At the Money: The Data Behind America's Wealthy

In this episode of 'At the Money,' Barry speaks with Owen Zidar and Eric Zwick about the data behind America's wealthiest people. Owen Zidar is professor of Economics and Public Affairs at Princeton, and Eric Zwick is professor of Economics and Finance at the University of Chicago Booth School of Business. They are the authors of a new book The Everywhere Millionaire: Who Is Really Rich in America and How They Got There.” Each week, “At the Money” discusses an important topic in money management. From portfolio construction to taxes and cutting down on fees, join Barry Ritholtz to learn the best ways to put your money to work. See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  At Brookfield, we invest in the thing behind the thing behind the next big thing. Our focus across infrastructure, energy, real estate, private equity, and credit is helping to build the backbone of the global economy. We combine deep operational expertise with disciplined long-term investing, uncovering value, and partnering alongside clients to shape tomorrow's economy today. Learn how you can own what's next at Brookfield.com/own. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital.

• 0:33Speaker 01

  Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro Plans.

• 1:15Speaker 02

  This is Robert Smith from Business History. If you're listening to this, there's a good chance you're a small business owner. And like every small business owner, you started with a dream to do what you love and watch it grow. What you probably didn't dream about? Keeping up with cyber threats. That's where Mastercard can help with access to tools that help identify cyber threats to better protect your business. Building your dream business, priceless. For cybersecurity in a changing world, there's Mastercard.

• 1:42Speaker 02

  Learn more at Mastercard.com/smallbusiness.

• 1:47Speaker 03

  Bloomberg Audio Studios. Podcasts, radio, news.

• 1:59Barry Ritholtz?

  America is a rich nation, but I want to get granular as to exactly how rich, who is rich, and how they got that way. The data is astounding. To help us unpack all of this and what it might mean for your personal prosperity, let's bring in Owen Zedard and Eric Zwick. They're professors at Princeton and the University of Chicago, respectively, and they are the authors of a fascinating new book, The Everywhere Millionaire: Who Is Really Rich in America and How They Got There? And if you're listening to this, be sure and check out Part One, where we discuss a lot of the findings in the book.

• 2:40Barry Ritholtz?

  Today, I really want to talk about the data, which really is very mind-blowing. Let's start out with the thousand-to-one ratio. Private owners versus public CEOs. For every wealthy CEO, there are more than 1,000 private business owners worth at least $25 million in net worth. That blew my mind. Tell me a little bit about that.

• 3:04Speaker 05

  Yes, so it's a great statistic. It started out when we were thinking about the pass-through income and like the growth of pass-throughs. Let's add up all the income for top 1% pass-through business owners. And what's a good reference for that to make the point that this is a huge, surprisingly huge group? Well, let's look at CEOs in the ExecuComp dataset, which is roughly the S and P 1500. And it takes the CEOs, the CFOs, and adds up their salary plus at-the-market values of their options. And you say, okay, add that up. And it turns out they're just swamped in size by the pass-through income flows for the pass-through business owners, because there are just way more of them. And they're all across the industry, all across the country.

• 3:47Speaker 05

  You know, we're talking about 1,500 CEOs plus another 1,000 CFOs or like top execs. And we're talking about like over a million of these top 1 to 0.5% business owners.

• 4:01Barry Ritholtz?

  A million and a half people worth $25 million or more who are not running public companies. It's amazing. Let's talk about something even more finite, the Forbes 400. You guys explain how much Main Street swamps the 400. The Forbes 400 list receives 50% of all news coverage on wealth. Its members hold only 3% of total US household wealth. Meanwhile, Main Street millionaires are worth 13 times more the total combined wealth of the Forbes 400, accounting for 40% of all household wealth.

• 4:42Barry Ritholtz?

  That data is just mind-blowing, especially how lopsided the media coverage is on the billionaires in the Forbes 400.

• 4:51Speaker 06

  To us, that's one of the main points of the book. When you think about, you know, how to get rich or the influence of the rich in America, there's just such a monopoly on attention on a very small handful of people. And we want to broaden the aperture to say, look, like, there's a lot of money in America. It's a very rich place with a lot of opportunity, and it's not just the Forbes 400. We need to broaden it when we're thinking about opportunity, tax policy, and, you know, just a huge range of issues that people care about. And we really think the narrative is, needs to be reset.

• 5:29Barry Ritholtz?

  So I want to really get granular with the data and just reveal how far off the narrative is. 5 million households have over $5 million. That's the top 4%. And if you've followed the Fidelity 401K millionaire data, that really shouldn't be a terrible surprise. But then there are 2 million Americans worth $10 million or more. And then the number that I think could be the most shocking number in the entire book, if you ask people, how many people are worth 100 million or more in America? I don't know, they'd say a few hundred, a few thousand.

• 6:13Barry Ritholtz?

  65,000 Americans are sent to millionaires worth more than $100 million. I think that was the most shocking number in the entire book.

• 6:22Speaker 05

  It's a huge group of people. So Forbes 400 is 400 people. You add like all the people and their families, their kids, maybe it's like 1,500 people or 2,000 people.

• 6:32Barry Ritholtz?

