This month’s book club entry for my Your Money This Week podcast is The Everywhere Millionaire: Who is Really Rich in America and How They Got There. We’re discussing it tomorrow. Here’s my short book review.
The Millionaire Next Door is the personal finance book that has influenced me the most. I read it shortly after graduating college, and the lessons on who the wealthy really are in America and how they got that way were very impactful. I reviewed it here, and it’s also on my list of Best Financial Literacy Books. But it came out decades ago, so some stats and lessons are dated. It also relied heavily on surveys, which, while helpful, don’t provide the broadest data set.
The Everywhere Millionaire: Who Is Really Rich in America and How They Got There by Owen Zidar and Eric Zwick does an excellent job addressing those limitations, and is in many ways a worthy successor to The Millionaire Next Door. This is something the authors themselves acknowledge in the book when they share that it mirrors many of their findings.
This book came out of a project the authors were asked to complete by the Treasury Department starting in 2014. They were tasked with figuring out how much business owners were paying in taxes. To do this, they built the first database connecting data from tax forms to individual businesses, their owners, and employees. They also tracked the founders of every new firm started in the United States since 2000.
In mining this data, they uncovered the great insights shared in this book. I highly recommend it and hope this book review of The Everywhere Millionaire encourages you to check it out.
The book has three parts.
Part one introduces us to what they call the Main Street Millionaires.
The second part covers where they came from and how they grew rich.
The final part focuses on their political power.
The third part was the least interesting and can be skipped by most readers. It also didn’t reflect the experience I saw with my business owner clients, who I find are not nearly as politically active as the book claims.
Key Takeaways
The authors group the wealthy into three tiers, using 2022 data:
- Wealthy: $5 million or more in net worth, the top 4% of households, or nearly 5 million households
- Decamillionaires: $10 million or more, about 2 million households
- Centamillionaires: $100 million or more, about 65,000 households
The rich are mostly business owners. About 75% of decamillionaires and nearly all centamillionaires own a private business. The authors call these owners Main Street Millionaires: roughly 3 million people with average wealth around $25 million.
Their businesses are mostly boring. The common thread is a large stake in a mundane business that provides goods or services people need: regional chains, distributors, multi-location franchise owners. Think Publix, Buc-ee’s, and Love’s, not tech startups.
There are more of them than ever. Adjusted for inflation, decamillionaire business owners have more than doubled since the early 1990s, and centamillionaires have nearly quadrupled. Reinvesting in their firms, economic growth, and lower interest rates and taxes all helped. So did the 1986 Tax Reform Act, which fueled the boom in pass-through entities.
Wealth takes decades. Publix opened in 1930. Love’s started in 1964 and is on its third generation. Buc-ee’s seemed to appear overnight, but its first store opened in 1982. The typical decamillionaire business owner is 62, and fewer than 10% are under 40.
They’re educated, married, and focused. About 80% are college grads, 40% have graduate degrees, and 90% are married, compared with 60% of the population over 40. They also tend to have few interests outside the business.
Early career exposure beats test scores. High test scores predict higher income, but are weaker predictors of entrepreneurship. Growing up around a family business and working in jobs that provide business training in entrepreneurial industries matter more.
Business ownership is risky. About half of new businesses stop operating within five years.
Succession planning is essential. Profits per employee dropped 82% when an essential owner died before 65 or retired.
Wealth rarely survives inheritance intact. Only 12% of children of top-1% earners stay in the top 1%. Heirs tend to spend more and work less, and family-run firms underperform.
Selling is a common final step in their wealth-building journey. Private equity is hungry for founder-owned firms, which made up 60% of PE deals in 2023.
