What’s the Difference Between High-Income Earners and Low-Income Earners?
Published on - August 19th, 2009 (by J.D. Roth) In June, a user at Ask Metafilter wondered: What are the differences between someone who makes $100,000/year and someone who makes $30,000? As you might expect, this question generated a lot of discussion — all of it interesting.
Many commenters noted that, from their experience, high-income earners generally exhibited several of the following traits:
- They maintain a strong work ethic.
- They don’t watch the clock.
- They seek to improve their skills.
- They do quality work.
- They’re flexible and adaptable.
- They maintain a good social network.
- They possess self-confidence.
A few commenters noted that there are two other factors that absolutely play a role in how much a person earns. Chief among these is choice of profession. Even if you’re the best damn high school physics teacher in the world, you’ll still probably earn just $50,000 or so. (But if that gives you a fulfilling life, that’s probably worth more than a high salary.)
Hard work, etc. do not guarantee a higher salary — but they do improve the odds. A second oft-overlooked factor is luck. Chance. Happenstance. There’s no question that luck plays a role in how much a person is paid. But as I’ve argued in the past, in most cases luck is no accident. It’s possible to make your own luck — to a degree.
There are many great comments in the Ask Metafilter discussion, including a mention of a Platonic dialogue about wealth and economics. One of my favorite comments is from decathecting, who writes:
Lots of people make six figures, including plumbers, business managers, attorneys, high school principals, military officers, technicians, landlords, psychologists, and people in thousands of other professions. The common denominator is that they’ve figured out what they’re good at that other people are willing to pay them to do.
From my own experience, I know that while I was stagnant and uninterested in my career, my income was also stagnant. It wasn’t until I decided to take charge of my own life that my financial situation improved — including the amount I was earning.
I’ve seen the same in the lives of my friends. It’s easy to coast, to become complacent. But it’s important to remember that with incomes especially, nobody cares more about your money than you do. If you want to earn more, you must play an active role in obtaining the money.
Finally, I want to note that a high salary is not the the panacea that many people believe it to be.
Sometimes the costs of a high income make the payoff less than you might expect. For example, I have a friend who is an attorney. He makes a fair amount of money. But he’s also burdened by outrageous student loans and business expenses. Though his income is high on paper, it’s actually rather modest after he’s paid for his necessities.
High income earners face another problem that prevents them from getting ahead: lifestyle inflation. Sure, that’s a nice problem to have, I suppose, but if you don’t learn to control your spending as your income increases, you’re not really much better off in the long run than somebody with half your salary.
Ultimately, I don’t know if it’s possible to say that there’s any one magic thing that leads one person to make more than another. Yes, hard work probably makes a difference. But so does luck. Have you noted a difference between the high-income earners in your life and the low-income earners? Is there a pattern? Or does it all seem rather arbitrary?
Addendum: I seem to have done a poor job of conveying my message today. I’m not trying to imply that “poor people are lazy” or anything of that nature. However, I do think there must be differences between high-income earners and low-income earners, that it’s not purely a matter of luck. So, what are these differences? It must be possible to have an intelligent conversation on this subject without being rude and without becoming defensive.
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All good points. I think another part of earning more that gets ignored is stress. As you climb up and earn more, it typically involves more stress. For some people, it’s worth it. For others, not so much.
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I would add education to this list, a lot of higher paying careers require advanced education.
Long hours, hard work, saying yes, yes, yes (when you would sometimes rather say no), and keeping stress under control to avoid burn out.
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I was lucky to grow up in a somewhat wealthy family. Growing up, my dad got laid off at his job. He had some time and eventually got a job as VP at one of his previous colleague’s companies. There was some people that worked at his new company for 15 – 20 years longer than he did. I remember asking him why is it that he gets to be VP when some people working under him have been at that company for far longer than himself.
He told me that, “Some people are just meant for it, some people are not.”
I will always remember that line as it goes to show that hard work and loyalty does not guarantee reward. Even in my current job I am low income and I work way harder than most of my co-workers who probably make more than I do.