  Not 65,000?

• 6:34Speaker 05

  Not 65,000, right. So we're talking about like 30 to, you know, 50 times the number of people here. That is why not only, say, how is there a lot of 3, 4 million dollar houses, but there are a lot of like 10, 20 million dollar houses. That's why, like Aspen, the average house price is so high. It's not just like some tech people from Silicon Valley buying those houses. It's like car dealers and people running like manufacturing businesses, making inputs into production for construction and so on. And they've accumulated like really screw you money. And it's amazing.

• 7:11Barry Ritholtz?

  Yeah, I always say, if you want to feel really bad about yourself, go to Zillow, set it to see sold houses, and look at a wealthy part of America. Out in the Hamptons, it's genuinely shocking how many 30, 40, 50 million dollar houses, like hundreds, transact every summer. It blows my mind. Here's another data point that I'm kind of starting to intuit, having plowed through the book. Half of Americans who are worth $5 million or more own a private business. That really seems to be the data point that is the core theme here, that if you want to accumulate that sort of wealth, or you want to understand where that wealth is in

• 7:56Barry Ritholtz?

  America, you have to look at business owners.

• 8:00Speaker 06

  That's absolutely right. One of the things that really jumped out to us when we were looking at pass-through businesses is that 70 cents of every dollar of income of these entities went to the top 1%. So this is really much more concentrated than public equity ownership and other forms of wealth. And it's just very prevalent as you go up further and further into the wealth distribution.

• 8:20Barry Ritholtz?

  And again, more confirmation bias for me. I'm fond of saying, the only reason any family should ever pay estate tax is on the way to your attorney to sign the documents, you're hit by a bus. And you guys confirm that because $200 billion transfers tax-free every year. Only 0.1% of all US estates pay any estate tax. That's down. I did an analysis on that 15 years ago, and I want to say it was 0.4%. So it's even less today.

• 8:58Barry Ritholtz?

  Tell us a little bit about hundreds of billions of dollars transferring tax-free every year.

• 9:06Speaker 06

  And it's quite striking. I mean, one of the reasons why I think it's fallen is that the threshold has moved from in early 2000s, 1.2 million up to 30 million for married couples. And so we've really decimated it. There's also a huge range of avoidance schemes. I think Gary Cohn, who is the NEC Chair or NEC Director in the first Trump administration, said only morons pay the estate tax.

• 9:31Barry Ritholtz?

  It's true. So it's really, it's really amazing. Go on.

• 9:36Speaker 06

  Yeah. So I think, you know, this is one area where if you look at what happened to the estate tax, a lot of it was basically sold on, oh, we need to help the little guy. And there's some really wealthy business owners who were kind of using that to decimate it. And given how much wealth is transferring at the great wealth transfer, I think it's high time to revisit the estate and inheritance tax regime because it's really amazing how little we collect in estate taxes.

• 10:09Barry Ritholtz?

  I want to talk about something that's sort of contra to the main theme. You discuss some issues that can address some of the, that K shape we talked about, some of the inequalities that are there. I, I, I knew that there was a labor penalty for all these non-competes that are out there. I had no idea it was $300 billion annually. Some states allow it, some states like California do not. If we were to get rid of all of these non-competes, and I'm not talking about where there are very specific trade secrets in businesses, just run of the mill non-competes for people who are just doing their daily jobs and are

• 10:53Barry Ritholtz?

  not senior and have no access to that, $300 billion a year would go a long way to closing that K a little bit. Tell us about why we should get rid of all these non-competes.

• 11:04Speaker 05

  So we try and place, you know, these everywhere millionaires and the businesses they run in this broader conversation about what's going on with the labor share, like what's going on with the share of overall economic activity that's going to workers versus owners, and suggest that some of the same factors that I think have gotten a lot more attention, which is, you know, workers having fewer options in terms of where to go if they're not being treated well at a given employer. Like, that's, I think, a story that's been told for large public companies, maybe, but not so much for these smaller companies. And it turns out that non-competes are really broad and have expanded. You see a Jimmy John's or a Jersey Mike's applying non-competes to the sandwich artists. And

• 11:49Speaker 05

  they, you know, there is a lot of artistry in, in making a hoagie, and I have a taste for one as lunch approaches. But like, it's, you shouldn't be restricted from like leaving one Jimmy John's to go across the street to make sandwiches for somebody else. And if you scale that up, you know, like the ability to walk out the door as a worker, there's a lot of power to get better wages if the company's doing well. And, and these things have really proliferated in a way that seems kind of unhelpful for the conversation of inequality and unnecessary, I think, when you think about, you know, protecting the secret to making that perfect sandwich.

• 12:29Barry Ritholtz?

  Last question, which I guess indirectly relates to that. When you guys looked at wealth to see how overrepresented wealthy congressmen are versus the general public, the numbers are kind of shocking. So the deck of millionaires, people worth $10 million are 10x as likely to sit in Congress, 10 times likely to sit in Congress as they're found in the general population. But where this is really egregious is with the group of people worth 100 million or more, the senamillionaires, you're 62 times more likely to sit in Congress as you are to be found in the general population. Tell us how that came about and what does

• 13:12Barry Ritholtz?

  that mean for policy and income and wealth inequality?

