I heard some interesting factoids about America’s millionaires recently on the Zig Ziglar Podcast. This isn’t a podcast that I had listened to before (or are necessarily recommending), but I enjoyed the insight into where America’s millionaires come from and thought it might be instructional to many people who are thinking about financial independence.
First, the podcasters said that there are actually a good number of millionaires in the United States: about 8.4 million. Since there are 318 million people in the country today, that’s about 2.6%, or one out of 38 people. That seems like a lot, doesn’t it? I know that a million dollars today isn’t what it used to be, but it’s still a good number of people.
Next, the podcast said that these are the sources of wealth for America’s millionaires:
- 74% – Own their own Businesses
- 10% – CEO/Business Executives
- 10% – Professionals – Dentist, Doctor, Lawyer, etc.
- 5% – Top Salespeople
- <1% – Actors, Athletes, Musicians, Lottery Winners, etc.
Being a big-company guy all of my career (category #2), I was surprised that so many millionaires built their wealth by owning their own business. Not surprised that it is a good route to wealth, but surprised that it is overwhelmingly so. The numbers are amazing: self-employed people represent only about 6% of the labor force, but 74% of millionaires? That’s 12x more than their share of the workforce.
As the Millionaire Next Door book notes, the kinds of businesses these millionaires own are pretty down-to-earth enterprises: businesses like dry cleaners, bowling alleys, commercial lawn care, restaurants, real estate firms, auto repair garages, or bicycle shops. These are the simple kinds of businesses that serve us all every day and make their owners wealthy over time. Another study, shows that the self-employed are also the happiest of all working people. A good friend of mine that owns his own business was telling me of the joys of leaving work on a weekday afternoon to take his kids to the movies. No meetings to attend or boss to complain. Happiness.
With this being the case, you would think everyone would be starting their own businesses. But curiously, the number of self-employed Americans is falling, not rising (graph here). Self-employment peaked in 2005 and has declined about 10% over the last 10 years. If for nothing else, I would have expected with the explosion of digital tools, more and more people would be owning their own piece of the future.
One question the podcasters asked was “Is our education system really preparing people for this world?” I think not, honestly. We recently took our high school senior son to meet with the admissions people and a professor at the college he is interested in attending. I was a bit dismayed that becoming a software engineer, programmer, or IT expert for a multinational MegaCorp was presented as almost the exclusive focus of the Computer Science program. In an age of “digital unicorns” – tech start-ups with market valuations over $1B – you would think that business education to help you own your own destiny would be a highly compelling value proposition for universities today.
(Then again, the podcast said the average GPA of deca-millionaires ($10M+) was only 2.70, so their success in life may seem invalidating to the status of higher education in the United States. Better to be a drop out like Steve Jobs or Bill Gates!?)
While my financial independence and aspiration to retire early were fueled over almost three decades at three different MegaCorps, my advice to my son will be to march to the beat of a different drum. I would say – think about how you can own your own dream. Enlist others in your vision of working hard, serving others & making smart choices. You are much more likely to be happy & successful by owning your own destiny!
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9 thoughts on “The Foolish Route To Millionaire Status”
I used to have a boss that would say “You don’t get rich working for someone else”.
Don’t forget Mark Zuckerberg on the list of dropout billionaires!
As much as our society lauds wealth, it’s also obsessed with status. And you don’t achieve status by owning a dry cleaning business, you get it by earning a fancy title (like I bet you have at MegaCorp, and which I have at a MegaCorp subsidiary) and driving a fancy car. Which we know from the Millionaire Next Door is the exact opposite way you build actual wealth. If you can teach your son not only to forge his own path, but to go counter to society’s obsession with status, he will already have won. 🙂
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Good point! Fortunately, Mr.FireStation Junior is not suffering from affluenza. I think that owning your own business also teaches you not to throw your money around lightly.
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Most universities know that people are by and large looking for security. It’s funny….in a real estate book I read a number of years ago, the author pointed out that there are two doors in life: security and freedom. He then said that the person who chooses the security door gets neither.
I think that might be a derivative of a Ben Franklin quote, which comes to mind in these days of NSA snooping: “Those Who Sacrifice Liberty For Security Deserve Neither.”
Great points. I’m pretty vocal to friends and through my writing about the advantages of living in the digital age.
The point you make about education especially is telling. No one is taught to start their own thing or blaze their own trail – they are taught to fit in. Just like no one is taught to handle their finances – they are taught to keep up with the Jonses.
The education system seems to breed a single-minded way of thinking. I know this is extremely over-simplified and quite a generalization, but it’s worth taking into consideration before just assuming a college degree is a ticket to success.
Well put. You see it playing out in the election rhetoric as well – each candidate promising to create JOBS, not making it easier to create businesses.