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I’m surprised to be saying this on this blog, but I don’t like this post very much at all. It seems awfully presumptuous. First of all, I work with low-income people everyday in my position at a non-profit. I know low-income, and making $30,000 is certainly not it. Secondly, the list of traits for high-income workers can apply to people all along the economic spctrum. People who live in poverty work hard too–they might not sit at a desk all day, but they work two or three jobs and spend hours securing resources for their families just to meet their basic needs and survive day to day. Please consider this concept in future posts–you do have middle and low-income readers; please don’t isolate us.
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I appreciate that you recognize luck as a factor. I would say it’s a critical one. If you or anyone hasn’t read Malcolm Gladwell’s book, Outliers… please do. It’s implications are huge. While he talks about the reasons for the success of the ultra-successful… similar powers are in control of those of us ‘regular folk.’
Your environment, which you have little control of – in other words, luck – is the major contributor. Just being born in the US pretty much guarantees an income of at least $18,000 – likely more if you look at averages.
People on Metafilter suggest high earners:
-maintain a strong work ethic.
-don’t watch the clock.
-seek to improve their skills.
-do quality work.
-are flexible and adaptable.
-maintain a good social network.
-possess self-confidence.
These are trivial. Plenty of high wage earners don’t have ANY of these… likewise plenty of hardworking, intelligent people are left behind economically. It’s actually a bit insulting to presume people don’t have these attributes based on income.
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And I think this is fundamental to much of the stuff you discuss on this blog. It takes planning to buy the ingredients and have them on hand to cook a good meal at home; planning to have a garden; planning to investigate and cut one’s bills down; planning to navigate a higher educational degree and a subsequent career; etc.
Much of a lower income, more paycheck to paycheck mentality concerns reactionary spending, impulse spending, deficit spending, all with little or no planning. People often work quite hard, but if they do not step back, however briefly, from the daily grind to do a bit of planning, it creates a serious impediment to increasing income and decreasing spending.
I, too, though, think that luck has a role to play.
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I think the biggest differentiator is a sense of entitlement. People who think the world owes them a living often flounder along from job to job, and never seem to understand why things “never work out”. People who realize that they are responsible for making thier own way are far more likely to succeed in a career sense.
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I agree with comments #4 and #5. I’m conflicted about this post and some of the comments because it assumes a lot of positive traits about high-income earners that may not really be true. As a high-income earner myself, I can say that two traits have helped me: a crazy work ethic and caring more about money than about happiness in my job.
The second trait, in particular, isn’t something that I’m proud of or something I’d recommend, but I freely admit that I chose a career I didn’t like because of its earning potential (and to please my parents, but that’s another story). Many of my co-workers are the same way: making lots of money is simply a higher priority for them and they’re willing to sacrifice much more than lower-income people to get it. I earn less than some of them because I’m not willing to give up health, sleep, family time, peace of mind, and outside interests like they do. Of course, I’ve also worked with plenty of people who were lazy, but who’ve managed to work the system so they can coast along on their schmoozing and political abilities alone. People like that seem to get a pass on the work ethic part.
Plus, contrary to the “you won’t be good at something you hate” myth, I’ve managed to be quite successful at my job because I hate failure even more than I hate my career. So don’t be so quick to assign all positive traits to people with money. The reality is much more complicated than that. I’m making changes in my own life right now because I’ve learned the hard way that being happy with my life should be a requirement, not an option.
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Depending on where you live, “luck” can be the biggest contributing factor. I live in an area where you are often defined by where you went to high school. There are lots of private schools, each with it’s own personality. Alumni contacts and support is huge. Many people never leave the area and their contacts have been developed since adolescence. I’ve seen veritable idiots get cake jobs because of the contacts and hard working newcomers to the area are mystified that they are passed over. I call all this luck because we can’t choose our families and whether they can afford 15k a year for high school.
