Months ago, we showed you a set of data visualizations that highlighted how people make and spend their money based on income groups.
Today’s post follows a similar theme, and it visualizes differences based on education levels.
Below, we’ll tackle the breakdowns of several educational groupings, ranging from high school dropouts to those in the highest education bracket, which is defined as having achieved a master’s, professional, or doctorate degree.
Income and Spending, by Education
The data visualizations in today’s post come to us from Engaging Data and they use Sankey diagrams to display data from the Bureau of Labor Statistics (BLS) that shows income and expenditure differences between varying levels of education in America.
The four charts below will show data from the following categories:
- Less than high school graduate
- High school graduate
- Bachelor’s degree
- Master’s, professional, or doctorate degree
It should be noted that the educational level listed pertains to the person the BLS defines as the primary household member. Further, people in households can be at different ages and at different stages in their career – for example, someone with a Master’s degree could be 72 years old and collecting pension payments, and this impacts the data.
Less than High School Graduate – $28,245 in spending (98.5% of total income)
These contain an average of 2.2 people (0.7 income earners, 0.6 children, and 0.5 seniors)
The average household in this category brings in $17,979 of salary income, as well as an additional $7,503 from social security programs.
Almost all money (98.5%) is spent, and on average these households are actually pulling money from savings (or taking out loans) to make ends meet. The biggest expenditure categories include: housing (23.5%), foot at home (12.3%), household expenses (8.4%), and gas/insurance (8.2%).
High School Graduate – $35,036 in spending (87.3% of total income)
These contain an average of 2.3 people (1.0 income earners, 0.6 children, and 0.4 seniors)
The average household here brings in $29,330 of salary, as well as $9,008 from social security.
These households spend 87.3% of their income, while putting $3,113 (7.8%) away in savings each year. The biggest expenditure categories include housing (21.7% of spending), food at home (10.1%), gas/insurance (10.0%), and vehicles (7.7%).
Bachelor’s Degree – $63,373 in spending (68.6% of total income)
These contain an average of 2.5 people (1.5 income earners, 0.6 children, and 0.4 seniors)
Households with at least one person with a Bachelor’s degree earn $81,629 per year in salary, as well as nearly $11,000 stemming from a combination of social security, dividends, property, and other income.
Roughly 68.6% of income is spent, with 16.6% going to savings. Top expenditures include housing (22.4%), gas/insurance (8.8%), household expenses (7.9%), and food at home (7.6%).
Graduate Degree – $83,593 in spending (62.9% of total income)
These contain an average of 2.6 people (1.5 income earners, 0.6 children, and 0.4 seniors)
Finally, in the most educated category available, the average amount of salary coming into households is $116,018, with roughly an additional $17,000 coming in from other sources such as social security, dividends, property, and other income.
Here, 62.9% of income gets spent, and 17.3% gets put towards savings. The most significant expenditure categories are housing (23.3%), household expenses (8.4%), gas and insurance (7.2%), and food at home (6.9%).
A Changing Role for Education?
For now, there is a clear link between certain types of college degrees and higher salaries.
However, as total student debt continues to hit record highs of $1.5 trillion and as more remote educational options proliferate online, it will be interesting to see how these charts are impacted in the coming years.
By the year 2030, do you think education will still have the same strength of correlation with income levels?
Mapped: The Wealthiest Person in Every U.S. State in 2020
The biggest state fortunes range from $0.3 billion to $117.1 billion (Jeff Bezos). See the wealthiest person in every U.S. state on this map.
The Wealthiest Person in Every U.S. State
There are different degrees of wealth that exist, even among the richest in America.
For example, a heavy-hitting millionaire might have the most impressive fortune in his or her home state — but venture a few miles across the state border, and suddenly they become a small fish in a much bigger pond.
Today’s map comes to us from HowMuch.net, and it shows the incredible variance in the biggest fortunes on a state-by-state basis.
The Rich List, by State
Below is the full list containing the wealthiest person in every U.S. state, based on calculations by Forbes in early March 2020.
Amazon founder Jeff Bezos tops the list with a net worth of $117.1 billion in the state of Washington — meanwhile, the smallest fortune on the list is located in Alaska at just $0.3 billion.
|Rank||Person||State||Net Worth ($B)|
|#4||Michael Bloomberg||New York||$58.4|
|#9||Phil Knight and family||Oregon||$40.0|
|#17||Thomas Frist Jr and family||Tennessee||$13.0|
|#18||John Menard Jr||Wisconsin||$11.7|
|#22||Harold Hamm & family||Oklahoma||$9.7|
|#23||James Goodnight||North Carolina||$8.0|
|#25||Pauline MacMillan Keinath||Missouri||$6.9|
|#28||Ernest Garcia II||Arizona||$6.2|
|#29||John Overdeck||New Jersey||$6.1|
|#30||Ted Lerner and family||Maryland||$5.5|
|#33||Les Wexner and family||Ohio||$4.5|
|#37||T. Denny Sanford||South Dakota||$2.4|
|#39||Anita Zucker||South Carolina||$1.9|
|#40||Jonathan Nelson||Rhode Island||$1.8|
|#42||Jim Justice II||West Virginia||$1.5|
|#43||James and Thomas Duff||Mississippi||$1.4|
|#44||Gary Tharaldson||North Dakota||$1.0|
|#46||Elizabeth Snyder and Robert Gore||Delaware||$0.9|
|#47||Andrea Reimann-Ciardelli||New Hampshire||$0.7|
|#48||Mack C. Chase||New Mexico||$0.7|
|#50||Leonard Hyde, Jonathan Rubini and Families||Alaska||$0.3|
While all of the names above are considered extraordinarily wealthy in their home states, there is still a magnitude of difference involved. The low end of the list ($0.3 billion) would need to multiply their fortune by 390 times to get up to the $117.1 billion Bezos level.
