Explaining A Six-Figure Salary
In today's world, it can seem like everything is getting more and more expensive. We have a war in Asia directly affecting the price of our Tesla's, we have drug cartels limiting the avocado supply, and inflation is doing its best Miley Cyrus impression and coming through like a wrecking ball.
All of this being said, however, the economic conditions we're in today have given rise to some of the most leverage the American worker has ever had. Talent is now in short supply, and companies are doing whatever they can in order to get great employees through the door, including paying out the nose for them.
As a quick note, you'll usually hear these terms of six, seven, eight and nine figures in reference to net worth, rather than a paycheck. Having a six figure net worth is actually pretty common, while having a six figure salary is really not. However, since it's way more fun to look at high paying jobs rather than someone's personal balance sheet, let's do that instead.
Today, let's cover what a these salary ranges actually mean, who makes all this money, and why it might not matter anymore.
Related: How I Doubled My Income In One Year
What Is a Six-Figure Salary?
A six figure salary is any annual salary where you make between $100,000-$999,999 per year, hence the "six-figures." In a 2019 YouGov study shared with Yahoo Finance and the Bureau of Labor Statistics, just 9% of Americans reported having a six-figure annual income. But what do those people actually do?
What Are Six-Figure Jobs?
The most attainable level on this list (sadly), quite a few different industries pay a six-figure income, and not just later in life. Of course, jobs with specific certifications (doctors, lawyers, etc) will pay six-figures basically straight out of school.
Another way to walk right into high-paying jobs is by pursuing higher education and getting a master's degree, where a median income (dependent on cost of living and industry) is over $100,000. The best way to blow past the $100,000 income level is to get into tech, working for one of the FAANG companies who will pay you whatever it takes to come in and code for them.
However, there are some non-traditional ways to get over that $100,000 number pretty quickly. According to Glassdoor, here are some of the top jobs to get you there, along with their median pay:
Federal Special Agent - $121,000
Airline Pilot - $120,000
Regional Sales Executive - $103,500
Equity Research Associate - $100,000
Marketing Executive - $125,000
Blogger (hey!) - $110,000
Professional soccer player in the American MLS - $410,000
Software Developers - $175,000
And the list goes on, and on, and on. Oftentimes, you don't even need a bachelor's degree to make that much money! There's also the trade school route, with many workers in plumbing, construction and general contracting areas making a 6-figure salary pretty easily.
Finally, if you're under a six-figure salary at the moment, take a look at some side hustles you could do in your spare time! I mentioned above that bloggers can make six-figures on their own, let alone in conjunction with a 9-5. Side hustles can be a lot of hard work, but they can also result in a lot of money. Take a look at some online courses that could help you jumpstart your path to high income!
It's also worth noting that cost of living will have a big say in how much money you can make in a particular job. A marketing manager in Topeka, Kansas, likely won't drive a 6-figure income because it doesn't cost as much to live there as it does in San Francisco or New York City, so they pay will be lower for the same work.
What Is a Seven Figure Salary?
Now that we've graduated from six figures, it's time to talk about truly elite status: seven figures. Making seven figures means you make between $1,000,000 and $9,999,999 per year. Welcome to the two comma club.
What Jobs Pay Seven Figures?
Seven figure jobs are truly few and far between. It takes something pretty special to reach this level of compensation, so the list is much, much smaller than it was at the six figure level. Jobs that make this amount of money include:
Doctors with their own practice
Lawyers that are partners at their own firms
Financial Managers with a large book of business
Sales executives in the luxury sector that receive large commissions
Investment Bankers at the partner level
Private equity partners with company equity
Web influencers with large followings (Meet Kevin, Graham Stephan)
The average professional athlete in the NBA, MLB, NFL, NHL or international soccer leagues
What Is an Eight Figure Salary?
An eight figure salary is rarified air. It means you are some of the best of the best. You aren't just the 1%; you pay the 1% to park your car. An eight figure salary is between $10,000,000-$99,000,000.
What Jobs Pay Eight Figures?
Chances are, if someone is making eight figures, you might know their name. These are generally people in Hollywood circles, or are the top level professional athletes. Here are some careers that could bring in eight figures:
Top level professional athletes
A-list movie and television actors
High-profile movie and television directors
Fortune 500 C-Suite executives
Hedge fund senior directors
Top level web influencers (Mr. Beast, KSI, The Paul Brothers)
A Note On Stock Based Compensation and Bonuses
It's important to note that, outside of athletes and movie stars, those that make eight figures usually don't get that full amount in a paycheck every two weeks. Generally, the majority of this level of wealth is made up of bonuses and stock options, which vest based on corporate goals that need to be hit.
