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January 18, 2012

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You may not see many programmers or engineers in the top1%, but there are even fewer in the *bottom* 50% or even 75%.

[HS: I agree with that analysis.]

Gotta love the NYT.

The top 1% is evil, predatory, unjust, and racist.

Now, how do we get into the top 1%?

[HS: Medical school followed by a well-paid specialty seems like the safest route for those young enough to go in that direction. Or marriage.]

HS, thanks for the link. I enjoyed reading it.

Some things are expected. A lot of the chemistry-biological sciences are premed (or maybe predental). Not unanticipated that they are going to do pretty well. Economics did very well. Are they the investment bankers or maybe some top lawyers? I don't think most economists are Top 1%er's.

Some things surprised me - for example, the relatively high standing of political science and government. Tough to make the top 1% as a politician or bureaucrat. Art history and criticism at 5.9% and ethnic studies at 5.2%, around the same as physiology, chemistry, molecular biology (lots of premeds) and finance (investment-banking types). How can this be? Are these just attractive women who marry well? I was astounded. And philosophy and religious studies ahead of microbiology, chemical engineering, physics, accounting and math? What's going on here? Are these fortunate few founding their own megachurches or starting their own religions?

Med school with a specialty is really hard and takes a long long time. Most proles don't have the money, or don't want to continue being poor till they are 35.

The founders of Microsoft, Google, Yahoo, and Facebook were executives, not programmers, when they reached the top 1%, but their technical skills enabled them to create their companies.

For some people, programming skill is a tool that enables them to implement their ideas.

I don't think this is especially helpful since it looks at households. I would like to see a similar chart that looks at who is making the income. Counting a private elementary school teacher (it's amazing how low their salaries are compared to their public school counterparts) married to a doctor in the top 1% is fine, but it's misleading in the NYT graphic.

Also, I suspect that across many different categories, business owners are making it look like some professions are more lucrative than they really are.

If you own a bunch of fast food restaurants, I suppose you show up as a manager, but the real category should be businessman.

-Mercy

The fact that there are less programmers/engineers in the one percent is likely due to the noncompetitive nature and Type B-ness of most programmers/engineers(esp. foreigners). We know that economics majors are likely the most egotistical so they are better represented. Also, Doctors are egotistical as well. We all know that a big paycheck is the prime motivator in becoming a doctor for most. "Helping others" just happens to be a coincidental benefit.

I'm surprised that very few people in the construction industry are in the 1%. Even in today's economy, anyone who owns a plumbing/heating/HVAC etc. business should have a very good chance of qualifying. Could they be counted as managers?

"Tough to make the top 1% as a politician or bureaucrat."


In California the top 1% are state employees.

http://online.wsj.com/article/SB10001424052748704132204576285471510530398.html


"We all know that a big paycheck is the prime motivator in becoming a doctor for most."


My doctor friends tell me that people with this mindset won't make it through medical school as it really requires a passion. Prestige/status is probably the bigger motivator than money.

@ Peter

The people you described are proles (specifically high proles) even if they're in management. They lack the elite gravitas.

Peter, almost certainly. There are two fields for managers of contstruction firms (in the upper left of the whole image are all construction managers, and down on the bottom left are CEOs of different types of firms, all construction is the upper left corner of that, as well. They're some of the largest industry squares on the chart.

It doesn't help that they split programmers, computer scientists. Also that few coders who start even a fairly small firm are going to retain a development type title, even if the majority of their work is code development (so they're going to show up as managers or executives).

I know they exist, but I've never met a computer nerd who even seemed interested in wealth. Think of the hard science grad students who work for nothing because they are motivated by ideas and the desire to avoid the stupid people who ask stupid questions and waste their thinking time. Different motivations.

Grocery Store Cashiers: 0.3% of the 1.1 million people with this job are in the top 1%

???

Even if the explanation here was marriage, why would you continue to do this job if you had a rich husband? Or why would you want your wife doing such low pay menial work?

Perhaps this includes the 15 year old children of the super rich who are forced to work during high school to "build character"?

This category isn't like maids or waiters, where well-paid, high class examples exist. There are no high class grocery store cashier jobs.

[HS: The kid of upper middle class parents working part-time at Whole Foods?]

Gotta love the NYT.

The top 1% is evil, predatory, unjust, and racist.

Now, how do we get into the top 1%?

[HS: Medical school followed by a well-paid specialty seems like the safest route for those young enough to go in that direction. Or marriage.]

Posted by: JP | January 18, 2012 at 02:51 PM
________________
He was pointing out the irony of liberals hatred for the other wealthy people, yet they have the desire to become wealthy.

