Motley Fool Money - America's Real One Percent Has Nothing to Do With Silicon Valley or Wall Street

Episode Date: October 25, 2026

The wealthiest people in America aren't who you think they are. Together, they have more net worth than the Forbes 400 by a factor of ten — and almost no one has heard of them. Motley Fool analyst Rachel Warren talks with Eric Zwick, professor of economics at the University of Chicago Booth School of Business and co-author of The Everywhere Millionaire, about the decade of research that rewrote what he thought he knew about wealth, inequality, and the American economy. They get into who actually makes up the top one percent, what these Main Street millionaires can teach public market investors about capital allocation and competition, and the economic indicators worth watching right now if you want to track the health of the businesses that actually power most of the country.  Host: Rachel Warren Guest: Eric Zwick Producers: Bart Shannon, Lauren Budabin  Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

When you collectively add them up, they have more net worth than the Forbes 400 by an order of magnitude. So more than 10 times the collective net worth of the Forbes 400, even though individually they're not as rich as Elon. That was Eric Swick, Professor of Economics at the University of Chicago Booth School of Business. On a group of Americans, almost no one has ever heard of, who collectively hold more wealth than the entire Forbes 400. I'm Motleyful analyst Rachel Warren. Eric spent a decade working through economic data that most researchers never get access to, and what he found completely rewrites the story of wealth in this country. We get into who actually makes up the real 1%, what this hidden economy of Main Street millionaires

means for investors watching the public markets, and the statistic that made Eric rethink everything he thought he knew about inequality. We hope you enjoy. Welcome back to Motleyful Conversations. I'm Motleyful analyst Rachel Warren. Today I'm delighted to welcome Eric Zwick, Professor of Economics and Finance. finance at the University of Chicago Booth School of Business to the show. Eric is also the co-author of an incredibly eye-opening new book, The Everywhere Millionaire,

who is really rich in America and how they got there. Eric has spent a decade digging through economic data to shatter the myth that transformational wealth belongs only to Silicon Valley tech founders and Wall Street executives. Instead, this research has uncovered America's hidden 1%. The regional business owners, passed through entity founders, and Main Street entrepreneurs, building generational fortunes completely away from the spotlight. Eric, it's wonderful to have you on the show. Welcome. Thank you so much for having me. Great to be here.

One of the things that struck me is the core thesis of the everywhere millionaire sort of challenges the popular narrative that massive wealth creation requires building a software giant or managing a hedge fund. And, you know, there are many other examples. When you look at the data, what is the typical member of America's real 1% actually look like? Yes, so we are told that, you know, the path to prosperity is sort of through Silicon Valley or Wall Street. You have to be a tech CEO or a, you know, a VC-back startup founder or a Wall Street trader in order to get really rich in America.

And what we found through a decade of research working with unprecedented administrative data that then in the book we turned into stories by going out and finding these everywhere millionaires lurking in plain sight is that, you know, wealth is sort of. much more pervasive, it's much more abundant. Across the country, there are people running unglamorous businesses in towns and suburbs and tier two, tier three cities all across the country who are incredibly wealthy. So our ever millionaires have average net worth of around $25 million. So they have minimum net worth about $5 million.

They are people who own a private business. And we estimate there are about 3 million of them. So that's a lot of people. When you collectively add them up, they have more net worth than the Forbes 400 by an order of magnitude. So more than 10 times the collective net worth of the Forbes 400, even though individually they're not as rich as Elon. They're just collectively this huge group of people that we really didn't know that much about,

I think, for various reasons that we can talk about. Concretely, who are they? We do something we kind of joke because we both have little kids, Owen and I, the ABC board book. So the ABCs of getting rich. And A is for auto dealers, B is for beer distributors, C is for contractors, D is for dentists, and I could go on. But it's sort of like that type of mid-market business owner across a whole bunch of industries that are not super glamorous. These are ever millionaires whose stories we try and tell in this book. And I think in the book as well, you call this group the stealthy wealthy.

