‘Unsexy’ businesses from which a few people are getting rich include auto repair shops, gas stations

A typical rich American is not who we think they are, but actually the owner of a ‘regional business,’ such as an ‘auto dealer’ or a ‘alcohol or soft drinks distributor.’

While doing research for his book, author Seth Stephens-Davidowitz said he was shocked to learn that more than 140,000 Americans who earn more than $1.58 million per year are owners of so-called ‘unsexy’ businesses. 

These include auto repair shops, gas stations and business equipment contractors.  

In a New York Times op-ed piece, Stephens-Davidowitz pointed to a 2019 study by four economists, ‘Capitalists in the Twenty-First Century,’ that analyzed data of American taxpayers to determine who dominated the top 0.1 percent of earners.

‘It is rare that I read a sentence that changes how I view the world. This was one of them,’ he wrote. ‘I hadn’t thought of owning an auto dealership as a path to getting rich; I didn’t even know what a beverage distribution company was.’  

A typical rich American is not who we think they are, but actually the owner of a ‘regional business,’ such as an ‘auto dealer’ or a ‘beverage distributor’

Author Seth Stephens-Davidowitz said he was shocked to learn that more than 140,000 Americans who earn more than $1.58 million per year are owners of ‘unsexy’ businesses 

Stephens-Davidowitz then compared studies and data from the Census Bureau and estimated that more than 20 percent of auto dealerships in America have an owner making more than $1.58 million per year.

In the op-ed piece, the writer detailed lessons to learn from the data gathered on rich earners.

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The first point he made was that ‘rich people own.’ 

‘Among members of the top 0.1 percent, the researchers found, about three times as many make the majority of their income from owning a business as from being paid a wage,’ he wrote. ‘Salaries don’t make people rich nearly as often as equity does.’

His second point was that ‘rich people tend to own unsexy businesses.’ 

Stephens-Davidowitz pointed out a third factor in gaining wealth is to avoid ruthless price competition. He said auto dealerships and beverage distributors both have legal protections

Beverage distributors are protected by a system set up after prohibition that prevents beverage companies from distributing products themselves, eliminating price competition

By comparison, the average record store lasts 2.5 years, toy stores lasts 3.2 years, clothing stores 3.7 years and cosmetic stories lasts about 4 years.  

Stephens-Davidowitz pointed out a third factor in gaining wealth is to avoid ruthless price competition.  

He gave the example of auto dealerships and beverage distributors – both of which have legal protections. State franchising laws often give auto dealers exclusive rights to sell cars in a territory. 

And beverage distributors are protected by a system set up after prohibition that prevents beverage companies from distributing their products themselves, he wrote. 

Stephens-Davidowitz added that this information may entice some to run out and buy an auto dealership, but ‘you may not have much luck,’ he said. ‘Owners of auto dealerships know how good they have it.’