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Just to clarify, the article says that if you’re a high earner, you likely posses X characteristics. Some people are saying this assumes if you are not a high earner, you do not posses X characteristics. That is a mistaken negation and is not necessarily true (and certainly not implied by the article). The contrapositive, if you do not posses X characteristics, you are likely not a high earner would be correct. Too much LSAT studying
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Kudos to Kaitlyn and Jeremy (#4, #5) for mentioning that many low-income people exhibit all the good traits that Metafilter pointed out, and many high-income earners do NOT. Laziness is an equal-opportunity trait, as is industriousness. One can’t say that high income earners are usually ‘harder-working, more focused, do better quality work, etc etc’ than low income earners.
Some of the hardest-working people I’ve known have been low-income workers. They come in early, bust their ass, are the last ones to leave, often skip breaks, etc., for hourly low-income wages.
Meanwhile, I’ve had the displeasure of knowing several high-earning bosses who were the laziest, sleaziest, dishonest people I’ve ever seen…sneaking into work hours late each day, and sneaking out early, doing no work, having blatantly lied to get their positions (saying they knew the software, but then clearly showing on the job they could hardly turn on a computer much less run the software).
How well you can shmooze with people, how gregarious you are, how out-going and extroverted you are will often get you further in life than just “hard work” or “Good work ethics”. Luck is often based on how many people you can meet, relate to, and strike up some sort of relationship with. For those people who are severely introverted or have social anxieties, it is hard to ever get ahead. These people work hard, have wonderful work ethics, strive to learn more, but lack the very last two traits on that list, which are the most important ones and really, the key ones: the extroverted, gregarious attitude that it takes to make the necessary “Social Network”, and the necessary self-esteem to have “Self-Confidence”.
Of course, the exception to this rule (gregarious=social network=higher wages) would be the few people out there who are brilliantly smart in the maths and the sciences. I’ve noticed that brilliant computer programmers make six-figures, but I’ve run across a few that are definitely introverts and NOT gregarious. It’s just that their skills are in such high demand, and so few people can do their job, that they can command a high salary while being very very introverted and grouchy.
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I disagree with this post. The main determinants of your earning power are your education, gender, geographic location and age. Education is very much influenced by your family’s class status to begin with. Women earn less than men, as do other groups facing systemic discrimination, even when they are doing exactly the same work. Additionally, women often take on the unpaid work of childcare which affects their workforce earnings for decades. Geography can place a ceiling on both income and opportunity. Income also increases with time and seniority, peaking in about your mid-50s.
So while you listed a bunch of individual things you can think about to influence your own earning, this article needlessly oversimplifies earning capacity and blames people for some circumstances beyond their control.
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high income earners, more often than not do jobs that they love, things that they would gladly do for free. which is not the case for low income earners
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You’re right, Peter, and I appreciate your defense of the author – because I agree, he was not implying that low income people lack X characteristics – but many, and some here are examples, could make that assumption from such claims even when the author does not intend it.
Human’s naturally try to simplify things. It’s easy to assume that if one state includes X attributes, that the opposite state would include opposite attributes – even if it’s wrong. My only advice is to just be careful – most people don’t take Critical Thinking Courses or go to law school.
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My husband is a high income earner. Just last night we were discussing whether a high income was the most worthy pursuit since it is the most consuming of his pursuits.
Here’s what we decided…
1. Pursuing a passion would be a worthier pursuit
2. At the end of the day the wealth comes from how much you keep not how much you earn.
In spite of our enlightened conversation,this morning he left home bound for the office before 6AM. I doubt he will resign from his position any time real soon.
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Hi,
I think peace of mind is much more important than high income. I have seen many people who are earning six figure income but they don’t have peace of mind. And no amount of money can buy peace of mind.
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I always find it funny when people talk about teachers as low income earners. Maybe it’s just where I live, but teachers start around $45k and after about 10 years are earning $90k+. Not exactly a low-income profession.
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Some of you are mis-interpreting my intentions with this post. I’m not trying to claim that “poor people are lazy”. I don’t believe that at all.
Instead, I’m asking if there are, indeed, discernible differences between high-income earners and low-income earners. If there are no discernible differences, logic dictates that it all comes down to luck. I don’t believe this is true, either. I don’t think it is all luck. I think there are real differences.
