The richest person in your town probably isn’t a tech entrepreneur or a hedge fund manager. Chances are, it’s the dentist who runs six offices or the HVAC contractor whose trucks are everywhere, according to economists Owen Zidar and Eric Zwick. These “stealth rich people,” as the duo describe them in their new book, “The Everywhere Millionaire,” typically get rich the old-fashioned way: through hard work over many years. And there are plenty of them in the U.S., with roughly 5 million households worth at least $5 million and a combined wealth more than 13 times that of the Forbes 400, their research shows. The findings, based on economists’ deep dive into Treasury and IRS data that linked tax records to individual businesses and their owners, show that the path to great wealth in the U.S. typically doesn’t run through a regular paycheck. Instead, it is through ordinary companies that often benefit from the same tax exemptions and structures: “pass-through” companies, such as sole proprietorships and partnerships. “This is not just a story about coastal wealth, Silicon Valley and finance,” Zwick, an economics professor at the University of Chicago Booth School of Business, told CBS News. “This is a much broader phenomenon and also much closer to home for many Americans.” Economists Owen Zidar and Eric Zwick dug into Treasury and IRS data to learn more about millionaires in the United States. They found that many own brick-and-mortar businesses, such as HVAC repair companies or restaurant chains, rather than making money in Silicon Valley or Wall Street. Henry Holt and Co. To be sure, the stock market boom has also created a growing number of 401(k) millionaires, but Zwick and Zidar focus on people who have accumulated wealth far greater than even dedicated savers have been able to amass. These “millionaires everywhere” include 3 million private business owners, with an average wealth of about $25 million, they found. [Musk] is very rich, but the Forbes 400 represents 3% to 5% of total U.S. household wealth, and this group is much larger, and that’s important for understanding the economy,” Zwick said. The Millionaire Next Door? The new research is reminiscent of the 1990s bestseller “The Millionaire Next Door” by Thomas Stanley and William Danko, which found that many millionaires were average Americans who built their wealth through careful savings and According to the book, the millionaires who are the subject of Zwick and Zidar’s research are generally not as modest as those studied by Stanley and Danko, and the economists found that many of these wealthy business owners have no qualms about enjoying the fruits of their prosperity. Yachts, large houses and other extravagances are common. At the same time, their businesses are of the typical traditional type, rather than the headline-grabbing wealth associated with Silicon Valley and Wall Street. down the street, you look at a truck that’s delivering beer, and if you look at the door, you see the name of the beer distributor, and then you go look for it and say, ‘Oh, that’s a millionaire everywhere,'” Zwick said. “These are the millionaires everywhere in the United States. The research also examined the traits of the typical millionaire, tracking whether they inherited their businesses or wealth, for example, or whether they were more likely to have college degrees. The pair found that about three-quarters of them millionaires started their own businesses, while the vast majority did not inherit money. “The typical millionaire everywhere is 62 years old and married,” Zwick said. “They are often still pretty obsessed with what they do,” he said. One typical millionaire profiled by economists is Dick Portillo, who grew up poor in a housing project in Chicago and opened a hot dog stand in 1963 with a $1,100 investment that grew the business into a large chain. regional. to Berkshire Partners for $1 billion Many of these business owners are driven primarily by the desire to be their own bosses rather than get rich, Zwick said. owner, avoiding double taxation of corporate taxes. Such agreements also allow pass-through companies to deduct 20% of that income from their taxes, allowing owners to avoid paying income taxes on a portion of their profits. “This has made them richer than they would have otherwise been, and is an important part of the story of their growth over the past 40 years.” Will AI change this path to wealth? “As artificial intelligence fuels speculation about the future of work, Zwick believes wealth-building opportunities will continue to abound in the United States. “The problems that these people are solving are tactile, they are tangible; they are problems that people experience every day,” he said. “Technology will change the look and feel of these businesses, but these real-world touch issues will still be there. HVAC will still be a necessity.” He added: “There is a lot of room for people to adopt new technology but solve these old problems.” Edited by Alain Sherter More from CBS News Go deeper with The Free Press In:
