to Bill Gates doesn’t mean we aren’t rich compared to someone from Bangladesh or 1935. And I would hope my grandchildren laugh at how poorly I lived in the 80s compared to them. I don’t see this trend stopping, just speeding up and slowing down along with the economy. ---
**Author:** ![billfish678](https://avatars.discourse-cdn.com/v4/letter/b/7bcc69/32.png) [@billfish678](https://boards.straightdope.com/u/billfish678)\ **Post date:** [January 25, 2016, 10:18pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/90 "2016-01-25T22:18:42Z")
> [@Voyager](#): > > I rather suspect it is more than that, given my non-VP salary. New PhDs in CS and engineering are getting over $100K these days. > > They might not get stock options, since a change in the tax law makes them not as attractive, but I’m sure they do get stock grants that vest over time. > Now, Apple might be cheap, but I’ve heard lots of bad things about working there but never that. That may or may not be true. But that is kind of beside the point of the OP. Get “rich” by getting a hard to get degree that pays well…:dubious: First, most people can’t do it. Second, if everybody could…they would…and it would pay like McDonalds would. Third, even if the first two weren’t true in some strange universe, there would only be a limited number of slots available for the job anyway. ---
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [January 25, 2016, 10:48pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/91 "2016-01-25T22:48:03Z")
> [@coremelt](#): > > For one thing its tax liability reduction (legal) not tax avoidance (illegal). At least in Australia paying yourself a franked dividend from a company is taxed at a lesser rate than regular income. There is numerous other ways. As for it being legal, all I can say is that my legal and financial advisors (who are reputable) assure me that it is. Perhaps it’s different in Australia, but in the US it’s tax _avoidance_ that’s legal and tax _evasion_ that’s illegal. Also, the US doesn’t have franked dividends. We do have the notion of carried interest, which is a means for wealthy funds to pay their managers in a way that gets taxed at preferential capital gains rates. But it pretty much only applies to fund managers. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [January 25, 2016, 11:58pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/92 "2016-01-25T23:58:39Z")
> [@coremelt](#): > > I have friends who are US citizens and have corporations that they contract through. They’re doing pretty well. How much tax reduction do they see? ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [January 26, 2016, 6:59am UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/93 "2016-01-26T06:59:05Z")
> [@DrCube](#): > > But every one of us, from the homeless man in jeans in an alley to the drunks at the bar, are “millionaires” compared to most people in history. For one thing, that’s not the condition stated by the OP, who was clearly asking why we don’t see **most** Americans earning and living like the **wealthiest** Americans. Which is intrinsically impossible, as I said. For another, I question the hell out of the assertion that the homeless man in jeans in an alley necessarily has a fantastically superior existence compared to most people in history. Freezing your ass off in a dirty alley has **never** been considered a rich-person luxury lifestyle, and I don’t think the existence of denim or even cellphones and antibiotics is sufficient to offset that fact. Yes, I agree with you that the **average** person today has access to amenities and technologies that yesterday’s aristocrats could only dream of. And I agree that, with continuing development and a proper social safety net, the average people of the future may have access to even more modern conveniences that today’s millionaires would envy. But, absent some kind of draconian communist restructuring, the lifestyles of a small wealthy elite will always be much more luxurious than those of their non-wealthy contemporaries. > [@Dr Cube](#): > > In real terms the minimum wage has been going down for decades. […] > > Also, the fact that labor is getting more expensive is evidence that I’m right. :dubious: Make up your mind: is labor getting cheaper or more expensive? Personally, I’m not seeing how the fact that a fast-food job is harder to get and less remunerative in real terms than it was a few decades ago is evidence that the average person is better off overall now than they were then. ---
**Author:** ![coremelt](https://avatars.discourse-cdn.com/v4/letter/c/4491bb/32.png) [@coremelt](https://boards.straightdope.com/u/coremelt)\ **Post date:** [January 26, 2016, 8:11am UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/94 "2016-01-26T08:11:04Z")
> [@Ruken](#): > > How much tax reduction do they see? Generally they can reduce from 30 percent to around 15 percent total tax liability but its only worth setting up if you earn a certain minimum amount because of the extra legal / accounting fees involved. Those would average 2000- 4000 a year with an initial one off setup fee around $5K. ---
