Economists Find Most Everyday Americans Gain Wealth Through Private Business Ownership
New research analyzing millions of business owners reveals that a significant portion of American millionaires derive their wealth from private, often ordinary, businesses.
Economists Owen Zidar of Princeton and Eric Zwick of the University of Chicago have analyzed millions of tax records and other data to map how everyday Americans actually accumulate wealth. Their new book, "The Everywhere Millionaire," highlights that a substantial number of the nation's wealthiest individuals are owners of privately held businesses, often built on less conspicuous business models.
The researchers estimate that approximately three million Americans have become what they term "Everywhere Millionaires," collectively holding over $65 trillion in wealth. Of these, around 1.7 million have amassed fortunes of at least $10 million through private business ownership, encompassing professions like car dealers, dentists, restaurateurs, and construction company owners.
Economists have historically overlooked the scale of wealth creation within private enterprises. Many of these entities are "pass-through" businesses, where profits are taxed at the individual owner's level. A lack of integrated data between personal and business tax filings has made it challenging for authorities to fully grasp the scope of these companies and their owners' wealth.
By compiling data over a decade, Zidar and Zwick have created what is believed to be the largest dataset ever assembled on entrepreneurs and private business owners. This aggregated data offers a novel and detailed perspective on the elements driving entrepreneurial success.
The study underscores that wealth accumulation is not solely the domain of executives in publicly traded companies. The number of private business owners achieving significant wealth far exceeds that of CEOs in public corporations with comparable net worth.