And I wonder why has this segment of the population managed to build this kind of wealth, but very much away from the spotlight and even, you know, the radar of Wall Street? Yes. So we call them stealthy wealthy. And, you know, some are maybe nefarious a little bit in their behavior. But many, they're just flying under the radar, but just, you know, not with anything, you know, untoward about their behavior. So we call them the stealthy wealthy just because people aren't looking for them in the right places. We're, you know, looking away from the coasts.

So a lot of our attention is drawn to the coasts where we tend to look in the media at, you know, public company activity, right? It's a lot of retail investors listening to this podcast. And, you know, public companies are a specific subset of the American economy. And they disclose their information. You know what they are. They tend to be consumer-oriented businesses, not always. ways. They tend to be in more capital-intensive sectors, so they have to raise capital to go

public. This is not a representative pick of the American economy, and it's not, you know, the ballpark in terms of what's where people work, where the profits are. So more than half of the total profits in business across the country are in what we call pass-through businesses. These are non-public businesses. So there's a ton of activity. Most businesses in the country are these kind of pass-through businesses, non-public businesses, and they're all over the place. So I think, you know,

the Forbes 400 is another example of, you know, when people think about who's really rich, they jump to the top of the Forbes list. Those are tech founders, typically public companies, you know, owners, and also people who are seeking attention

in some cases by buying media companies. And, you know, are stealthy, wealthy, are not actively trying to hide, although some are, You know, one car dealer is notoriously referred to as Batman because everybody knows that he exists, but nobody's seen him. And I think, you know, they just are running their businesses. They're not in these media markets.

And they're doing their thing and enjoying it, in a lot of cases, without a lot of attention at all. You know, one of the things that struck me, I saw there was a comment on your book from the Nobel Prize winning economist Angus Deaton. And he was saying that in his comment, there's currently five million households in America with over $5 million each running entirely below the radar. And I wonder, what does that tell us about just the scaling capacity, but also the overall health of the U.S. consumer economy? Yeah. So I think there's this fish eye lens view of the U.S. economy that is kind of prevailing in the media narrative where it sort of zooms in on Elon or zooms in on a few billionaires. and then it's like everybody's being left behind. I think the message from these stories is that,

yeah, there's a lot more opportunity for people to do incredibly well. I mean, we're not talking about people who just have like a million bucks in a pension. We're talking about people who don't really have to think too hard about how they spend their money at this point. They're close to post-economic, if not post-economic, to use a term of art, where they basically like kind of, okay, I want this, I'm going to buy it. There are millions of people like that across the country

and many of them didn't, you know, weren't born with a lot of opportunities. So we figure that about a third, we try and estimate this in various ways of our everywhere millionaires, inherited businesses or come through that shortcut into prosperity as business owners, but that means the two-thirds or maybe 70%.

either founded their business or bought one and grew it later in their careers. So that's kind of a lot of self-made stories in the data. And we tell some of these stories individually like Dick Portillo from Chicago who started out growing up in the Cabrini Green Housing Project and started a hot dog stand. He didn't actually know how to make hot dogs at the time. He didn't know how to steam a bun. Had an $1,100 investment initially. built this thing incrementally with no outside investors, no very little debt, just plowing his profits back into the business.

It was the largest privately owned restaurant company by the time he eventually sold it because he didn't really want to pass it under his kids. He's sort of like it was Dick's business and so he was like, I'm gonna I'm gonna sell it in his 80s although he's kind of annoyed to do it because after selling it he's told us he was bored, but he sold it for over a billion dollars and you know we found him in yacht registration data So he has a very large yacht, like over 100 foot yacht called Top Dog. And so, you know, there are stories like this. He's, you know, an outlier within that class of, right, because he's more like a billionaire that people haven't heard of. But there are just tons of stories that look like him in the data.

