Ninety-nine percent and the great divide

Occupy Wall Street got us talking about class in America, just like that. Long a taboo topic, it’s one that desperately needs to be aired. But we can talk about it now. A brilliant stroke it was, to bypass the loaded term “class” and give us something a lot more functional: “the 99%” vs. “the 1%.”

In a country without ranks and titles, our attempts at drawing class lines typically involve finding some numerical cutoff that we can agree on: the “poverty line” is $20K per year, “middle class” is $40K, and so on. Trouble is, it’s arbitrary and doesn’t really yield much in the way of agreement. Nor insight, for that matter.

The percentages 99 and 1 appear at first glance to be yet another stab at a quantitative divide. Indeed, a graph of  income distribution in America shows a classic “hockey stick” curve that takes its sharp upward bend right at the 99th percentile, so the quantities turned out about right in this case. While it’s good that they did, the class differences that really matter are qualitative.

It’s not just about a difference in number of dollars. There’s a point where enough difference in degree becomes a difference in kind.  Politically, it’s about the difference in interests. The one percent have an interest in maintaining the system of rewards that grants them a disproportionate share of the wealth, while the ninety-nine percent’s interest lies in getting a share that’s steady enough to keep body and soul together. On a finite planet, these interests will inevitably come into conflict.

Once such lines are drawn, of course, people will go about assigning themselves to one side or the other. Some of it is cultural: a number of solidly middle-class go-getters, for example, are likely to identify with the top one percent based purely on aspiration. Conversely, some millionaires of a populist persuasion will throw in their lot with The Common Man.

For many others, their inner geek will clamor to know exactly what income level puts a person into the literal top 1%. Here’s the short answer: half a million a year.  According to data  from the Brookings Institution, annual income for the 99th percentile (i.e., entry into the top 1%) is $506,553. Any less and you’re down here with us serfs.

These stats are about income, but here’s an item about wealth that I found to be an eye-opener. The Federal Reserve releases quarterly figures for Total Household Net Worth, an amount which is currently at $57.3 trillion. That’s the sum total of all the net worth of all the households in all the land.

There are 114.8 million of them, as it happens, so your average household is worth $499,600.  That’s right — that’s how much there is to go around. To put it another way, an even distribution of wealth would mean every single family in America sitting comfy and secure on a half-million dollar nest-egg. Make of that what you will.

But the truly great divide, I believe, that separates the upper class from the working classes is when you get to leave out the “working” part. At a certain point, income from investments is enough to live on. You don’t have to worry about having a job, because you don’t need one.

Depending on your concept of “enough,” you could be work-optional with as little $2 million to your name. Dividends and interest on that much would put you in the $100,000-a-year bracket fairly easily. For life.

When you’re work-optional, the world looks like a much different place than it does to someone who has to harness up to a paycheck. That’s privilege. That’s the real difference between the top 1% and the rest of us. Our gut-level understanding of this is what the Occupiers have so successfully struck and have finally given a voice to. We can talk about it now.

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