The Global 1% Perspective

Much has been said, written, and depicted about the plight of the ‘average American’ struggling against the weighty oppression of the top 1% of wage earners. However, like most social, economic, and political issues of our day, the appropriate global context has been almost wholly missing from this vital and energetic discussion. As Americans, we are constantly comparing ourselves to each other while ignoring our larger place and status in the world, which ultimately will hold the key to re-energizing our economy.

So what is our place in worldwide individual finance? We are the 1%. According to new research by World Bank economist Branko Milanovic, 50 percent of the world’s richest 1% live in the USA. That encompasses 29 million US households, far surpassing runner up Germany with 4 million. France, Italy, and Great Britain make up the next tier of countries followed by Canada, Korea, Japan and Brazil.

And what exactly does it take to be included in the top 1% of worldwide wage earners? According to Milanovic’s research, income of $34,000 per year (after taxes) will put you in the club (this number is per individual member of a household, so a family of four would be included if the household earned $136,000 a year). The study found that the global ‘middle class’ make just $1,225 (worldwide median annual income) – unable to own a home, a car, attend college, or save for retirement.

Even though there is a deplorable wealth gap in this country on a global scale, we are an incredibly affluent nation. Citizens of large parts of the world struggle their whole lives with no hope of attaining the security or lifestyles largely taken for granted here. Milanovic found that even the poorest 5% of Americans are better off financially than two-thirds of the rest of the world.

The discussions, debates, and conversations on how to address inequalities in American incomes must continue as we seek solutions to a more perfect union. Throughout those activities, however, we should never lose sight of where we stand as a country or we risk destroying the very societal elements and institutions that allowed us to succeed where others have struggled.

[Note: Milanovic’s data is adjusted for geographical differences in cost of living. The study is based on the most recent comprehensive global data available collected in 2005.]