And I think it's quite inspiring. And it says that there's more opportunity available than I think the prevailing narrative. So I think that's an optimistic take on the economy that you don't hear as often as maybe we should. Your favorite Starbucks flavor is coming home. Introducing new Starbucks Cinnamon Dolce by Nespresso for Virtuo. Ready with the touch of a button on your Nespresso virtual machine, these pods are the perfect way to start your day with the Starbucks cafe quality you love. And they're super easy to customize however you like.

Discover new cinnamon dolce and the full range of Starbucks by Nisprosso for Virtuo pods in your local grocery store today. This episode is brought to you by Google Pixel. Tired of eating the same thing? Google Pixel 11 Pro has Gemini built in, so you can snap a pick of your fridge and just ask something. Like, hey Gemini, give me a 30-minute recipe using what I have in my fridge.

We're going to make a crispy panseared chicken with honey glazed charred sprouts. Brussels sprouts and chicken are a match made in heaven. Ask more of your phone and try the Google Pixel 11 pro. Check it out at store, dot google.com results for illustrative purposes. What do you think maybe the primary misconceptions are among the public, among investors, about where that real durable wealth is being generated right now?

Silicon Valley tech apps, influencer economy, these are terms that I think are like kind of the flashy, you know, Instagram real images that we see about rich people. We don't see the trash bag liner manufacturer who supplies to like all the McDonald's franchises, right? And then, you know, when he retired from that business, bought a submersible so he could hunt for actual treasure in the Caribbean from sunk in treasure ships. So we don't see, you know, the guy who has 20 Wendy's franchises that he's, you know, built that portfolio. of franchises over time running Wendy's, who's, you know, like maybe a deca millionaire or something like that. These are sort of unglamorous businesses. They don't draw our attention in the same way, even though the people are laughing their ways to the bank. They're not as entertaining to look at

if you're swiping and scrolling, I think. That's why there's just this misconception about it. But once you start to look for them, you start, you do see them everywhere, whether, you know, even if you live in sort of New York City, you actually can see them all over the place. But if you live, you know, I live in Chicago, I walk from work to school to drop off my kid, there's a beer truck that says Budweiser on the side. And on the side of the door is the name of the distributor. And I'm like, oh, that's, that's Reyes. That's like one of the largest beer distributors in the country, incredibly well. healthy and most people haven't heard of him or that family. And their story is quite interesting in terms of how they rolled up distributors across

the country over many decades. But there's sort of like that kind of thing. They're like right all around us closer to home than you think. But you're not looking for them, you know, on your phone. You're kind of looking for them in the world around you. You know, from your research into these Main Street businesses, I wonder what are some takeaways or, you know, a framework that maybe you can draw into evaluating public companies. You know, if you're a retail investor listening to this conversation, what are maybe

some lessons that can be learned from these private businesses that can be drawn into the health of the public markets? Yeah, that's a good question. I like that question. One is probably to think about competition a little bit more broadly, there's scope for competition from the private market in certain product lines and certain you know so sort of thinking about like when you're picking investments like it's not just about competition

from other publics right it's competition from products that are being offered just by these everywhere millionaires in their businesses and which ones are kind of robust to that kind of competition which ones have an opportunity to disrupt sort of the sleepier

everywhere millionaires in certain industries. So I think we've seen, you know, legal services, companies that are trying to enter and disrupt, say, these law practices across the country because there's tons of profit there. So if you're looking for sort of opportunities or growth, I think disrupting some of these businesses where, yeah, they're not so focused on staying ahead or adopting new technology. I think it's like quite interesting. So I think, you know, we've seen a little bit of that with the software as a service. Is this going to be disrupted by AI or is it going to be complimentary with AI?