Programming might not get you into the top 1% (7-figures), but if you'll settle for very attainable $250k by your 30s, programming is a kick ass career, if you're smart and motivated. $250k to $500k gets you BMWs, 5BR homes, and private schools. Not 1%, but elite. If you blog all day about politics, you'll be a mediocre programmer making $100k-$150k. Yes, even shit programmers break 6-figs. What career do bottom quartile incompetents make $100k? Programming, baby. Starting salary, $60k. Sucks are a career? You're on crack, idiot.

What's interesting is obviously the second figure. So the winnners are Physician/Dentist, Lawyers, C- level jobs, Financial analysts and that's that.

the first two categories are recruited on IQ. MD and JD students have a much higher average IQ and grades than every other students included engeneers if you compare average LSAT, MCAT and GRE ... and average GPA among schools.

if you are a dentist, you're 15 times more likely to be part of the top 1% revenue than if you're an engineer ....

There was a talk at Harvard on income inequality (it is still on the front page of Mankiw's blog) and they said that the top half of the one percent is almost entirely high level executives and people working in financial services. This fits with my personal experience and I suspect the economists at Harvard filtered out a lot of the noise in the NY Times data (i.e, second incomes, children). In addition I think that the skilled professions like law and medicine are overwhelmingly at the bottom of the top 1%.

At a top bank, one can easily pull in several million dollars a year, even if one has no management responsibilities. PE and hedge fund salaries are also very high.

"if you are a dentist, you're 15 times more likely to be part of the top 1% revenue than if you're an engineer"

Chris Rock has a bitter rant about how he's a hot shot celebrity but his neighbor in the mansion next door is a lowly dentist.

Doctors, lawyers, and bankers - these are highly regulated and licensed professions, it's nice having government on your side

"MD and JD students have a much higher average IQ and grades than every other students included engeneers"

I know too many lawyers and engineers to believe that, though it might be true for MDs. My experience is the average MD is considerably more intelligent than the average lawyer.

Another place we may be misinterpreting the value of an engineering degree: engineering is the most common undergrad major for F500 CEOs, and that phenomenon probably extends to well below the CEO level. Several senior managers at my company are engineers...with law degrees. I'd describe everyone I'e come across with that educational background as brilliant.

They need to factor age into this somehow. Better to be in the top 10% from age 25 onwards than to struggle your whole life and make it into the top 1% at age 55.

Like some other commenters brought up, how do they exactly come up with this? Do they count engineers like google's CEOs as engineers or ceos? Etc..

Let's see it for the top .01 of 1%.

"Programming might not get you into the top 1% (7-figures), but if you'll settle for very attainable $250k by your 30s, programming is a kick ass career, if you're smart and motivated."

Is this true?

What do Half Sigma and any other readers here familiar with the field think about this?

There seem to be a lot of confusing signals out there.

On the one hand, you see articles and comments from people like 2ndTry suggesting that computer science is a valuable degree, programming is a good field to go into, Silicon Valley is booming, startups are great and sexy, etc.

On the other hand, you hear about how programming is a terrible career from people like Half Sigma.

And this goes for other similar technical, engineering fields as well.

These are very confusing signals for people trying to decide about career paths.

So what's the truth? Is something like computer programming a good field to go into these days and will it be a good field in the near future?

I think it would be interesting to see the chart redone by undergrad major (or lack thereof). I'd bet that the left side of the chart is over represented by math heavy undergrad degrees, even if the current job isn't still directly related to the degree.

[HS: Um, dude, didn't you read my other post from this morning?]

i think you underestimate teaching as honest-to-god wealth creating. It's easy to say "married into it", but while it's factually correct it isn't revealing.
The real way to serious wealth is to start a company and have it work. However, during the beginning xyz years it is very difficult, cash-flow irregular and without benefits.
Often, a young couple will have a talk: "honey, i'm going to start HalfSigmaCorp and I want you to be on board", to which she says "Yes, i need a job which is very stable, provides terrific benefits and is flexible enough to allow me to double as your secretary/errand runner". Teaching is a superlative answer.
Anecdotally, 100% of entrepeneurs who are with their first wife, the wife is a teacher. As a data-set, "The Millionaire Next Door" references this phenomenon.
A teacher married to a business owner is often seen as "married rich", but in a very real way teaching provided backstop to the business.
<---entrepeneur married to teacher

Half, neither this map nor the major list from the earlier post seems to exclude people making money from inherited wealth, or am I missing something? Therefore, it's not correct to say they necessarily predict who "joins" the top 1 percent, because they could have been born there.

[HS: Both charts are looking at top 1% household income. Not wealth. I even think that investment income is being excluded. If people in this list "inherited" high income, it was by means of their parents sending them to the very best private schools to ensure they get into a top 1% career track (which is relatively common).]

Ted,

Half uses statistics and reflects how the world actually works. 2nd try uses his guy (I got rich and I hang around with other rich people, therefore all people who become computer programmers get rich).