A recent example is embattled Walt Disney Company CEO Bob Chapek, who took over the corner office in 2019. In 2021, Chapek's total compensation was $32.5 million, but here's how it broke down:
$2.5 million in cash, distributed via paycheck
$14.3 million in cash bonuses due to exceeding corporate goals
$13.9 million in stock options and stock awards
Thanks to company and stock performance for Disney in 2021, Chapek graduated from the seven figure club to the eight figure club pretty quickly.
Related: Investing in The Walt Disney Company
What Is a Nine Figure Salary?
If you hadn't heard of the people in the eight figure salary range, then you've sure as hell heard of the people in the nine figure salary range. These are the cream of the crop, as they make between $100,000,000-$999,999,999 per year. These include:
Historic athletes in their sports, inclusive of endorsements:
LeBron James - $111 million
Cristiano Ronaldo - $125 million
Lionel Messi - $165 million
Roger Federer - $106 million
It's also worth noting that LeBron and Ronaldo are rumored to have signed lifetime deals with apparel company Nike, worth an estimated $1 billion each.
Outside of athletes, you also have:
Tech company CEO's
Hedge fund managers
A Quick Note On The Billionaire Boy's Club
I'm also not going to cover it in this piece, but there is a 10 figure salary range that is so exclusive that you likely do know the names of the members: Elon Musk, Tim Cook, Satya Nadella and Jeff Bezos, as well as hedge fund legends Ray Dalio, George Soros, Ken Griffin and Jim Simons have all been a part of this club.
The Myth of a Six Figure Salary
As we come down from billionaire land and enter back into reality for pretty much everyone on Earth, many in the workforce consider a six figure salary to be the absolute pinnacle of their earning potential in their career path, and they might be right.
The Unaffordable American Dream
That same YouGov study I cited earlier points out that millennials are, in fact, accumulating higher salaries than the generations that have come before, but we have a problem: inflation.
Related: The Beginner's Guide to Inflation
I'm not talking about the inflation that your racist uncle just text you about because he saw it on Fox News, though that doesn't help. I'm talking about inflation in areas you might not think about. Let's take housing.
In 1950, an era that generates a strange amount of nostalgia for many, where white people were unjustly empowered and women were below house cats in terms of importance (please stop pining for the 1950's), the median cost of a house in the United States was $7,354. Adjusted for inflation, that's $85,000 today.
Now compare that to the median home price in the United States in 2021, after the housing market heated up like a frat boy at a beer pong table. The median home price in America today is $374,000. For those of you keeping score at home, that's nearly five times higher than the median price in the 1950's, accounting for inflation.
The issue? Wages have not increased at the same rate. Commensurate to real estate and wage growth, home buyers today are paying 39% more for a home than their parents or grandparents did 70 years ago. But we have another issue.
Debt - A Millennial Reality
Let's talk about something called "purchasing power." Purchasing power is the ability for a consumer to spend money on purchases. The more money they make, then the more purchasing power they should have, right? Typically, yes. However, we have something called "debt" that tends to get in the way, and millennials are saddled with it.
Of just the millennial generation, 14.8 million of us report having student loan debt due to pursuing a college degree. The average millennial borrower has nearly $39,000 in student loan debt, and that comes with an interest rate that makes it more and more difficult to get out of as time goes on.
Couple this with general wage stagnation over the last few decades, two separate "once in a generation" economic crisis and previous generations waiting longer and longer to retire, leading to shortages of upper level jobs, poor spending habits by younger generations, general "lifestyle creep" of having to have better toys than your neighbor and you start to have a savings crisis. Sure enough, Americans are shit at saving money, but not because we have to have our iced coffees and avocado toasts. It's because there's no money left to save.
Student loan debt, credit card debt, wage stagnation, sharp rent increases, layoffs, COVID and just generally being alive have led to a genuine homebuying crisis for millennials. 36% attribute these factors to them not being able to purchase a home in the U.S, and that doesn't even account for the fact that home prices are being artificially bought up by investment firms searching for new asset classes.
So What Does Six Figures Actually Mean?
Look, if you have breached the six figure barrier and are on to the next challenge, I'm certainly not here to shit in your punch bowl. I myself have just conquered this challenge, and it feels great! It's given my wife and I more flexibility in how we save, invest and live our lives. What it also does, though, is make me realize how stretched that money actually will be in the future. One jump into Zillow and I realize how much of my future income will have to be dedicated to a mortgage if I ever want to leave my townhome and venture into such radical avenues as "having a yard" or "not having to share walls with neighbors."
Working your way past $100,000 per year puts you solidly in the top 10% of Americans, but it also doesn't mean what it used to.
