Maybe the Young Aren't Taking Over the 1 Percent

The face of America's billionaires is changing, but it's not necessarily for the younger.


It seems that more and more youngsters with internet startups are instant bajillionaires. Twenty-seven-year-old Mark Zuckerberg's Facebook is adding two more to the rich under-30 set, purchasing Instagram for $1 billion from founders Mike Krieger and Kevin Systrom. There is a bevy of others, as well, like Zuckerberg's Facebook cofounders, as well as Google cofounders Sergey Brin and Larry Page, all of whom were under 30 when they started their wildly popular sites. Add in lists like Inc.'s 30 under 30, which catalogs the hottest young entrepreneurs, and it looks like Generation Y is primed to take over the 1 percent.

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But that's a tough case to make.

Data show that "there has been [an age] shift downward in that more millionaires are in their fifties or under 50 and fewer are 60 or older. But there are very few millionaires under age 40, and that hasn't really increased over time," says Scott Winship, fellow in economic studies at the Brookings Institution, in an email. As for the billionaires, he says, globalized markets mean that the rich—old and young—are all now able to become far wealthier than they once were.

Winship points to data from the Federal Reserve's Survey of Consumer Finances, which show that the share of young people with annual incomes of $1 million in 2011 dollars—pocket change to some of these young entrepreneurs—barely changed from 1982 to 2006.

Million Dollar Earners by Age    
Age 1982 2006
Under 30 0% 0%
30-39 5 6
40-49 19 22
50-59 22 36
60-69 33 27
70+ 21 9
Source: Scott Winship    

Those data, of course, are just for incomes and not net worth. But a glance at Forbes' list of the richest Americans also suggests, however, that it's still the older set atop the very largest piles of wealth. The wealthiest person under 50, 47-year-old Amazon founder and CEO Jeff Bezos, sits at No. 13. Zuckerberg, at No. 14, is the only under-30 member of the club until his Facebook cofounder Dustin Moskovitz, at No. 91.

And while high-priced startups like Instagram have the business world buzzing about a "social media bubble," Winship doesn't see the young people at the helm of many of these companies making up an unusually large portion of the wealthiest Americans.

"I think what's happened is that there are a small number of high-profile folks like Zuckerberg and the Google guys that everyone notices. But [Microsoft cofounder and chairman Bill] Gates and [Apple cofounder Steve] Jobs got rich pretty young, too, back in the 1980s and early 1990s," says Winship.

"I think the perception out there is that it's easier" to quickly make large sums of money, says Jeff Ladouceur, director of SEI Private Wealth Management. "I think what we don't hear about is the number of folks and ideas that aren't making it."

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However, it's also unfair to say that wealth trends aren't shifting; they are, but it has less to do with age and more to do with how people make their billions...not to mention how many billions they are able to make.

The rise of the internet has made a new arena in which it is possible to make lots of money with far fewer startup costs than the industrial giants of yesteryear. Rockefeller may have needed oil refineries, but now some coding, a laptop, and an idea can make for a wildly lucrative product. Even Gates and Jobs had a higher barrier for entry to their markets than some of today's web entrepreneurs, says Winship.

This means that getting to the top can be a fast ride. As Forbes showed in a 2011 analysis, John D. Rockefeller and Henry Ford each took more than two decades to hit $1 billion in net worth. Website founders like Bezos and Zuckerberg can do it in a matter of a few years. Priceline's Jay Walker needed just one year.

That has helped a handful of high-profile young business people climb the wealth ladder quickly. Then there's the question of how they climbed so high. Winship says that this is a trend across all of the richest Americans.

Now, he says, "the richest people in America in any given year are much richer than the richest Americans were in the 1980s and early 1990s." Because of globalization, companies—particularly websites—can reach huge customer bases, meaning potentially bigger profits. In short, are more young entrepreneurs hit it big, they may find their older counterparts already easily outpacing them.