To be sure, a person can be one and the same - a higher earner and wealthy, but earnings and wealth are not synonymous. I've crossed paths with high-income earners who I would consider "poor." They owned many assets -- homes, time-shares, jewelry, cars, motorcycles, boats -- but they owned.few cash-generating investments: a business, dividend-paying stocks, rental property (I would add bonds, but I'm unsure if they count anymore). Labor was the primary source of their cash flow and their collection of depreciating assets.
Someone can generate a prodigious salary and be wealthy, or be poor. On the other hand, someone can generate a poor salary and be wealthy. Ronald Read is a glowing example of the latter. Mr. Read, a former Vermont resident, died last year age 92. He left this world alone, as we all will, but he left behind an $8-million fortune.
Mr. Read's wealth is a Horatio Alger tale; he never rose beyond gas-station attendant or janitor. Rarely does either occupation arise in conversation with the desultory high-school guidance counselor, and for good reason: Salary.com reports $20,611 as the median annual income for a full-time gas-station attendant. Janitors earn considerably more, though hardly enough to puff your chest. Salary.com reports $25,900 as the median annual income for a full-time janitor.
Mr. Read amassed his fortune through frugality, patience, and a keen eye for dividend stocks. According to Mr. Read’s attorney, Mr. Read’s portfolio at the time of his departure included AT&T (NYSE: T), Bank of America (NYSE: BAC), CVS (NYSE: CVS), Deere (NYSE: DE), General Motors (NYSE: GM), and General Electric (NYSE: GE).
Frugality, I believe, is key here. Few of us are genuinely frugal; most lack the fortitude to defer consumption. As H.L. Mencken noted a century ago in England’s Sunday Chronicle, “The human race detests thrift as it detests intelligence.” Nothing has changed. Modern culture continues to detest thrift. Indeed, an entire strain of economic thought – Keynesianism – is predicated on profligacy.
But there are two more angles worth considering: One is division of labor. Earning money is one talent, but creating wealth is another. One individual can possess both talents, but it should be reasonable to expect that a person could excel at one but not the other. The other angle centers on "living wage." That Mr. Read was able to tease so much wealth out of so measly earnings further weakens the pro-living-wage, pro-minimum-wage (pro-price-control, really) stance.