Chelsea German, a Cato Institute scholar and editor of their new(ish) project, HumanProgress.org, recently wrote an article about the odds of making it to the top 1% in the United States. Apparently, the odds are pretty good.
According to research from Cornell University, over 50 percent of Americans find themselves among the top 10 percent of income-earners for at least one year during their working lives. Over 11 percent of Americans will be counted among the top 1 percent of income-earners (i.e., people making at minimum $332,000) for at least one year.
11% is pretty good odds. Indeed, the reason, she argues, is because social mobility in the U.S. is high and turnover at the top of the income spectrum is also high. As she notes:
Some 94 percent of Americans who reach “top 1 percent” income status will enjoy it for only a single year. Approximately 99 percent will lose their “top 1 percent” status within a decade.
Now consider the top 400 U.S. income-earners — a far more exclusive club than the top 1 percent. Between 1992 and 2013, 72 percent of the top 400 retained that title for no more than a year. Over 97 percent retained it for no more than a decade.
This echoes what American Enterprise Institute scholar Mark J. Perry has said elsewhere.
This also echoes Thomas Sowell’s claim that “people who were in the top 1 percent in 1996 had their incomes fall — repeat, fall — by 26 percent by 2005 … More than half the people who were in the top 1 percent in 1996 were no longer there in 2005.”
So there’s more than what meets the eye when it comes to income inequality. So be careful when pushing tax hikes for the “rich.” One day, you might become the “rich” you once demonized.