Why Our Growing American Affluence Should Be Celebrated, Not Condemned A new study suggests many Americans reach the dream of affluence. How? Because we're a country of smart, driven entrepreneurs.
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The way most of the media depicts it, there are about 1 percent of the country making all the money and putting their feet up on the arched backs of the rest of the 99 percent.
This never sat well with me, since Entrepreneur has for decades chronicled countless stories of people rising up from nothing to create great companies, creating wealth along the way. That is, after all, the American dream, and it doesn't jive with the nightmare of the 99-percenters and those who constantly harp that we are a nation divided into a handful of haves and a bucketload of have-nots.
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It turns out the data doesn't support that rhetoric. According to a study by Washington University in St. Louis, released this week by the Associated Press, a full 21 percent of working-age adults reach affluence for at least a year in their lives, before they hit the age of 60. That percentage, according the study, is twice the rate that it was in 1979.
This "new affluent" is bigger than you think. The AP estimates them at 25 million U.S. households, accounting for nearly 40 percent of total U.S. consumer spending.
Does that sound like the greedy 1 percent to you?
Of course not.
This is not a rich-get-richer story. It's more of a poor-get-richer-then-get-poorer-and-richer-again story. The 21 percent who reach affluence hit an income of $250,000 a year. Many of them, though, drop from that level (though they stay in the top 20 percent of all earners by holding down paychecks of $100,000 a year, for the most part).
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How does this happen? Because, we are an entrepreneurial country. How do you make a bundle and lose a bundle, then make it back again? By being nutty enough to believe in yourself and your ability to take an idea everyone thinks is crazy and turn it into a real-life business. Some of these ideas make money. Most don't. But there is profit in the trying, in the experience of building an enterprise, a market, a customer base and a team of employees.
Every American should love success. All entrepreneurs do, and, you know what? They also honor failure. It is part of the process. We are given the chance to make our own destiny in this country, and we know that means walking the tightrope without a safety net.
Yet, there sadly remains a part of this country that believes success should be punished with higher taxes, punitive wage laws, senseless regulations and trophies for trying, rather than winning. The solution is to take from that 1 percent and redistribute to the other 99. They don't even realize that wealth redistribution amounts to wealth destruction -- for everyone.
And now we know that approach would hurt even more people. It's one thing to fight the 1 percent. It is completely another to rail against the 21 percent.
Yes, there is a wealth gap in this country. You cannot ignore that. But real data now show the truth in how to fix the problem. Give people the chance to win -- and lose -- and more people can reach the brass ring of affluence. If we can have 21 percent of our citizens reach affluence, there's no reason we can't double that rate again in 15 or 20 years. Along the way, some great examples of American innovation will be funded and commercialized. People will be richer for the experience, and deservedly so.
That's the entrepreneurial way. It's time to stop thinking the American dream is a pipe dream.