Medicine has high barriers to entry (ie you need a medical degree to practice), so physicians have been able to negotiate high reimbursement rates since the 1960s. Unfortunately for them, there's likely going to be huge cuts in physician reimbursement from Medicare and Medicaid very soon. Private insurers tie in their rates to Medicare and likely will cut back on reimbursement too. Combined with rising overhead and more centralization of practice ownership, it's likely that physicians are going to see their stratospheric income fall down to merely upper middle class.

Dentists benefit from the same barriers to entry, but aren't dependent on Medicare/Medicaid reimbursement. They also seem to work really good hours (~35 hours/week), have no residency, negligible malpractice, and own their practices. Why go for medicine when you can become a highly paid, underworked dentist with lots of financial security?

Lots of physicians marry other medical students they meet during grad school or residency. I'd bet many of the doctors in the top 1 percent are from two-earner physician families. If two married physicians earn about $200k/yr each, that easily puts them above the 1 percent income threshold. You could say that a benefit of getting on the physician career track is that it gives you a decent chance of marrying a physician too, doubling your family's earning potential.

Same is even more true for dentists. Dentists are fortunate that once they break even with their practice's annual fixed costs, a high percentage of the subsequent revenue is profit, giving them an incentive to maximize revenue intake. If a husband and wife practice dentistry together in the same office, that easily more than doubles their net income.

One advantage that doctors and lawyers have is that they have go to to medical school or law school, where there's a good chance they'll meet someone of the opposite sex who's going to be a doctor or lawyer.

I'd guess that most of the households in the top 1 percent are dual-income, and it helps when both partners are earning good incomes.

"It's easier for a female teacher to become rich by choosing a good husband than it is for a man to earn his way into wealth through computer programming"

tut tut .. elementary statistics mistake. A few women luck out and get hitched to a 1% earner, but the majority languish with the rest of us. However most computer programming guys do well. one is extrimisthan, another mediocristan. I would much rather be in mediocristhan.
For someone who denigrates other for their low IQ, your posts are surprisingly dumb.

****Lots of physicians marry other medical students they meet during grad school or residency. I'd bet many of the doctors in the top 1 percent are from two-earner physician families.****

Yes, definitely. I wrote about this elsewhere once. Because of female hypergamy, and the corresponding male desire to marry "down", I've been surprised over the years to meet so many doctors married to other doctors. Partly, this is a function of the fact that you marry who you meet. But more than that, I think (sadly) that many, many young male doctors, when wife-shopping, care more about her future income than about her mothering potential.

I'm also curious about the computer programming question, by the way. As a natural introvert, I occasionally wonder whether I chose the wrong career path, and might not have been better off in programming or engineering.

Like I predicted in your previous post, physicians(MD) are pretty secured. Actually, MDs do well almost all over world, including socialist countries.

"Yes, definitely. I wrote about this elsewhere once. Because of female hypergamy, and the corresponding male desire to marry "down", I've been surprised over the years to meet so many doctors married to other doctors."

Male doctors are higher status then female doctors because, well it's obvious, male doctors are highly desired by other females. A female doctor however...who cares? I think as a female doctor I would feel lucky marrying a male doctor.

I would be interested to see a similar map for net worth. Income is almost beside the point, I think. If all you're going to do with your huge income is become locked in an expensive lifestyle, mostly exchanging debt rather than building wealth, what real difference does it make that you drive BMWs and I drive an F-150?

Is that what these people are protesting?

[HS: This is a false understanding of modern-day "capitalism." Today, wealth is based on earning ability rather than transferable assets.]

What about "old money" or people who have no occupation because they are collecting "rents" of some type? They don't seem to show up on the list.

"Dentists are fortunate that once they break even with their practice's annual fixed costs, a high percentage of the subsequent revenue is profit, giving them an incentive to maximize revenue intake."

Start-up costs for a dental practice are extremely high. Much higher than for a medical practice of similar size.

" Several senior managers at my company are engineers...with law degrees. I'd describe everyone I'e come across with that educational background as brilliant."

I have degrees in chemical engineering and a T14 law degree. I make exactly the same amount of money I made in 2000 when I got out of law school.

Based on a cost-benefit analysis, should I go to medical school and seek to become a radiation oncologist?

Help me out, here, commenteers.

Excellent programmers become team leads and move on to be product managers and would therefore not be in the "programmer" category

"I know they exist, but I've never met a computer nerd who even seemed interested in wealth."
Obviously you have not heard of Silicon Valley and startups,have you?

" On the one hand, you see articles and comments from people like 2ndTry suggesting that computer science is a valuable degree, programming is a good field to go into, Silicon Valley is booming, startups are great and sexy, etc.

