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Monday, March 30, 2009

Wealth Concentration in the U.S.

Marketing Charts (via Businessweek) details:

Five towns in California and four on New York’s Long Island have made it into the top 10 wealthiest towns in America, according to a recently released list from BusinessWeek.

The annual rankings of the top 25, which were compiled by The Gadberry Group, are based upon the average 2008 net income and 2008 net worth of the towns’ residents.

Exclusive Brookville, N.Y. tops the list as America’s wealthiest town, with an average annual income of $328K (seventh highest) and an average net worth of $1.67 million, the highest on the list. The non-commerical municipality, which is located on Long Island’s north shore 25 miles from midtown Manhattan, is the home to celebrity Jennifer Lopez and is known for its extreme privacy, country-like setting and good schools.

What struck me was how "little" wealth (I understand it IS A LOT, but I am speaking in relative terms) these families had considering the average income they were making. Bear with me for a minute... the average family in the U.S. makes ~$50,000 and has net wealth in the multiple of 2-4x that (i.e. $100-$200,000) because most of that money NEEDS to be spent to survive. However... if you were making $300,000 a year at the beginning on 2008, chances are you have been doing quite well for yourself for a number of years, thus I would have expected net wealth to have been many multiples higher as you don't "need" to spend all that money to survive. My thought was everyone had to "keep up with the neighbors" (i.e. the Mercedes and private school for the kids).

It will be interesting to see how the wealth in these towns has held up. Businessweek details:
Income and net worth data were collected before the economy collapsed at the end of 2008, and that subsequent news and events indicate that the residents of these affluent communities are most likely now feeling the pain of the recession.