Job Creation: Thank The Rich

Tom EgelhoffPublished: December 9, 2014

WESTPORT, CT - SEPTEMBER 18: A man drives his antique car during an auto show of rare and luxury vehicles on September 18, 2011 in Westport, Connecticut. Despite some of the poorest cities in the country, Connecticut has the third highest average median income at $64,644 in America. Nationally the Census data shows that the numbers of the poor have risen to a record 46.2 million -- amounting to nearly 1 in 6 Americans. (Photo by Spencer Platt/Getty Images).

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Even with unemployment numbers going down each month there is still a valid concern among American workers about where the jobs are and who actually creates them.

Do The Rich Really Create Jobs?

Let’s begin with those who are not rich. We go out and buy a pair of $25 dollar jeans. So do the rich. So it would seem on the surface that neither of rich, poor or middle class would move the needle very much.

That of course is flawed thinking. Why? — Because it’s thinking on too small a scale. It’s puts rich and poor in the same class and that’s far from accurate.

Let’s Examine The Real Facts of Rich Purchasing Power

Those of you who read my blog know that I am a numbers guy. I put emotion aside and look at the facts then I can make my emotional decision but not before.

So the question becomes what can the rich buy that you and I buy and how much will their purchasing power contribute to job growth or job creation?

Here Are The Census Numbers

U.S. Households number 115,226,802
One in 50 of those households has an income of $250,000 or more
That’s 2.3 million households with incomes of $250,000 or more.
Average number of people per household in the U.S. is 2.61.
That amounts to about 6 million purchasers.

How Do The Numbers Relate To Job Creation?

Let’s go back to our jeans. If we buy three pairs of jeans for $25 dollars each, that’s a lot of money from 113 million households. ($8 billion to be exact)

But what happens if the rich buy three pairs of jeans?

Seventy-five dollars worth of jeans for 2.3 million people would be $172,000 dollars if they all bought jeans on the same day. If you take it further to 2.3 million households with 2.61 people buying $75 worth of jeans you are at $448,500,00 for one day. That’s a long way from $8 billion.

Let’s Just Look At $75 Dollars

If the rich were to average spending $75 each day of the year how much would that be? Seventy-five dollars X 365 days x 2.3 million households = $62,780,000,000 billion/yr. It would cost just $5 billion more to fund the entire department of education. And I’m guessing they would spend more than $75 per day.

A $250,000 yearly income would break down to $120.19 per hour for a 40 hour a week job, $684.93 per day or $20,833 per month.

Some Final Thoughts

Yes the dollars you and I spend probably do go further to creating jobs than 2.3 million rich households do. But take a moment to think where unemployment would be without them. But to claim the rich don’t significantly add to job creation would be plain wrong.

And I have made the case before that not only do the rich create jobs but also create jobs that only the rich can create. You can read that blog here.