The Power of a Boring Business

Building a regional business has been one of the best ways to build wealth in the U.S. Will that continue?

Good Morning!

Here are today’s highlights:

• In a video and a blog post, Nile Livingston captures the flavor of our 21 Hats Live event in Ann Arbor.

• In our latest Dashboard podcast, John Arensmeyer points to reasons to be optimistic that lawmakers can work together to support small businesses.

• America already has half a million unfilled manufacturing jobs.

• The Trump administration has stopped enforcing regulations that it doesn’t like.

MANAGEMENT

For a growing number of Americans, the key to building wealth has been owning a regional business: “Derek Olson grew up dreaming about the thrill of running his own business. Decades later, that dream came true and made him wealthy—just not exactly in the way he expected. Olson has made a fortune making machines that rip up flooring, like carpeting in elementary schools. ‘This is how sexy it is: The average elementary school in the United States has 7 miles of carpet—and children are disgusting,’ said Olson, chief executive of National Flooring Equipment and the father of two, chuckling. ‘So elementary schools basically need their floors redone almost every summer. It’s this niche industry that no one knows about and everybody needs.’”

• “Olson’s annual income running his flooring-equipment company puts him in the top 1 percent of earners in the U.S., or people who as of 2022 made at least $550,000, excluding capital gains. He expects Minnesota-based National to bring in roughly $50 million in revenue this year, after recently buying an Australian manufacturer.”

• “Finance and Silicon Valley offer glamorous, high-profile paths that can lead to significant wealth. But a vast universe of traditional routes focused on providing goods and services has become increasingly central to the accumulation of significant, if less obvious, wealth in the U.S. ‘We call it the stealthy wealthy,’ said Owen Zidar, a Princeton University economist who has studied the group with University of Chicago economist Eric Zwick.”

• “Behind a paycheck, the largest source of income for the 1-percent highest earners in the U.S. isn’t being a partner at an investment bank or launching a one-in-a-million tech startup. It is owning a medium-size regional business. Many of them are distinctly boring and extremely lucrative, like auto dealerships, beverage distributors, grocery stores, dental practices, and law firms, according to Zidar and Zwick.

• “Their analysis of anonymized tax data from 2000 through 2022 suggests the importance of such business ownership to the U.S. economy has grown. The share of income that ownership generates has increased to 34.9 percent in 2022 from 30.3 percent in 2014 for the top 1 percent earners.” READ MORE

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