To put this another way, the same degree of difference exists between the median household wealth in the U.S. (~$100,000) and a multi-millionaire with $39 million to their name.
Rising and Falling Fortunes
The above figures were obtained prior to the COVID-19 market crash, which will surely impact the size of some of the fortunes listed here.
Who will be most and least impacted by the recent stock market turmoil?
Even though Jeff Bezos has most of his wealth tied up in Amazon stock, so far it has been relatively unaffected by the volatility. With more people staying home because of social distancing, orders on online platforms such as Amazon have exploded.
Similarly to Amazon, the heirs of the Walmart fortune in the Walton family — including Jim Walton, Alice Walton, and Rob Walton — are also seeing Walmart’s stock price hold relatively steady in the face of volatility. In fact, some analysts consider Walmart to be the ultimate “recession-proof” stock, as consumers flock to discount goods in poor economic times.
Warren Buffett is also an interesting case. Though the stock market has certainly disrupted the real-time value of his fortune, that’s not the game that Warren Buffett plays. In fact, he is known for waiting for times of crisis to deploy his cash, and has a significant stockpile of money ready for just this kind of situation.
Billionaires like Sheldon Adelson in Nevada or Philip Anschutz of Colorado might be singing a different tune than some of the other above magnates. Adelson, for example, owns a good chunk of the Las Vegas Strip, as well as casinos and hotels in Singapore and Macao. Unfortunately, tourism-related businesses are some of the hardest hit in the COVID-19 crash.
Meanwhile, Anschutz owns the Coachella Music Festival and stakes in many professional sports teams (LA Lakers, LA Kings, and multiple MLS teams), which have all been impacted by the cancellation of big events and gatherings throughout the country. Like many others, Anschutz is probably itching for things to get back to normal.
Opportunity Zones: Aligning Public and Private Capital
Opportunity zone funds (OZFs) can help the neighborhoods that need it most, while also providing significant tax benefits for investors.
Opportunity Zones: Aligning Public and Private Capital
At the end of 2017, a potential $6.1 trillion in unrealized capital gains was available for reinvestment.
Throughout the U.S., unrealized capital gains have significant tax implications with enormous potential. Unrealized capital gains occur when the value of an asset has gone up on paper, but has not yet been sold for a profit. Taxes are triggered once the asset has been sold.
Investors can offset or defer these taxes in a few ways, including one new strategy: investing in opportunity zones.
Today’s infographic from Bedford Funds explains what opportunity zone funds are, their core benefits, and their potential impact across the country.
What is an Opportunity Zone?
Opportunity zones are U.S. Census tracts whose citizens experience economic distress.
Originating in the 2017 Tax Cuts and Jobs Act, they offer the potential to connect long-term capital with low-income communities across the country to drive return and impact.
How are opportunity zones chosen? The initial base is low-income census tracts, which have:
- Poverty rates of at least 20%; or
- Median family incomes lower than 80% of the surrounding area
The state’s governor or chief executive then nominates up to 25% of these areas as opportunity zones. Nationwide, a total of 8,700 opportunity zones exist, and 7.9 million of the areas’ residents live in poverty.
Overall, 35 million people live in these opportunity zones. There are a number of disparities between opportunity zones and notional averages across key variables:
|Poverty Rate||Median Family Income||Education*|
*Adult with Bachelor’s degree or higher
It’s evident these cities could benefit from increased investment.
What is an Opportunity Zone Fund?
An opportunity zone fund (OZF) is an investment vehicle that provides tax benefits for private capital to help revitalize economically distressed communities. Both operating businesses and real estate are eligible for investment.
Many investor types may take advantage of opportunity zone funds:
- Corporations– Also includes partnerships
- Accredited investors– Defined as high net worth individuals, brokers, and trusts
- Nonresident foreign investors– Only on capital gains earned in the U.S.
- Retail investors– Through funds that have lower minimums, though options are more limited
In addition to their wide eligibility, OZFs have a number of potential benefits.
Tax breaks on capital gains can be organized into three tiers:
- Initial Tax Deferral– Once the previously-earned capital gains are channeled into a qualifying OZF, federal tax is deferred until December 31, 2026 or the date the investment is sold— whichever comes sooner
- Step-Up In Basis– 10% of the original capital gains will be excluded from federal taxes if an investment is held for five years
- Capital Gains Tax Exclusion– Federal tax on capital gains earned within the OZF is 100% eliminated if an investment is held for 10 years
All things being equal, OZFs realize after-tax outcomes that are over 40% higher than a standard portfolio investment. For example, the potential after-tax value of a $100 investment after a 10-year holding period would be as follows.
|Initial Investment||Net after-tax value|
|Standard portfolio investment||$76.20 ($100- 23.8% capital gains tax)||$132.36|
*Note: assumes long-term federal capital gains tax rate of 23.8%, no state income tax, and annual appreciation of 7% for both the OZF and alternative investment.
While it takes a few years to realize these tax benefits, OZFs have long-term horizons to encourage sustained investment with a lasting impact. The result is the potential for sustainable and equitable wealth creation.
Although real estate investments have captured significant attention, recent regulation has clarified that operating businesses are also eligible OZF investments.
By investing in businesses, OZFs can have a direct impact on economic growth and job creation.
Ultimately, OZFs have the potential to catalyze collective impact through their scalable operating company and real estate investments. Working directly with community leaders, OZFs can help drive long-term rejuvenation from within, versus gentrification from outside forces.
Opportunity zone funds are projected to raise $44 billion in capital designed specifically to invest in this future growth.
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