But what are the differences? What makes one person earn more than another?
Unfortunately, I think that in many cases, even in 2009, some of it has to do with race and gender. There have been huge strides made toward economic equality — but parity has not yet been reached. But what else is involved? What are the things that differentiate high-income earners from low-income earners?
I think it’s possible to have this discussion without becoming defensive and naturally assuming that the question implies disdain of those with smaller incomes. Because it doesn’t.
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Note that a high salary is also a function of where one lives. If you live in a high cost of living area, your salary will be higher. Rather than think in terms of overall dollars, I find its better to look at Purchasing Power Parity numbers.
I do not agree that luck is a MAJOR fact. I think its pretty minor. I grew up in, quite literally, next door to housing projects. i went to rough schools. Hard work, lots of perseverance, and a dream/goal, are what I believe are the primary contributors towards my success.
I prefer however, to look at the difference between high wealth households and low wealth households. You can earn ALOT of money and not be wealthy, because one doesn’t save. You can earn a little bit of money and wind up being wealthy, because of good habits.
JD is definitely right that lifestyle inflation plays a role. 6 years ago, I made less than 30K. Today, I make more than 100K. Aside from taking on a mortgage which was a monthly difference in rent of a few hundred dollars, my lifestyle hasn’t changed. I know the dangers of lifestyle inflation. And I figure if I was happy making 30K, then I can do the same things making 100K, save the difference, and in time can use those savings towards some of my own more dreamy dreams (like funding scholarships)
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@Walt (#17)
I wouldn’t call teachers low-income earners. Kris taught high school for eight years, and I always thought she was paid middle-of-the-road. But school teachers certainly aren’t paid vast sums of money, especially when you consider how many hours they work.
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Well, there’s really little happiness and life satisfaction difference, as multiple surveys love to point out…
I have a friend who’s a doctor, in his last year of residency, and one of his good friends is a surgeon. This past Sunday, when we went out to autocross, both of them managed to make it out. While it’s common to be envious of the professions for their high salaries, they rarely make it out to do what they enjoy doing. The surgeon’s wife was out there, reading a book, because that was the best she was going to get as far as spending time with her husband, which I joked with her about, the “glamorous life of a surgeon’s wife.” Uh uh, nooooooooo thanks.
When it comes to making a ton of money, you give up a lot to get it. I’d rather make $50k a year doing what I do or don’t enjoy and having enough time to indulge in my hobbies rather than make $100k a year doing something I don’t enjoy and having NO time for my hobbies. If I could ever make $100k a year doing what I enjoy and still having enough time for my hobbies, that I would love.
Peter (#10) got it right — It’s simply taking a group of people and seeing what they have in common, no suggestion whatsoever that lacking these makes you the opposite. Shows how much people read into things I guess. I make pittance for money, and I’m not insulted.
(So far for the year, $10k, woo! $8k after taxes…)
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I’m afraid I have to weigh in with the peeps who believe that the items in that list are not coupled with income level. I feel like I’ve seen at least as many exceptions to that ‘rule’ as examples of it.
Walt: where the heck are you that teachers can make $90K (and what is the cost of living there?) I just ran a half-dozen ‘teacher salary [location]‘ web searches and consistently found salary ranges way below what you’re suggesting. The only one that even came close to that was NYC, and to get $90K you need *twenty* years experience plus a masters’ degree. And with NYC’s cost of living, that’s just middling, not high.
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JD, thanks for clarifying at comment #18. I think part of what got my hackles up was that TSD posted this week on a similar topic, and the judgmental tone of that post and the comments colored the way I read your post. Sorry about that.
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J.D.–perhaps it isn’t “all” luck, but studies show time and time again that it is not mostly personal attributes that determine wage. This metafilter thing is particularly pernicious. It asks people what they *believe* about high income earners–and does nothing to document the statistics surrounding who earns high incomes. In this sense, it reifies our culture’s belief in a meritocracy, even though there is little evidence that such a thing exists. Perhaps this would be interesting if we could ever find two people with the exact same background–in terms of race, gender, parent income, college attended, number of children, stability of spouse, etc., etc.–but that is virtually impossible to do. Wage disparity in this country is real, and posts like this continue to make it sound as if that is to some degree attributable to personal attributes. It’s just a much thornier issue.
