What’s the difference between high-income earners and low-income earners?

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.

Reminder: One way to improve your income is to learn how to negotiate your salary. Mastering this skill can make a huge difference in your lifetime earnings potential.

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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Writer's Coin
Writer's Coin
10 years ago

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.

Sam
Sam
10 years ago

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.

Michael
Michael
10 years ago

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… Read more »

Kaitlyn
Kaitlyn
10 years ago

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… Read more »

Jeremy Keith Hammond
Jeremy Keith Hammond
10 years ago

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… Read more »

kk
kk
10 years ago

I have noticed that many, but not all, high income folks tend to be better at planning than lower income folks. 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… Read more »

Chamoiswillow
Chamoiswillow
10 years ago

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.

Cara
Cara
10 years ago

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,… Read more »

sandycheeks
sandycheeks
10 years ago

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… Read more »

Peter
Peter
10 years ago

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 🙂

Brenda
Brenda
10 years ago

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… Read more »

Regan
Regan
10 years ago

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… Read more »

kenyantykoon
kenyantykoon
10 years ago

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

Jeremy Keith Hammond
Jeremy Keith Hammond
10 years ago

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.

Laurie Zieber
Laurie Zieber
10 years ago

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.

Mohammad Azam
Mohammad Azam
10 years ago

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.

Walt
Walt
10 years ago

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.

J.D.
J.D.
10 years ago

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… Read more »

JerichoHill
JerichoHill
10 years ago

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,… Read more »

J.D.
J.D.
10 years ago

@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.

Foxie@CarsxGirl
10 years ago

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… Read more »

Karawynn @ Pocketmint
Karawynn @ Pocketmint
10 years ago

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… Read more »

Cara
Cara
10 years ago

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.

ethel
ethel
10 years ago

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… Read more »

Lesley
Lesley
10 years ago

I sometimes wonder how much of it has to do with choices made when you’re young. All the high-income people I know went straight into university, already focused on a specific field that they enjoyed AND had reasonable job prospects. Many people I know who are lower-income earners didn’t really know what they wanted to do yet. Some didn’t go on to get further education, and those who did often started with no plan in mind, switched majors/programs at least once, and sometimes dropped out. It wasn’t for lack of talent, work ethic, self confidence, etc. They just didn’t know… Read more »

Tyler@FrugallyGreen
10 years ago

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… Read more »

Kevin M
Kevin M
10 years ago

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.

Jessie
Jessie
10 years ago

A few other things come to mind after reading JD’s post… 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… Read more »

ethel
ethel
10 years ago

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.

Emily D
Emily D
10 years ago

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… Read more »

J.D.
J.D.
10 years ago

@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… Read more »

PhilLover
PhilLover
10 years ago

Holy cow. This is the first time I’ve ever been compelled to post a reply after 2 + years of reading. I have a daily struggle with this. My boyfriend and I are in the crossroads of this exact problem. He decided to leave a VERY lucrative 6 figure career in LA as a camera assistant to become an Occupational Therapist, while I’m still figuring out what’s best for me. 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… Read more »

Alexandra
Alexandra
10 years ago

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… Read more »

ethel
ethel
10 years ago

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… Read more »

Nancy L.
Nancy L.
10 years ago

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… Read more »

Mohammad Azam
Mohammad Azam
10 years ago

Teachers are paid well since they don’t work long hours and their job is very secure.

I am talking about University Level Professors!

Nate
Nate
10 years ago

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… Read more »

J.D.
J.D.
10 years ago

@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… Read more »

Troy
Troy
10 years ago

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.

Des
Des
10 years ago

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… Read more »

olga
olga
10 years ago

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… Read more »

Cat
Cat
10 years ago

I think the only difference is high net work people have a better understanding of self-discipline and self-motivation.

Everything else is secondary.

nicvalentine
nicvalentine
10 years ago

risk…

MissPinkKate
MissPinkKate
10 years ago

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.

JAK
JAK
10 years ago

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.

Steve
Steve
10 years ago

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… Read more »

Denise L
Denise L
10 years ago

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.

Scott R.
Scott R.
10 years ago

I agree hugely on the external vs. internal focus. My spouse and I are high-income, and our friends are pretty evenly distributed between high income, low income, and old money. Part of it is luck, obviously… not just whether or not you’re born into old money (which, honestly, that seems like the unhappiest group of all), but whether or not you’re born into a family that encourages and supports you in academic and career success. 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… Read more »

honestb
honestb
10 years ago

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.

scordo.com
scordo.com
10 years ago

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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