On the other hand, you hear about how programming is a terrible career from people like Half Sigma. "

I am not a programmer myself, though I do program a lot in my job.

The truth is somewhere in between. Go to Glassdoor for Software Engineer salaries. Salary of 250k is extremely rare. You can make that much as a developer on Wall St or if you are lucky. Or in a startup if you are very lucky. Or maybe in Google. It is not "very attainable" at all.

If you like programming it is a good field to go into, there are plenty of jobs. You can live anywhere in US and probably make around 100k.

1/4th of physicians are in a marriage with another physician, and many of these marriages are two earner. Among dentists, around 1/8th are married to a spouse who is currently practicing. 2 physicians = 400K/yr. 2 dentists practicing together = 500K/yr. Marrying a spouse from the same career track is very lucrative.

I'd also bet that many physicians and dentists marry other professionals, especially from healthcare backgrounds. Despite the stereotype of the doctor marrying the gold digger, my experience is that they tend to marry intellectual, accomplished, driven partners. More likely businessmen or financiers go for these type of partners.

Yes, I should've included that dentists have high startup costs. They also have to pay their own pay roll taxes, medical insurance, 401K, and pension out of pocket.

Despite that it's still a good career. Average dentist earns 150K/yr as a sole proprietor and works 35 hours per week. That's $82 an hour. Even with all those expenses, it's still comparable to a CEO's pay rate, without the risk or stress.

There are also plenty of Asian male/white female physician couples than any other proffesions.

@Samson J.

I've met many female doctors who are great mothers, I'm usually one of the guys that are quite critical about the whole female career nonsense, but it's not so bad in this field.

Sure medicine has a painful upstart, but the career offers great flexibility if you want it (and are willing to sacrifice SOME income).

It also doesn't hurt to have those really smart genes. I can't recall one example of a bad kid who had two doctor parents, I just can't..

inb4 I get told hard..

[quoted] "HS: This is a false understanding of modern-day 'capitalism.' Today, wealth is based on earning ability rather than transferable assets."

Do you have a post on this somewhere? If not, maybe you should do one. Because on its face, it doesn't seem to make much sense.

[HS: Yes, here's a link:

http://www.halfsigma.com/2011/12/rich-is-about-human-capital.html ]

B/c of social media IPOs, there is a HUGE tech bubble right now. Programming have 10 standing job offers. It is the hottest sector out there, period.

I even know Android programmers pulling down $200/hr. That's, $400,000 a year, pro-rata. And he's got more work than he can handle. He's hired someone for $100k, and paying him out of pocket, b/c THATS how much money he's making.

$400k a year, and programming sucks as a career? LOLOLOLLZZZZZZZZZZ. You are utterly clueless about the programming industry.

2ndTry: First, even if his rate is $200 per hour, he is not going to make 400k per year. He will get much less than that because he will not be working the whole year, no matter how many clients he has.

Lets say his clients pay him 350k per year. He then has to pay 100k in salary, probably 20k in benefits and payroll taxes for his employee. Then he needs 20k for his own benefits. So he's left with only 200k.

Which is a good salary, he will probably be able to deduct a lot of expenses as well. But then he is not a simple programmer anymore, he is a businessman. It requires a different skill set in addition to programming one.

Of all programmers there are probably 1 in 500 like him.

@kaz:

Yes, you're right: of all the types of "career women", physicians seem to be among the most family-friendly; I acknowledge this. Oftentimes you'll see doctor/doctor marriages that involve a male specialist who works a lot, and a female GP who works part-time.

You're also right about the "smart genes", but I might argue the point about "bad kids". It's true that doctor/doctor kids are almost never *really* bad, in terms of being criminals or whatnot. But it's not true that they always have what I would consider to be an admirable value system; I do know many children of physician/physician couples who grow up to think that "career" and money are the most important things in life; who suffer from uptightness, anal-retentiveness, and the idea that their value comes from how hard they work; and who, in general, quite obviously grew up absorbing a value system at odds with the one I want for my kids.

Anyhow, I've had this discussion elsewhere, so I don't care to repeat it here (unless you want to), but I do stand by my point that all too often, when a professional man marries a professional woman, he is thinking about that extra income and not about future family concerns.

2ndTry, based on what you've said it could be a lot like 12 years ago during the dot com bubble. In Silicon Valley, the party was fun while it lasted but afterwards there was an ocean of unemployed and the Hindu body shops took over. Staff engineers are not part of the power structure of this society and big business will not tolerate them being as well compensated as you claim. For most, a great career consists of a few decades of success - something much more likely in the traditional professions.

For $150k to $400k, who needs to be part of the power structure. Just bill those hours, put away 7-figures, and semi-retire early. I retired at 30 doing the same thing during the last bubble.

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