I think we could think about some of these more tactile industries, you know, fast casual dining or auto parts or, you know, mid-market manufacturing, making frozen kishes like this kind of stuff in big box stores. Okay, is AI going to disrupt all aspects of that business or is AI going to sort of help with, you know, customer relations management is going to, you know, customer relations management is going to, help with sales and like what does that mean for some of the other stocks I'm looking at or some of the opportunities I'm looking at. I think there's like it's useful to have a reminder that the economy isn't just zeros and ones and chips and code that there's this like much richer, you know, in the world three-dimensional economy out there and the stories might be a little different than the the magnificent seven. So I think like as a public market investor, that's what I'd be thinking about

all the investors are flooding into those seven bets. What are some like maybe interesting contrarian bets? There's just some thoughts I have on that question. One of the other things that, you know, I was thinking about often when we look at the public markets, we see some companies expend massive amounts of capital on, you know, dilutive acquisitions or even poorly timed share buybacks and I wonder how do the stealthy wealthy as you call them in the book, how do they tend to think about capital allocation? Because I also think that there's often parallels that we can draw when we're looking at, you know, quality businesses in the public markets from what we see in terms of the actions taking place in the private markets. Yeah, so I see some of these acquisitions

or like so throwing capital back in investors through buybacks. It's sort of like, you know, the consequence of having run out of good ideas. And, you know, in some cases, like the dilutive acquisition is, well, we see the writing on the wall with our main business line, which is trending, you know, down. And so in the absence of this acquisition, it's going to look even worse. So it could still make sense to do it, even if it's, like, not a great, you know, it's not going to, like, you know, lead to salvation for the company. wealthy wealthy folks have the benefit of being able to grow, you know, without reinventing

themselves in a lot of cases, sort of like, as I mentioned, geographically or sort of adding a few products like, you know, the chemical importer exporter that we profile can just like sort of find a few more customers can be hard to do, but because their market shares are so smaller, it's like sort of an easier problem to solve to try and to try and grow that business, at least conceptually. You know, sales is not easy if nobody's heard of you. So you really got to get in the door and go go to the customers and talk to them and, you know, work that network for sure. But they have a bit of an easier job growing, especially if they're in like kind of a growing industry. So then they can just ride those tailwinds. Big public company

that's kind of very established, kind of market leader, yeah, dilutive acquisition might be the only game in town, or returning money to shareholders might be the only game in town. I think maybe the stealthy, wealthy version of that is, well, reaching the end of my life cycle going to retire, I don't know who's going to take over the business, so maybe I'll just sell this thing to private equity and ride off into the sunset on my yacht.

So that's sort of like what some of those stories look like. It's kind of returning the money to shareholders as opposed to, you know, burning the thing down to maintain control. Your favorite Starbucks flavor is coming home. Introducing new Starbucks Cinnamon Dolce by Nespresso for Virtuo. Ready with the touch of a button on your Nespresso virtual machine, these pods are the perfect way to start your day with the Starbucks cafe quality

you love. And they're super easy to customize however you like. Discover new cinnamon dolce and the full range of Starbucks by Nisproso for Virtuo pods in your local. grocery store today. This episode is brought to you by Google Pixel. Tired of eating the same thing? Google Pixel 11 Pro has Gemini built in.

So you can snap a pick of your fridge and just ask something. Like, hey Gemini, give me a 30-minute recipe using what I have in my fridge. We're going to make a crispy panseared chicken with honey glazed charred sprouts. Brussels sprouts and chicken are a match made in heaven. Ask more of your phone and try the Google Pixel 11 Pro. Check it out at store.combole. Yeah, and it's interesting to think about how as, you know, investors in public companies who sort of gain indirect exposure to these players just to by nature of their relationships with

some of these big players. When you were writing this book, you know, as we get to the end of our time here together today, I'm curious, what surprised you the most in your research as you were learning about these Main Street entrepreneurs and their businesses? Yeah, so I, you know, was definitely, I came at this thinking about the stories on especially top inequality was sort of maybe one of the early things that we thought about like pickety's capital had just come out that book that was sort of all about we're back in the in the gilded age it's a new gilded age like a few you know billionaire industrialists that like

