> You basically just need to participate in an IPO-style windfall, and maybe split it over two tax years.

I realize we're on HN, but... calling that not hard feels out of touch. By definition it's extremely rare.

I guess if you mean, an individual who's gotten into that rare position doesn't need to struggle particularly hard to see the fruits, the comment makes sense. Is that it?

'average' people might see it in a year with an inheritance. That was me two years ago. It was a finanically interesting time before the money got placed in more safe places than the checking account.

By the same token, it's not hard for a person to be worth $1M+...steady long-term investment in a 401k over the course of your career can get you there.

But it's _unavailable_ to the average person. They'll get taxed brutally if they touch it, and when managed correctly, will be divvyd out over the course of their retirement...so having 1M doesn't mean it's liquid.

Reality check: 'average' people do not get inheritances of such significance.

Yeah, the median household receives ~$12k in inheritance (average is $46k). And that's lifetime inheritance, so it's spread over several years.

I haven't researched the actual numbers...but isn't that kind of sad?

We may get two more, not near as sizable as the last one...and if we manage things right, my kids will get some, too.

It doesn't take hardly any money at all if you start early enough. $100 a month becomes $320k at retirement. (yes, handwavey tax implications, but still, 100 a month at 7% for 44 years is $320k)

> 'average' people might see it in a year with an inheritance.

inherited money is not taxable income to the recipient (in the US).

Actually the current rule is not taxable up to $12M but that changes with the whims of politicians and has changed quite frequently.

No, it is not income (nor taxable) to the recipient regardless of amount.

There is a tax on the estate of the decedent if the estate is larger than the exclusion amount.

I think we are saying the same thing.

Not taxable until it is over $12M. The only difference is that I didn't state that it wasn't taxed as income (which it shouldn't be) - it should be taxed as inheritance if it should be taxed at all.

Its unusual to start an agreement response with “actually” but glad we cleared up my misunderstanding of that phrase.

In the context of “an inheritance put me in the top 1% of income”, that’s obviously wrong, which was my point.

It is only rare in a particular year. If a given person is assumed to only earn that for 1-2 years of a 30+ year career, then 10-20% of all people will be a top 1% earner, by rough math. Still rare, but not nearly as uncommon when looked at that way, if you take the hypothesis that it is commonly a one-time event.

If your math adds up, (and it might but I'm not following it at all) -- 10% is still kind of rare. But yeah, not extremely so. For example, I consider myself pretty good at what I do, but I'd likely have to work very hard (for me) to get in that position. My circumstances don't put me anywhere near it.

FYI: Median personal income in the US in 2022 was about $40,000. https://fred.stlouisfed.org/series/MEPAINUSA646N

You do realize that the vast vast majority of the population never have an IPO-style windfall in a 30+ year career, don’t you? Are we witnessing some sort of fake out-of-touchness as humble brag here?

Yeah, I've been a software engineer for almost 20 years and I've never had an 'IPO-style windfall' (and don't see how that's going to happen in the next ten years either, unless I join a unicorn startup). Closest I've ever gotten to that is a $10k bonus one year. That definitely doesn't count.

I've been an early employee at two startups also, they just didn't pan out.

If I don't get that in one of the more well-paid professions, then I don't see how a teacher, or a janitor, or a waitress, etc, would ever get one.

> If I don't get that in one of the more well-paid professions, then I don't see how a teacher, or a janitor, or a waitress, etc, would ever get one.

Yeah I was entirely limiting the population discussed to SWE as well. Anybody who doesn't work in a core tech role has no chance whatsoever of such windfall, and that includes many people who do work in tech roles.

Of course they do - lots of roles in a business will get pre-IPO share option packages.

> unless I join a unicorn startup

Not a unicorn. Just be an early member of a company that gets to IPO. You do have to risk more to attempt that, and maybe do it more than once, but it's a question of appetite for risk and a slightly lower work-life balance. It's definitely not unattainable.

Well I tried it twice so far. I'm in my 40s now, with a wife who's also trying to get a side business going in her spare time. It's not impossible but I haven't found anything worth making that risk for yet, and I'd still need to make almost what I'm making now for salary to even bother.