**Author:** ![clairobscur](https://avatars.discourse-cdn.com/v4/letter/c/839c29/32.png) [@clairobscur](https://boards.straightdope.com/u/clairobscur)\ **Post date:** [January 26, 2016, 9:33am UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/95 "2016-01-26T09:33:18Z")
> [@Ruken](#): > > $5k invested per year at 7% return, which is not unreasonable, will get you pretty close to $1M after 40 years. I was investing $5k per year when I was making less than half the per capita GDP. Expecting a 7% return in an investment that’s safe (like in there’s no way your investment is going to suddenly lose half its value) doesn’t seem that reasonable to me. Besides, you have to deduce from it inflation, and then taxes on your return. I would think that expecting a 3% return after inflation and taxes is more reasonable. Which means, at 60, assuming that you live this long, that the dollar you saved when you were 20 now turned into 3.26. Now, is it worth it? Especially given that people income \*tends\* to raise over their lifetime. You're usually making more at 60 than you were at 20. So, it's not even obvious that those 3 dollars at 60 will have a marginal utility higher than the 1 dollar you saved at 20. So, for instance, you could pay for a 3260 vacation at 60, but will this make your life better on the overall than a $ 1000 vacation when you were 20 would have? You could live very modestly for 40 years, and then buy a mansion much bigger than your coworkers earning the same who have lived paycheck to paycheck, but it’s not obvious that their lives won’t have been better overall. ---
**Author:** ![coremelt](https://avatars.discourse-cdn.com/v4/letter/c/4491bb/32.png) [@coremelt](https://boards.straightdope.com/u/coremelt)\ **Post date:** [January 26, 2016, 9:37am UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/96 "2016-01-26T09:37:30Z")
> [@Voyager](#): > > I rather suspect it is more than that, given my non-VP salary. New PhDs in CS and engineering are getting over $100K these days. > . I know a few Apple VP’s personally. Judging from the cars they drive and their lifestyles ( and considering the enormous cost of living anywhere near Cupertino) they don’t seem that well off. Facebook, Google and all the other younger tech companies are the ones that pay lavish salaries and massive stock options. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [January 26, 2016, 1:37pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/97 "2016-01-26T13:37:07Z")
> [@coremelt](#): > > Generally they can reduce from 30 percent to around 15 percent total tax liability but its only worth setting up if you earn a certain minimum amount because of the extra legal / accounting fees involved. Those would average 2000- 4000 a year with an initial one off setup fee around $5K. Ok great, we’re seeing some actual number from you now. Are we talking S, C, or LLC? Are they following the “reasonable salary” rules? ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [January 26, 2016, 2:00pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/98 "2016-01-26T14:00:14Z")
> [@Voyager](#): > > I rather suspect it is more than that, given my non-VP salary. New PhDs in CS and engineering are getting over $100K these days. > > They might not get stock options, since a change in the tax law makes them not as attractive, but I’m sure they do get stock grants that vest over time. > Now, Apple might be cheap, but I’ve heard lots of bad things about working there but never that. My husband was in the running for a VP at Apple job. Salary is right on. We couldn’t afford to take the job since he made that much in Minnesota where it is way cheaper to live. (Netflix and Amazon were similar stories. $200k a year for a VP job in the Midwest is a way better deal than the same salary in Bay or Seattle.) ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [January 26, 2016, 2:10pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/99 "2016-01-26T14:10:12Z")
OP is curious why people don’t accumulate wealth, and we have an example of attitudes that contribute to that: > [@clairobscur](#): > > Expecting a 7% return in an investment that’s safe (like in there’s no way your investment is going to suddenly lose half its value) doesn’t seem that reasonable to me. Besides, you have to deduce from it inflation, and then taxes on your return. 7% is market CAGR after inflation since the 50s. We don’t know what will happen tomorrow, but it’s not an unreasonable number for someone retiring today. No, that’s not “an investment that’s safe”. That’s why people generally diversify, and derisk as they approach retirement. And if you’re only saving a piddling $5k, there are multiple tax-advantaged options. But I hope you already know all that. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [January 26, 2016, 5:45pm UTC](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969/100 "2016-01-26T17:45:08Z")
> [@coremelt](#): > > I know a few Apple VP’s personally. Judging from the cars they drive and their lifestyles ( and considering the enormous cost of living anywhere near Cupertino) they don’t seem that well off. Facebook, Google and all the other younger tech companies are the ones that pay lavish salaries and massive stock options. Maybe they are good with money? You couldn’t tell my salary from the car I drive and my lifestyle either. And while Cupertino has always been ridiculously expensive, if they bought a while ago it was much less so. I don’t live in Cupertino but I do own a house that is worth a totally absurd amount. I’m just down the hall from my VP. He is not a conspicuous consumer, and if he makes only $200K I’d be shocked. [Previous page](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969.md?page=4) [Next page](https://boards.straightdope.com/t/why-will-most-americans-never-become-mega-millionaires-or-billionaires/743969.md?page=6)