I’d rather you discuss real studies and statistics about these issues, like this:
http://weber.ucsd.edu/~kantonov/AAJOLE.pdf
You ask why we can’t have an “intelligent discussion” about the personal attributes in the metafilter “poll.” I think the reason you are finding resistance to this is because we so often discuss income as a result of personal attributes, and there is rarely intelligent discussion about the way demographics affect income. Generally, Americans don’t like to believe that there are things outside of one’s control that affects income. We would rather believe that by being an adherent to “Getting Things Done” or what not, that we can change our income and lifestyle.
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I think most consider teachers to be low/middle-pay since there is a ceiling to their earning potential. Unlike business owners, lawyers, etc who can conceivably have very high incomes. However, most teachers I work with (tax clients) have very good pensions and benefits, something most of us in the private sector lack. Something to keep in mind.
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There are all kinds of hardworking smart folks making very little money and all kinds of lazy cheats making it hand over fist. I think that’s all unimportant.
I think the idea of the post was to generalize characteristics that are more than likely to show up in “successful” people, which it did. Of course, when you generalize there will always be outliers and situations that don’t fit. This was just a starting point for discussion.
Looks like it worked!
Two things that I have noticed between some of my friends and colleagues that are more successful and those that aren’t (success not equaling $) are
1) The more successful are usually eager problem solvers and the less successful are usually problem “passers” more likely to complain until someone offers them a solution.
2)The more successful are those that take 100% responsibility for everything that comes their way no matter what caused it. There are plenty of things that happen in life that we can fairly attribute to “someone or something else’s fault” but taking that stance never gets us anywhere.
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Some more reasons also include:
- time spent in the workforce
- if your male or female (for a whooole lot of reasons that I won’t get into here and now)
- if you have chosen to have children or not
- education
- location
- age
- career path – some jobs just make less money
I’m sad that a lot of people are saying that higher income earners = success and lower income earners = unsuccessful. That’s simply not true. Success should be defined by each unique person trying to achieve it.
And let us not forget, some of those high income earners have greater debt and smaller net worths then those who have a smaller income.
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I would also add that I think an intelligent discussion of this very issue can be found in the classic “The Millionaire Next Door,” which actually examines high income folks rather than just asks others about their *perceptions* of high income folks.
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@Ethel (#29)
Good point RE: The Millionaire Next Door. The book doesn’t actually look at high-income folks, but at high net worth folks. Or, as the authors put it, prodigious accumulators of wealth. The book is more about keeping the money you’ve earned than actually earning it. Still, it does spend some time looking at how people generate their money. If I remember correctly, the authors conclude that in general, high income earners were self-employed.
At the same time, I think we all know entrepreneurs who make very little money and who ultimately have to fold their businesses.
As I say, this is an interesting discussion, and there’s no way we’re going to find the “right answer” here at GRS, but it’s worth talking about.
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I’ve come to realize something strange lately. Although my husband and I make less than 60K a year we have a higher net worth than a lot of people making 200,000+ a year. That’s a good feeling to us.
My husband is a teacher. While he thinks his pay is fair I think he is underpaid. I agree with the post that mentioned you have to include the wonderful benefits and pension into that salary. But considering what (some) teachers do (educating America’s future) and the time a lot of them put in they are underpaid. But my husband is passionate about his job and will settle for the salary while doing what he loves.
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I fell into my career in high school (I’d rather not reveal) and now I am overpaid for a very easy job. I work a few hours a day and am paid almost 80k. I hate it, and my brain feels empty. Right now, I’m putting all the money in the bank and waiting to be fired, because I assume someone must notice how disengaged I am at this point, due to the fact that I haven’t been challenged in years.
