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The reality of this phenomenon is that people who have done everything "perfectly" in their life and academic career feel a bit cheated when their income tops out in between 100k and 200k. They might be senior engineers or doctors or lawyers but they've hit this brick wall as far as income, sometimes in their 30s and yet there are all these people out there that make more than 10x or even 100x their annual income.

Now there are four ways that I am aware of to make more than about 200k/year.

1. Be an investor/entrepreneur in your own company.

2. Have stock in a company that IPOs or get bought.

3. Work in high finance at a well performing hedge fund or a maor wall street firm.

4. Be a senior partner in a major law firm or an experienced surgeon in an in-demand specialty. Though you'll still top out at about 500k, at least according to glassdoor.com.

Did I miss any?

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> and yet there are all these people out there that make more than 10x or even 100x their annual income

Where by "all these people" we mean an extremely small fraction of the population. If I think about things honestly, I'm paid more than almost everyone I interact with regularly. Many of these people aren't lazy or stupid or dropout or what-have-you. They also went to good schools and got good grades and are excellent at what they do; but it turns out that the "brick wall" in their field is a fraction of what it is in the tech industry. So, yes, I know a few people making more than I do, mostly in jobs I don't want to do, with working hours I wouldn't tolerate; but I'm not feeling too sorry for myself.

The average person can probably name more movie stars than high school classmates. It's really easy to hit a number that 'primitive-monkey-brain' starts treating as 'many'. Reasoned reflection will reveal how silly that is, but we get to deal with primitive monkey brains with Dunbar numbers full of incredibly rich people, and things like math are very low on the method resolution chain.

And a good fraction - maybe 20-25% - of the people I interact with have more money than I can contemplate. I work with a fairly large number of pre-IPO Googlers, plus here in Silicon Valley, you're always running into people that sold their company for $20M and are starting a new one.

I think that was the point of the article. If you actually get close to the brick wall in your profession, you'll meet people who've gotten past it. And suddenly, what seems like an enormous amount of money is just the tip of the iceberg, and you're left wondering what these people have that you don't.

I was going to make a related point. To get into the $100K-200K range, all you need is hard work. Study in school, do well on your standardized tests, get into a good college, pay attention to salaries when choosing your major, show up for on-campus interviews, and do your job well when you're hired. It's not hard to be making six figures a few years after graduation on this plan.

But to break the 99th percentile - I think that was $342K/year for 99.5th percentile of single filers - you need to take on some risk. Like forgoing your income for a few years to found a company. Or taking on a lower salary and the risk that you'll be laid off in a year and getting a job at a startup. Or putting up your own money to invest in one. Or taking on high-visibility, high-impact projects that may fail - often at the cost of your regular duties - within your day job.

For people whose whole life has been a steady upwards progression, risk is scary. It often looks impossible. And so they're stuck at a point in life where they know people who have vastly more money than them, but they don't understand how or are unwilling to achieve that.

Purely anecdotal, but many such risk-takers that I have known were able to mitigate their risk because of familial support mechanisms. Which is to say that while a certain amount of hard work and courage is crucial, it doesn't hurt to have rich parents.

>> mitigate their risk because of familial support mechanisms

Or society support mechanisms - many ppl in say Scandinavia use the two or more years of high unemployment benefits to start a business risk-free. Actually in Norway, to stimulate entrepreneurship, they would pay those benefits for the 1st six month of new company operation (to the owner).

"I think that was $342K/year for 99.5th percentile of single filers - you need to take on some risk"

I don't think this is true - all the traditional "low risk" professions have this ability: doctors, dentists, lawyers, investment bankers and fund managers. $300k+ is not unusual for a mid-level person in these industries. Senior people in these industries will hit $1m+ pretty easily without having taken on any significant personal risk. A lawyer 3-4 years out from law school in a large firm is going to be sitting on $200k+ already.

Do you think mid-level doctors, lawyers, bankers don't take risks on their job?

Yes, in the financial context they have a low risk profession. They can have greater than 90% confidence that if they do the same thing they did the previous year (likely, working very hard at a task they are very skilled in), that they will earn about the same amount they earned that year, usually adjusted up for inflation. Do you disagree, or are you using some other definition of risk?

If you don't know much about a given job it looks low risk. But a successful doctor, etc. have taken many risky decisions, with not enough information.

Bearing in mind that we are talking strictly in the financial sense — and not, for example, about risky medical decisions — can you explain what you're talking about further? What major risky investments do doctors make on a regular basis?

