If they weren’t so easy to hate, it would be difficult not to pity the top 1%. They have become an international scapegoat of the financial crisis, a universal punch bag for the dispossessed, angry and disillusioned. The phrase ‘We Are The 99%’ has become a universal slogan uniting many against a privileged few.
But who are the 1%? How should their wealth be measured? By salary, total income, assets or a combination? For the purposes of this post, I will look at the different ‘threshold incomes’ needed to be considered part of the top 1% of earners in different countries.
This analysis, illustrated in the graph above, is based on the statistics published by the Paris School of Economics’ ‘World Top Incomes Database’. The database is an amazing resource, allowing comparisons to be made on a raft of statistical measures across different countries and through the years.
Income threshold for top one percent by country
Australia – $209,013
France – $159,632 (2006 figure)
Germany – $200,358
Italy – $122,306
Spain – $111,437
Sweden – $116,105
UK – $155,225 (1)
USA – $341,810
All data as of 2008 in US dollars unless stated otherwise
(1) Data from the Institute for Fiscal Studies (report here)
This is a rough and ready analysis. It doesn’t take any account of purchasing power parity, variances in national statistical reporting or exchange rate fluctuations. It also represents, of course, only half of the story.
Having an income that tips you in to the top 1% of earners would not necessarily bring you close to being amongst the richest 1% in society. For starters, many of the truly wealthy would not have a salary or traditional income. In addition, this does not factor in the accrued wealth of generations passed on as assets (whether income bearing or not).
But it does provide an interesting reflection of who we are talking about when discussing the 1%, especially when the threshold incomes are nowhere near as high as most would assume. It also provides a fascinating reflection on each society, with a complex mixture of inequality, income differentials and the overall wealth of the country resulting in widely different income thresholds.
The USA’s very high threshold figure is no doubt a result of the combination of great national wealth and staggeringly high levels of inequality. Sweden, by contrast, is a rich country but with very low levels of inequality – and thus has a threshold income barely a third that of the USA.