This is part 1 of a series about how much money is needed, really, to live in the United States. There will be a TOC to help with going between the posts as they go live.

The Impetus

I was Doom Scrolling, as you do in a pandemic, I encountered a tweet about some of the US billionaires:

It’s hard to process what that kind of money is and I think that’s true for many people. Large numbers are hard for brains, but truly monumentally large numbers our brains just truncate prematurely. As a quick thought experiment about this, take a look at this YouTube video that takes 5 minutes to go through a relatively small celestial body that is smaller than Earth, moving to Earth, beyond Earth, our Sun, and other stars. Even though the video is moving through relatively to scale, it’s really hard to hold all of that in mind.

How does that tie into the billionaires?

The median salary in the United States is approximately $34,000 according to Wikipedia. Digging in a little deeper, the article shows how median salary breaks down by educational background, but not by other factors like race, gender, immigration status, age, etc. That said, 70% of the United States makes $50,000 or less, and only 10% make more than $100,000 according to that same source. When you have 90% of the population making less than $100,000, how can you be familiar with what it means to be a millionaire, let alone a billionaire?

With all that build up my interest is not about understanding what it’s like to live as a billioniare. I am really interested in:

  • What is a (relatively) true, minimum, “Wage for Life” in the United States
  • What is a decent, minimum, “Wage for Wealth” in the United States?

Why do I care about these questions?

For the so-called “minimum wage”, the main reason to care is that companies who pay the minimum wage, or worse a tipping wage, are the companies that would pay you less if they could. To understand how much money people need to live in the United States we can start to think about the Federal Minimum Wage in this way and why people advocate for the numbers that they do.

Moving past that, I want to dive a little into the Wage for Wealth. The idea here is past a certain amount, more money is just “money”. It’s when you start to think of money like perpetually present resource like air (take a deep breath for climate change, tho) rather than a bounded resource. That’s how you get billionaires that are “taking time off to play in space”. You could buy a boat, another boat, unlimited upgrades, buy every subscription service in the world, payoff whomever you needed to payoff to get around geographic licensing restrictions, and still have money left over. You are so far beyond the “I don’t even need to save for a house” or “I don’t even need to save for unlimted holidays” that “saving” is a foreign concept.

My very verbose point here is that there is a number that will still allow you to live a lucrative lifestyle and it is far, far less than billions. I want to find that number as a working number - to show how much less than billions you need to have in order to have self sustaining wealth that would put you in the buying class of the top 1% of the United States.

What will I be doing with these numbers?

One thing I like to do is calculate how many $60k salaries these billionaires coiuld fund if they used their annual wealth - not even touching whatever they keep in assets to potentially spend on themselves or whatever they spend it on. The idea is to help make a model for just how much wealth this is and how many people could be supported by it. The last I ran this quick calculation, Elon Musk could fund 300,000 persons' salaries if they were all $60,000/yr. Basically, Elon Musk could pay everyone in a mid-size city $60,000/yr for no reason whatsoever. Literally “just because reasons”.

I also hope to do some other analysis on the implications of these numbers, but first I want to actually establish some rigor around my assumptions. I picked $60,000 merely because it was roughly double the median wage. So I didn’t factor if that was actually a reasonable Wage for Life that includes things like “median medical expenses per annum”, “median student loan payments per annum”, “taking financial advice for savings, 401k plans, etc.” and so on. I want to account for these needs and see what the number actually falls out as.

Considerations

As I’ve already indicated, I’ll be factoring in common expenses in the United States. We do not have usable social safety net in the United States, so things like healthcare are tied to employement, and even with that tether many people out of pocket beyond co-pays and deductibles. I won’t be getting into this too deeply here, but you get the picture. Similar for how much people are usually paying into student loans, and other impacting conditions. This is not a comprehensive list at this point, but by the time I’ve reached the “other end” of my Wage for Life calcualtions I’ll review the considerations that I’ve built in at that point.

Verifications

I’ll be researching the base data, as best as possible, as I make my way through my considerations and I will also be verifying the information for the net wealth, passive income, etc. for the billionares that I’ll be researching. If I need to make other assumptions for “data not available” I’ll be clear about what assumptions I’ve made and why before proceeding.

What do I have to look forward to?

A multi-part blog post series exploring wealth in the United States and why we need to dismantle these systems, that doing so will not actually disincentivize people from “making more” due to the Wage for Wealth I’ll also be calculating.

You ready?

I’m ready.