I did go ahead and interview at another early startup that reached out last job search and it was such a boring idea (a slight tweak on Blue Apron) and the CTO had such a massive ego (spent literally half the interview talking about all the things he expects from an engineer at the company and how many engineers he's passed on and how people think he's an asshole) I wasn't bothered when he passed on me too. Felt like I was in good company.

Maybe I'll give another one a chance next time I'm looking for a job.

> appetite for risk and a slightly lower work-life balance

So it's difficult and rare and less/not available to those without safety nets and unhealthy (and, therefore, less/not available to people with disabilities).

Surprisingly startups often don't even pay less cash salary these days. It used to be the trade-off: a much lower cash salary but a pile of shares. Not anymore. You trade off in FAANG vs something else, yes - if they want you. But not startup vs established.

This has been my experience too as a software engineer with about 8 years of experience under my belt. A massive windfall like that simply isn't in the cards for me and even being fairly well compensated saving a majority of my money I don't see homeownership in my future.

That's been increasingly the experience of friends and coworkers too. I think a fair number of people are either far better off than they think, or just don't see the huge middle class and below squeeze going on.

Well, I do own a home. But the only people I know my age that seem to own homes (that don't have high paying jobs) took advantage of something in order to get the money together for the downpayment, like lived with their parents for years rent-free while saving, or their parents just outright provided the downpayment.

Or they bought a single-bedroom apartment as a condo for like the same price that most people used to pay for full-size homes back in the day.

And that was all pre-pandemic, when prices were like 70% of what they are now and mortgage rates were super low (that's when I bought mine also). I don't know of anyone who's bought a home my age since then (and I'm an older Millennial, it should be mostly us buying homes right now).

> and I'm an older Millennial, it should be mostly us buying homes right now

There's a huge Boomer generation also trying to downsize.

Back in 2021 the average homebuyer was 45 years old. This probably hasn't changed that much: https://www.businessinsider.com/typical-us-homebuyer-age-sal...

https://www.nar.realtor/sites/default/files/documents/2021-h...

- GenZ at 2%

- Older Millennials at 23 percent and Younger Millennials at 14 percent of the share of home buyers. Millennials have been the largest share of buyers since the 2014 report

- Buyers 41 to 55 (Gen Xers) consisted of 24 percent of recent home buyers.

- Buyers 56 to 65 consisted of 18 percent of recent buyers and buyers 66 to 74 consisted of 14 percent of recent buyers.

- Buyers 75 to 95 (The Silent Generation) represented the smallest share of buyers at five percent.

I would guess that in any given year a large chunk of the top 1% income earners were also top 1% income earners in other years. The median top 1% income earner, when calculated by the total number of living people who have ever had a top 1% income, may be a person who is only such an earner for 1-2 years. But it's fairly straightforward to see that this median can be reached while the majority of top 1% income earners in any given year are those who have been, or will be, top 1% earners in other years.

Basically, for a 30 year period, if a grand total of 5% of the populace will earn a top 1% income in their life, you could have 0.5% earning a top 1% income for the majority of their lives (so using up half of the top 1% slots). Another 0.9% earning a top 1% income for an average of 10 years of their lives (using up an additional 30% of the top 1% slots). And in the 30 year period this would leave only 1/5th of the top 1% slots open to the remaining 3.6%, who would have an average of 1.6 years each of being a top 1% income earner. Any spare slots would go to lottery winners.

Just to throw a concrete number on this, extrapolating from Wikipedia, about $350k family income will put you above the 1% mark. I assume IPO-windfall would be considerably higher than that and maybe be at least top 0.1% that year ($2M+), which would be a different discussion.

So, mathematically, the number must lie between 1% and 30% that will be in the top 1% over a 30 year career. The question that remains is where in that range, which gives a measure of economic mobility for a country.

For those calculating based on average house sales prices, I think the current threshold for a 1% income is just under $550k per year now in the USA.

https://taxfoundation.org/data/all/federal/summary-latest-fe...

> Income Split Point $548,336

> I wouldn't be surprised if wages in the parts of the global population that's currently industrializing (parts of China and India) went up by way more than 43% though.

"The average salary increase in India is likely to be 10% in 2023, up from an actual increase of 9.8% in 2022" [1]

China's was in the range 3.7 percent, with salaries now a double of what they were a decade ago [2].

[1] https://economictimes.indiatimes.com/jobs/mid-career/salarie...

[2] https://www.china-briefing.com/news/average-salaries-in-chin...