1. "But to break the 99th percentile - I think that was $342K/year for 99.5th percentile of single filers - you need to take on some risk. Like ... taking on high-visibility, high-impact projects that may fail - often at the cost of your regular duties - within your day job."

This is the OP.

2. Taking a bad important medical decision will have bad financial consequences - lower reputation, not so good references, patient complains leading to big losses of time - lower income in the future. Also there's stuff like which team do you join, what new technical skills do you get, which part of the world you work in. You take a lot of risk, you can expect higher rewards on success.

Personal risk, yes. Malpractice is covered by insurance. Bankers risk their clients' money, not their own (for the most part). As long as they perform their job competently, there is little risk compared to an entrepreneur who has had to quit their job and invest their personal funds into their venture.

Really? How about the risk, that one won't be able to complete his degree, after investing a lot of money and time? Or that he'll make a mistake, which will get him blacklisted from good jobs.

One knows all the risks involved in his job, and few in other's jobs.

Major league athlete, regular on a TV show or star in movies, former press secretary/lobbyist, best-selling author, multi-hit-album singer/band, music mogul/producer, real-estate agent in an expensive area.

I bet there are 100s of jobs where the top salaries are over two million. There are very few who can get them, though.

Most of those that you mentioned are very high risk fields, where you don't get a salary - you may hit it big for a few years, but very few athletes/artists/actors/etc have consistent long-term multi-million dollar years. Many are essentially entrepreneurs.

The problem with a high earning career as a professional athlete, is that you have to average their salary over their lifetime, and their earnings drop really fast after they hit their mid thirties.

> About one in five of us is retired. About two-thirds of us who are working are self-employed. Interestingly, self-employed people make up less than 20 percent of the workers in America but account for two-thirds of the millionaires. Also, three out of four of us who are self-employed consider ourselves to be entrepreneurs. Most of the others are self-employed professionals, such as doctors and accountants.

Many of the types of businesses we are in could be classified as dull-normal. We are welding contractors, auctioneers, rice farmers, owners of mobile-home parks, pest controllers, coin and stamp dealers, and paving contractors.

"The Millionaire Next Door"

http://www.bookbrowse.com/excerpts/index.cfm?book_number=242...

200k isn't that hard. Just go into management. You don't even need to be that high in a big company (even located in a low income region) to pass 200k.

I live in Madison WI. 200K is C-suite territory around here for a mid-sized company. An exec at one of the huge insurance companies or biotech companies make more but that not typical. We have an Amazon affiliate here and mid-level managers make around $80-100K I think. I highly doubt their Chief Architects make more than 200K. 200K for mid-level management in the Midwest (outside Chicago) is unrealistic for sure.

Well, that's bizarre then because the place I was in was a very depressed salary zone and a company with a (well deserved) reputation for underpaying even for their salary zone. And with any managers I've discussed this with, while never disclosing their salaries to me, have never been surprised.

Anyone care to explain the down vote here? I worked at a large company in the midwest (very low pay compared to more populated areas) and a manager of managers (of workers, i.e. just 1 step above team manager) was making $240k/yr. That was 10 years ago. I doubt compensation has gone down.

5. Become a high-level executive of a large or extremely profitable company.

Obviously there's a small number of people for whom this will happen but I'm pretty sure most corporate execs make >$200k

As far as I can see, the best ways to become this is are: (a) be an early employee of a company that grows large enough; (b) get your own company acquired (a subset of case 1); (c) meet the right people early on, especially at a young age; and (d) act entrepreneurially within an existing organization's management, which, depending on the health of the organization, may entail more political talent than productive talent.

That list might be how people assume it happens, but it doesn't reflect reality.

Most early employees never make it anywhere near management if they weren't management employees to begin with (and with venture-funded companies, those usually get replaced; Steve Blank wrote about this I think). Ditto for getting your company acquired (how many acquired YC alumni ended up quitting right after acquisition? something like 99%?). Meeting the right people also doesn't have as much to do with it as you'd suspect - a lot of CxOs are found through searches, and may come from companies in a completely different sector of the economy. As for entrepreneurial drive, that's the reason we're all here reading HN instead of being content with working for an "entrepreneurial" manager.

I recommend reading Sharon Voros' The Road to CEO - it describes the typical public company's executive officers' background pretty well. The basic idea is you have to work your way up the management chain of command and build up a solid resume (spending time at a prominent business consulting shop apparently can act as a short-cut for this). Personal qualities related to making good first impressions seem really important at the high level - the author spends a couple of chapters on things related to grooming and appearance. I don't run in CxO circles, but that seems an accurate impression from the senior management people I've encountered.

Bottom line seems to be you need to get into management and work and charm your way up.