We’ve both discussed that happiness does not come in the form of a paycheck. My boyfriend worked very long 18 hour days for his high salary, and I, in turn, am searching for my next career.
Stability is one thing. Happiness is another.
Do high earners have different traits? Possibly.
Maybe we just got lucky. But I know that 30k would be an adjustment that would be challenging, but definitely doable for a job that I love.
I don’t think people should chase a salary. I think they chould chase what they love.
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I’d like to point out a rather obvious fact that has not been mentionned – these categories are not static. People move from low to medium to high income earners, and back again.
When I was younger, I was definitely in the low income category. I stayed in the “low income” category from the time I started working at age 15 to when I graduated from graduate school, where upon I became a middle income earner. Now I am earning just a little below $100K per year. I am the same person, with the same values and charactoristics…just a little older
.
Even the high income earners may become low income earners again if: their business fails, they lose their jobs, they semi-retire, or retire.
These categories are not finite – people move in and out of them as their circumstances change. I think it is pretty naive to not recognize this. And wrong to attribute a set of charactoristics to someone simply based on their income.
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J.D., I would assert that high net worth people are more interesting and valuable to look at it in terms of the discussion you want to have. I took your post and subsequent clarifications to indicate that you are interested in the attributes that help financially successful people be financially successful. Why would you be interested in the attributes of people who earn a lot but have median net worths? I would assume that someone who earns a lot but can’t/doesn’t hold onto those earnings would not have the very attributes that you want to discuss–i.e., positive personal characteristics that allow them to succeed. If the discussion you want to have is only about annual salary, then I find it even less interesting and valid.
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Teachers are paid well since they don’t work long hours and their job is very secure.
I am talking about University Level Professors!
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Count me in among the folks who are put off by the implications of this post. Not necessarily JD’s take on it–I think his advice is wise in terms of how one should approach their own career. But I think the initial presumptions of the Ask Metafilter article are highly off base.
I have worked for less than minimum wage (farm labor) and I have worked for six figures, and I have never seen a sustainable correlation between inherent traits of an employee and their ability to earn salary. While I can point out many people who succeeded through hard work, determination, and natural skills, I can also point out just as many people who could not manage their way out of a cardboard box, yet still managed to score high paying, lucrative careers. Likewise, I’ve met hundreds of people who on paper should be earning a lot more–they are talented, intelligent and worked hard–but their salaries didn’t reflect this.
When I try to quantify salaries, I end up coming down to JD’s last question. It all does seem rather arbitrary to me. Arbitrary in the sense that people are all too often chosen for higher paying roles based on petty and insignificant social traits rather than skill or ability, and arbitrary in the sense that one field may suddenly become highly valued, while another might suddenly drop off the face of the earth due to rapid technological advances. All your efforts in the world won’t get you a higher salary if the demand for your services does not exist.
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Hey everyone!
I would like to toss some opinion into the mix.
One of the biggest things I have noticed about someone who earns more is that they BELIEVE they can earn more (or earn whatever they want)…
I have been trying to adapt this mentality recently – one of my mentors is just so darn sure ALL the time that he can make money. He has the attitude that if he was a professional toilet cleaner – he could make six figures. You know what? He is right! The richest person I know here in South Carolina digs holes and moves dirt for a living (on a very very very large scale).
I think that you really have to accept that you will never be the best at ANYTHING (there is always someone more skilled then you in some way or another). HOWEVER, you must believe that you have the potential to make more —- and go after it. It is crazy how that has been working for me lately. I’m with JD – you really can create your own luck sometimes!
As Dave Ramsey says, “Go out of the cave and kill something — bring it home for the family”.
I think some people believe they can go out of the cave and kill and elephant, while other might think that a pig is as best as they can do. Just my thoughts….
Also, I am completely not ignoring the fact that some people choose to work a certain career because they love what they do (and for whatever reason it doesn’t pay a high salary). But I am reminded of an episode of, “The Sharks” that recently aired (new show – it is awesome). A school teacher found an amazing way to teach kinds by putting Shakespeare to music. He brought it to, “The Sharks” (who are investors) – they made a deal and surely he is making big bucks now – doing what he loves with kids WHILE finding a way to make extra money doing it.