are taking over the whole economy these massive companies and they you know that's where all the all the money at the top is we started to look at well what's driving the top one percent share in income which, you know, in Pickety's book, the top 1% is kind of this nameless, faceless group of people. You don't really get a lot of humans, so we joke our book as like Piccaddy with people, but it's sort of like you actually meet these people that are in the top 1% and see what they're doing and get a little bit about their stories from their own mouths. And you're like, oh, this is not the typical 1% or even 0.1% is not like the moneybags monopolist gilded age person. It's like a private business owner with a mid-market business. Like, you know,

there are tons of these people. The top 1%. When we looked at narrow industries, the industry generating the most profits for their owners was doctors offices. And so it's like, oh, doctors' offices, that doesn't feel like a capital intensive business at all. That's really just they are running practices. They've structured as businesses so they can, you know, pay themselves a bit lower wages, but higher profits get better tax treatment, but also scale the business up and sell some of the services and so on that doctors do. But there's just a ton of doctors. And healthcare is 18% of the economy. And, you know, a big chunk of it is not hospitals or pharmaceuticals. It's just services being provided by these people. And so it's like, okay, this is like a totally

different view on inequality and who's really rich than I entered in like, you know, just trying to answer that question. So that sort of blew my mind. And like the more we talk to people or tell them about what we were learning in the data, you know, not just economists or academics, but just sort of like friends, family, people that we encounter conferences and so on, people that I, you know, play golf with. They just know all these people. They know these stories. Like they recognize the stories pretty quickly from their own lives, from their own backgrounds,

from where they grew up, from people they know the regional banker from like, you know, who they're lending. too, like the magnet manufacturer of this kind of thing. And so I think you realize they're all around us and we just haven't really been looking for them in the right way. So it was very eye-opening to me. And I think a lot of people who have read the book, which was written not just to be collected, but also to be enjoyed and read, will sort of have that eye-opening experience, I believe. And one final question for you as well, just as investors who are hearing all of this and and drawing on the lessons that you've showed us today. I also wonder, what are some key elements, metrics we can be looking at tracking the health of

the economy, tracking the health of the markets, you know, if I'm an investor listening, trying to see, how can I be tracking the health, the economy, in the markets over the next 12 to 18 months? What would you be looking at? That's good. I mean, so thinking about these everywhere millionaires, right, some of the more aggregate tangible retail sales consumption kind of data right like sort of these businesses are often selling you know say like the fast casual dining right so you're like looking at those kinds of

metrics that's not just sort of like quarterly earnings but really like what's going on with consumption are people able to spend money or people pulling back because you know prices have gone up and I think that's like an important thing going forward on like the economy and sort of like that's where through a lot of these types of businesses you know they'll grow if like customers keep coming in the door and they'll stop growing they won't close but they'll stop growing if if traffic slows down and then you know if you're in the supply chain a lot of cost shocks right so we're looking at some of the ppi numbers to think about like you know where are like inputs especially tight

You know, what are some of the second and third order effects of, say, energy prices going up, right? It's fertilizer. Or, like, okay, well, fertilizer goes into food. Okay, so food costs. Or, you know, like, you have all the distribution, like, logistics and trucking and so on that uses fuel. Okay, well, that means, like, everything that moves around that needs to, like, go from warehouse to consumer, warehouse to store. that's going to be more expensive. You sort of like track some of that stuff. And a lot of them, you know, mainstream millioners are running the businesses along that supply chain or in those input providing.

And you can kind of see in some of the aggregate data that comes out of the statistical agencies, you can see the health of the economy that way. I think those are some of the problems that we face today. And so I'm sort of looking at some of those statistics to see where things are going the next 12 to 18. Thank you so much for that, Eric. It's been so great to speak with you today. and for those who are listening or watching, check out Eric's new book co-authored with Owen Zyder, The Everywhere Millionaire, who is really rich in America and how they got there.

Thank you so much, Eric. Thanks for having me. To see the full interview, go to our Motley Fool Conversations YouTube page. As always, people on the program may have interests in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy ourselves stocks based solely on what you hear.

All personal finance content follows Motley Fool editorial standards, and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For the Motley Fool Hidden Gems Investing team, I'm Rachel Warren.

Thanks for listening. We'll see you next time.