It's true that my impressions are based on all I've known about the backgrounds of execs I've been impressed with, rather than a proper survey / random sampling. Perhaps the 80% come from more mundane middle management backgrounds; I don't have enough data to tell.

CEOs are a good example.

I like that you made a distinction between large and extremely profitable companies, because large companies often still pay their CEOs extreme salaries even when performance falters.

Case in point, Robert Nardelli at Home Depot made $123.7 million, excluding stock option grants, over 5 years from 2002 to 2007, while the company's stock price faltered. He was essentially fired and still got a severance package of $210 million. (http://en.wikipedia.org/wiki/The_Home_Depot)

Dick Grasso is another that comes to mind.

The obvious lesson here is if you spend your time feeling jealous of those who are doing better than you, you'll never be satisfied.

5. Become a top developer at a big software company.

(A variation on 3. You probably won't earn $100 million, but you could definitely earn $1 million. )

6. Become a top performer in entertainment (music, sports, movies).

A fun fact ignored by most people: it isn't just CEO pay that has skyrocketed over the years. Alex Rodrieguez gets $33 million/year, at his peak Babe Ruth got (inflation adjusted) $1.1 million.

    5. Become a top developer at a big software company.
    (A variation on 3. You probably won't earn $100 million, but you could definitely earn $1 million. )

Do you mean $1 million/year as a software developer? Details, please!

    6. Become a top performer in entertainment (music, sports, movies).
    A fun fact ignored by most people: it isn't just CEO pay that has skyrocketed over the years. Alex Rodrieguez gets $33 million/year, at his peak Babe Ruth got (inflation adjusted) $1.1 million.

See the "superstar effect" http://news.ycombinator.com/item?id=2039498

Do you mean $1 million/year as a software developer? Details, please!

http://www.businessinsider.com/google-engineer-gets-6-millio...

I seriously doubt Google is paying him 30x his yearly salary not to jump ship for Facebook.

I also happen to know a few cases of million dollar quants being poached from financial companies to software companies (specifically IBM, MS, and a couple of smaller companies I'd probably do better not to mention by name).

>A fun fact ignored by most people

People aren't ignoring it. The two things aren't related to each other. Alex Rodrieguez makes so much money because tickets to see him play cost so much (especially compared to what it cost to see Babe Ruth).

For the situation to be the same Rodrieguez would need to be making the same as Ruth (inflation adjusted) but the managers to be making 100+ times more money.

What's actually happened is prices have gone up. The difference you see is that certain professions have much better representation to ensure they get their share of the increased profits.

EDIT: A bit of point clarification.

Alex Rodrieguez makes so much money because tickets to see him play cost so much (especially compared to what it cost to see Babe Ruth).

Sorry, this theory is wrong.

Looking at http://eh.net/encyclopedia/article/haupert.mlb the average price of baseball tickets has, after adjustment for inflation, not changed very much.

What has changed is the value of the income from TV. Even so, the revenue for players has risen faster than the income from TV.

Another factor, not shown, is the size of the audience.

However even if you add all that together, I believe that salaries have still gone up by more than revenue. And I attribute that to the rise of free agents.

>Looking at http://eh.net/encyclopedia/article/haupert.mlb the average price of baseball tickets has, after adjustment for inflation, not changed very much.

>What has changed is the value of the income from TV.

And as mentioned by another commenter, merchandise and so on. Even if what you're saying were true that players have a larger percentage of the overall pie that their team makes (I don't believe this for a second without a lot more analysis) that could indicate that they were under-compensated before and are now getting a fairer share. Perhaps because of unions, perhaps because of (as you mention) free agents.

Not only have prices gone up, but exposure and merchandise etc (for the team) have increased in modern times, leading to more money as a whole for the team, and therefore star players.

The theme of all four of those methods of breaking from the 200-300K/yr income level is: leverage other people to work on your behalf. The most direct way to do that is to start a business. A slightly less direct way is to invest in existing businesses.

Yes, I think you probably missed a lot. I suspect there is a long tail of jobs with > $200k salaries. For example:

"The median income for public-university presidents in the 2007-08 academic year was $427,400. The average head of a private university* took home about $100,000 more." [1]

And that's old data.

[1] http://images.businessweek.com/ss/09/02/0216_college_pres/1....

#1 is a huge open field. You can live almost anywhere and not pay a lot in education and accomplish #1. Not that it's easy. It takes a lot of work and some talent and some luck, but there isn't the educational entry costs of #3 and #4.

Be in sales. This will have some overlap with your other ways.

I think that's most of it, but there's also sales commission on huge projects.

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