Good day everyone!!!
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@Ethel (#34)
You make a good point. High net worth folks are indeed more interesting and appropriate to examine than high income earners. But I feel like we explore the high net worth thing often here at GRS, if not always explicitly. The whole purpose of this site is to help others increase their net worth by looking at how others have done it successfully in the past.
But I’ll grant that perhaps this post was misguided. It doesn’t feel misguided to me, but I’ve learned that usually when something like this happens (I think somethings okay but everyone else does not), I’m the one who is wrong. I can’t always see how I’m wrong until much later, but…
I’m open to discussions in this thread, then, of how high net worth folks differ from low net worth people.
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I am surprised no one has mentioned this yet.
The number one determining factor of high income is self-employment.
Who you work for. Yourself, or someone else.
Most high income types ($100K), especially extremely high income types (500K+), are fully self employed or some type of self-employed / performance based / commission structure.
They own their business. They own their work.
It is not for everyone, and there are many risks, but that is where the real money is.
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Purely anecdotal, but the lower income earners I know tend to complain A LOT about what “life” has handed them. They acknowledge that they have made some poor decisions, but still blame the bulk of their circumstances on outside influences. (I’m not saying that is true for ALL low income earners, just the one’s I know.)
My father-in-law is a classic example of this. He has high blood pressure and a number of other health issues. He also comes up short every month on his bills. Its not hard to figure out why: he told us he stops at the convenience store every day on his way to work and buys a king size candy bar and a Mountain Dew. He eats fast food for lunch. He stops at the convenience store again on the way home for more snacks. Then he eats fast food again for dinner. Some people could probably afford to eat out every meal, but he is not one of them. He knows those things are bad for his health and bad for his wallet, but he continues to do them. He bought a Blackberry because “guys half my age have the internet already” and he was jealous.
Contrast that to a friend of mine that makes roughly $150k per year. He’s a solution-guy. Whenever I complain to him about some circumstance in my life he says, “Why don’t you just do X.?” Almost always there is some really easy solution, its just not always pleasant. I made a comment about a picture of a beautiful young girl in a bikini, saying I wish I could have a body like that. He said, “why can’t you?” He knows (and I do too) that if that was something I *really* wanted, I could hit the gym 15 hours a week and get it. It’s not a matter of “I can’t” its a matter of “I won’t” because other things are more important to me.
To sum that all up, I would say one key difference is that higher income earners believe they can do whatever they want, if they just do the right steps, working smart and hard. Lower income earners tend to place more weight on external factors.
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I think those points are corrct if the experiment is comparing absolutely same fields of work. For example, bilogical sciences, unless you join the pharmaceutical company, pay very little (academic science in Universities). Education be damned. But not everybody wants/needs to go after big bucks and work in environment of a big corporation, some like discoveries for the heck of them. That said, if two equal PhD’s work at the same University (location matters), then the more hardworking and so on will probably be on better pay. Unless the other one knows someone who knows someone who has an access to grants distribution:) In my experience, those big corporations actaully had this experiment cleaner – there really, if you work well and deligent, you get promoted and pay more. Simple.
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I think the only difference is high net work people have a better understanding of self-discipline and self-motivation.
Everything else is secondary.
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risk…
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In NYC, a lot of high income jobs require extreme life sacrifice- mainly working extremely long hours. If you’re not willing to give up time with your family, friends, and personal hobbies, I think you’ll always hit that ceiling.
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To KK – Post #6
Wow! You really just hit the nail on the head. You are discribing me. My family makes a pretty good income, but we still live pay check to pay check. I can’t seem to get out of this cycle or know where to begin and so at times, I would just chalk it up to needing to earn more, but what we really need is a plan! Thanks KK and Thanks JD for opening the floor on this discussion.