And that's in the formal economy in India, which employs a small fraction of those employed.

I found this mini-documentary by Polymatter[1] interesting. It asserts that Indian firms with ten or more employees are subject to inspections by the Indian labour inspectorate and a bunch of other requirements. For entirely unrelated reasons most Indian firms find 9 to be the optimum number of employees.

1. https://www.youtube.com/watch?v=Lvzn41Lv-O4&t=1s

And those are corporate jobs - sector like IT which are seeing rapid growth.

I would like to see stats on factory job worker wage growth. No way are they seeing 40% growth!

At the same time, YOY inflation in India is pretty high https://www.statista.com/statistics/271322/inflation-rate-in...

India keeps the majority of the population afloat by big socialist spending - government handouts or there would be riots on the streets!

Here in India, the income disparity is becoming near comical. Mid level management at bloated unprofitable startups are making 40-50x the annual income of a maid.

Condos in Delhi regularly sell for half a million dollars and higher.

Meanwhile the government had to extend a free food scheme for 800M people by another 5 years and reduce the price of cooking fuel by 40% because the majority can’t afford to eat.

That sounds like a potentially explosive social situation.

The government has kept that at bay so far with welfare schemes, religion, and nationalist propaganda. Don't know how sustainable that is. There is massive flight of talent already.

Even as someone who makes good money, increasingly starting to feel that any semblance of a "good life" is unaffordable here. The discourse among my friends - all well-paid mid-career professionals - was that it's often cheaper to fly out to a country like Thailand and stay in a good resort, than to have a holiday in India.

I’m not following your two sentiments. With high income disparity, isn’t it extremely cheap for high earners to go on holiday? Where I assume the restaurant and hotel staff are paid poorly?

Incomes have risen so sharply for high earners that the supply for hotels, cabs, flights hasn’t kept pace with demand from this segment. Hence the unaffordability.

> It's not that hard to get into a >99% income bracket for a year or two.

The 99th percentile threshold for household income in 2023 was "only" $591,550.

A two-earner couple who sells a house beyond the exclusion amount (or is not eligible for the exclusion) would pretty readily brush into the 99th percentile for that year. (Many zero-earner couples would get there just from a house sale.)

I wouldn't be surprised if a lot of the "one year" 99th percentile folks were there just from a house sale and then someone else takes that spot in subsequent years.

Are primary residence sales, which typically involve moving to another residence, considered "income" for the purposes discussed here? If they are, based on what I'm reading elsewhere, this would only be relative to the capital gains on the sale price relative to the purchase price.

Capital gains (for primary houses, those gains above the exclusion amount) contribute towards AGI (adjusted gross income), the best single summary line of income on the return.

Sure, gains above both the exclusion amount and the purchase price. But even when added to other sources of income that's going to yield a 1% income for very few people.

It will obviously be less than 1% of people overall.

Among the “got into the top 1% once” group, I think it’s possibly a majority of those cases.

Capital gains are roughly “net sales price minus basis”. Whatever the mortgage was has no bearing on it. (Someone who pays down their mortgage aggressively will not have more gains by that action, nor will someone who continually refi’s with cash-out have fewer gains.)

Edit: parent edited their comment to remove a question about how gains are calculated and how that interacted with mortgage payoff.

Quite likely.

> Whatever the mortgage was has no bearing on it.

Yeah, I realized that and deleted my edit.

Editing a third time to point out that we're editing back and forth in real time. Your edit on the mortgage didn't exist at the time I deleted my edit about it. :)

Edit: And for those calculating all of this out to determine what percent of the population does fall into the top 1% from a home sale:

https://www.irs.gov/taxtopics/tc701

: If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse.

> However, staying in that bracket is much harder; you need to have a windfall every year (so, be a successful VC) or be an executive.

That's a good point. When people talk about "the 1%" or "the wealthiest families", they take the group that would qualify to be in that ranking today, and compare them with a different group from the past. But they're not the same people. You really need to do a longitudinal study. Take the same people and see how their wealth has grown.

For instance, take the richest person from the 1980s

Yoshiaki Tsutsumi dominated the richest list in the 1980s thanks to his real estate empire. However, times soon changed for Tsutsumi when real estate values tanked in the 1990s and he was caught up in an accounting scandal in the early 2000s. As of 2006, he dropped off the list of the wealthiest people in the world.