• 13:16Speaker 06

  Yeah, it's really quite striking. Like, if you go to their grocery store, one out of every 33 people you meet are private business owners. If you go to Congress, it's one out of four. And I think some of that is because of the role of wealth and how hard it is to raise money. And so if you think about like, who is the senator or who's playing golf with the senator, you know, it's a lot of, of these folks. And the consequences are really quite striking in terms of thinking about who represents us when you're making decisions about the deficit or debt and, you know, some of these large tax bills come through. I think that's one part of the story for why we've seen such growth in their wealth

• 14:00Speaker 06

  is that there are a lot of small loopholes that's kind of avalanched over time in recent decades as a consequence of being so well represented, both in terms of people and in terms of their interests.

• 14:12Barry Ritholtz?

  To wrap up, if you are interested in either understanding wealth in America or becoming wealthy in America, The Everywhere Millionaire, Who is Really Rich in America and How They Got There by Owen Zidar and Eric Zwick is the book for you. I found it fascinating, and I think you will also. I'm Barry Ritholtz. You're listening to Bloomberg's At the Money.

• 14:54Speaker 00

  At Brookfield, we invest in the thing behind the thing behind the next big thing. Our focus across infrastructure, energy, real estate, private equity, and credit is helping to build the backbone of the global economy. We combine deep operational expertise with disciplined, long-term investing, uncovering value, and partnering alongside clients to shape tomorrow's economy today. Learn how you can own what's next at Brookfield.com/own. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital.

• 15:27Speaker 01

  Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode. Available on Plus and Pro Plans.

• 16:10Speaker 07

  The world of business is constantly evolving. Every day, new challenges, new opportunities, new ways of working. Comcast Business keeps you totally in step with secure AI-backed networking built to power the way modern business gets things done today in more than 100 countries around the world. That's some serious muscle. And get this, Comcast Business powers over 90% of the Fortune 500 and millions of small businesses. Behind it all, network engineers, cybersecurity specialists, support teams, thousands of experts answering your call at 2:00 AM like it's 2:00 PM. Always on, always ready. That's

• 16:50Speaker 07

  a lot of coffee. One partner powering how business gets done for companies of every size all around the globe. When you add it all up, no one does business like Comcast Business.

• 17:03Speaker 08

  A business gift is never just a gift. It's a thank you, a milestone, a moment of appreciation. It's a message about how much someone matters and what your brand stands for. At 4imprint, you'll find thousands of customizable options like premium apparel, branded drinkware, tech, totes, and more, each chosen not just for function, but for meaning. You can tailor every detail, your logo, your message, your presentation, so your gift feels personal and on-brand. And with expert support, dependable service, and thousands without a setup fee, creating something thoughtful doesn't mean making it complicated. Every order is backed by 4imprint's 360-degree guarantee, so you can be 4imprint certain it'll arrive exactly as expected, on time, and with the care your brand deserves.

• 17:48Speaker 08

  Because when the moment matters, the right gift speaks volumes, and the right partner makes it easy. Explore gifting with purpose and certainty at 4imprint.com. 4imprint, for certain.

• 17:59Speaker 09

  If you're a business owner, you need a card that can keep up. With the Delta Sky Miles Reserve Business American Express Card, everyday purchases transform into miles you can use towards future travel. So business as usual can lead to a well-deserved getaway. And for a limited time, card members can earn 200,000 bonus miles, the highest miles offered this year. Whether you're traveling for business or planning your next adventure, now's a great time to make every purchase go further. Apply today at www.delta.com/podcast. Offer ends November 4. Minimum spending requirements and terms apply.

• 18:35Speaker 02

  This is Robert Smith from Business History. If you're listening to this, there's a good chance you're a small business owner. And like every small business owner, you started with a dream to do what you love and watch it grow. What you probably didn't dream about, keeping up with cyber threats. That's where Mastercard can help with access to tools that help identify cyber threats to better protect your business. Building your dream business, priceless. For cybersecurity in a changing world, there's Mastercard.

• 19:02Speaker 02

  Learn more at mastercard.com/smallbusiness.

• 19:05Speaker 10

  Wise is the smart way to manage the currencies you need around the globe. When you send money abroad using your bank, you could get hit with hidden fees and exchange rate markups. There's a better way. Try Wise. Wise uses the exchange rate you'd usually find on Google with no unwelcome surprises. Plus, most transfers happen in under 20 seconds, which means your money arrives in less time than you've been listening to me. It's simple and free to sign up when you download the Wise app. Be smart, get wise. TSCs apply.

• 19:35Speaker 08

  A business gift should do more than check a box. It should reflect your brand and show someone they're appreciated, recognized, and truly seen. 4imprint offers thousands of high-quality customizable products like premium apparel, drinkware, tech, and more, making it easy to create a gift that feels meaningful and on-brand. And with 4imprint's expert support and their 360-degree guarantee, you can be 4imprint certain your order will arrive exactly as intended. Explore gifting with confidence at 4imprint.com. 4imprint, for certain.