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The differentiator is our thoughts. What we think about money in this case. When working with clients I often explain the ABC model (http://hubpages.com/hub/The-Ellis-ABC-Model). In short our thoughts create our reality (or at least our perception of reality). I often use the example of the lottery. Most people who play the lottery are lower income. Therefore, most people who win the lottery are lower income. We also know that most people who win the lottery, within a few years, have lost it all and are right back where they started. How can this be? I believe it is because their thoughts about money and how it is used lead them to eventually re-assume their previous level of wealth. See the work of Ruby Payne (http://www.ahaprocess.com/) in explaining poverty, middle class, and wealthy.
I believe this because the converse is also true. People who are very wealthy, from time to time, lose it all and become bankrupt. Yet many, within a few years are back on top. For example Donald Trump. He has been bankrupt several times. From what I’ve seen of him on TV he doesn’t strike me as very intelligent. Luck would explain how he got rich once, but not repeatedly. All the reasons listed (the Metafilter discussion) increase opportunities, but
I think the real differentiator is the thoughts and believes we hold.
(BTW I buy one ticket a week. The current PowerBall jackpot is 1/4Billion dollars. Thats worth a $1 of “fun”).
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My spouse and I both had a mixed bag growing up…. both lower-to-middle class families, both with some pretty crushing emotional and support problems (meth addicts, suicides, bipolar parents, runaway siblings, lots of unhappiness). However, we were both quick learners and encouraged to do well in school. When a lot of our peers were focused entirely on screwing around with the opposite sex, we were reading and learning to fix computers. We ended up going to the same Ivy League school, where we met at our student jobs (fixing computers, of course).
Meanwhile, we never made the bad decisions associated with college students. We didn’t sign up for credit cards, we didn’t party 24/7 (though we did start hanging out with new peers who introduced us to the delightful world of upper-class entertainment), and we didn’t coast through on our parent’s dime. We both worked all the way through school, at one point I was working 3 student jobs in addition to my classwork. We had a good time, but we were always focused on moving towards a successful future.
The friends we made at those student jobs and wine parties and such ended up being our future career network, since we were all interested in the same things. Both of us have kept our focus on building a life that we both enjoy, which has meant keeping resume’s updated and always being ready to jump at a better opportunity when it comes up. We’ve finally, 5 years after college graduation, found the situation that we want to stick with, so we’re now turning our attention to starting a family and finally taking vacations and such. Relaxing a little.
Were we lucky? Of course. We were both born bright, curious, healthy, and white in the USA. That’s about as good as you can do in the birth lottery. However, we’ve also made a series of good decisions throughout our entire lives, choosing to focus on academics and building our futures, and surrounded ourselves with others who did the same. We solve our own problems, and blame no one else for our mistakes (of which we’ve made plenty).
So yeah. Looking back, it’s obvious why we’re doing well now. And equally obvious why the folks who made different choices when they were younger aren’t. Is it fair? Probably not, but that’s life, right?
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My instinct was that this was going to be a “hot” post, and the comments so far have proved me right:)
I definitely think opportunity and awareness are key, as in someone gives you a chance and you are aware that this presents an opportunity. Unfortunately, there are some out there that never get the opportunity. And, the even more unfortunate, that pass it up when it is presented.
I agree with those above that say that people at $30k can also have all of the qualities you list (hard work ethic, good quality)…maybe luck/opportunity/fate/etc. play a role here.
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JD, I really think that you can’t underestimate luck as a factor – participating in any market, be it the stock market or the labour market, is a gamble. You can influence your chances a lot with attitude and education, but it’s still a gamble (your chances are also influenced by things you can’t control, like background, geography, and unfortunately race and gender). Some people lose out, and some people strike the jackpot.
I think it’s comforting to believe that we live in some kind of meritocracy, because it seems fair, but it isn’t really the case.
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I actually do think that high income earners “watch the clock” As the old saying goes, time is money and if you’re not aware of where you are spending your time (and whether you are being compensated well for that time spend) then you will not optimize your earning potential.
My tip would be to track every minute of your day and make sure you’re getting good ROI for your work effort.
Best,
Scordo.com
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