Today he's worth 500 million.

To make it that wealthy you generally have to take highly concentrated risks or be extremely leveraged. And this rarely lasts.

https://www.celebritynetworth.com/richest-businessmen/busine...

You have to keep delivering extreme amounts of value for decades, which is not easy. Much simpler (relatively speaking) to make a few million and retire.

> For that reason, I'd be interested to see income percentile statistics broken out over a 10 year period vs. annually. Some people summarize this effect with the acronym HENRY (High Earner, Not Rich Yet).

Heh, most of the world would kill just to experience that for one year in their life.

The report is that net worth (not income) of the wealthiest rose 42%.

Wages would tend to be a fraction of wealth for those on middle incomes, say, who have been in work for more than a few years. They will have payed the majority of their wages for years into acquiring a place to live.

In the Uk my house would now cost 8x my wage, a wage increase of 43% (for one year) would increase my net worth by about a sixteenth (~6%).

Inflation is 10% (not 42%) and my employer capped wage maintenance at 8%.

In October, Indian government wage maintenance was 4% (https://www.reuters.com/world/india/india-raises-dearness-al...), do you think the private sector paid 10x more?

>The report is that net worth (not income) of the wealthiest rose 42%.

How much increase for the net worth minus stocks? Betting that any increase there was much more modest.

One has to be extremely out of touch to think wages could rise "by way more than 43%" in a year over a reasonably large region anywhere in the world, unless it's a dirt poor and sparsely populated agricultural region that literally struck gold that year. (Not counting hyperinflation, obviously.)

> In the US, unions had a good year, but 43% pay raises in union contracts were mostly unheard of, so that part of the population probably isn't keeping up.

There's a difference between wealth and income though. It's entirely possible 10% pay raises yield >43% increases in wealth, so long as most of the original wage wasn't able to go in to savings/investment.

> It's not that hard to get into a >99% income bracket for a year or two. You basically just need to participate in an IPO-style windfall

This has got to be the hardest I've laughed at a Hacker News comment. Does dang put funny comments on the highlights section?

>but 43% pay raises in union contracts were mostly unheard of, so that part of the population probably isn't keeping up.

I would need significantly more than a 43% raise for a single year for my wealth to increase by 43%.

> In the US, unions had a good year, but 43% pay raises in union contracts were mostly unheard of, so that part of the population probably isn't keeping up.

Do you have any statistics for that claim? In Sweden the largest union negotiated salary increases of 7.4% over two years (https://www.unionen.se/opinion/ja-till-avtal-nu-har-vi-ett-m...) which is far below the rate of inflation. In other words most workers are experiencing pay cuts, not increases. It would be surprising if the situation was completely different in the US.

> It's not that hard to get into a >99% income bracket for a year or two. You basically just need to participate in an IPO-style windfall, and maybe split it over two tax years.

It's actually much easier than that: you just have to win the lottery. Easy! I mean, why doesn't everyone do that? Are they stupid?

I have an easier method. Stand under coconut trees at wealthy resorts until a coconut drops and kills you, that your heirs may sue for millions.

I think you'd need to be in the 10s of millions to register for top 1% in US. Mere "millions" might not be enough.

Haha, we know that plenty are trying...

Income isn't wealth. Please don't conflate the two.

While interesting perhaps, your comment has literally nothing whatsoever to do with “the poorest people in society”.

> I wouldn't be surprised if wages in the parts of the global population that's currently industrializing (parts of China and India) went up by way more than 43% though

What an insanely out-of-touch take. HN-ers really are something else.

> but 43% pay raises in union contracts were mostly unheard of

mostly unheard of?

I'd challenge anyone to show a union winning even a >25% pay raise for their employees, and even those would be unicorns.

Any highly competitive market for workers (e.g. silicon valley software developers) is going to be much better for wages than a union, and even they won't generally make 43% more YOY.

You’re completely missing the forest for the trees.

The richer are getting ever richer, with everyone else stagnating or regressing. Last time inegality was this high gave birth to the concept of a union, to the creation of communism, etc.

If you’re a capitalist who despises progressive ideals, you should be wary right now. The very rich are so rich they’re grabbing all the gains with nothing for anyone else.

in his gracious majesty, our Lord the King has declared that both rich and poor alike, may sleep under bridges in the rain