Which is today's likeliest path to true financial security for you and your family?

So you want to make money? That was the question Fortune magazine put to the graduating class of 1953 nearly 40 years ago. That was back when men were men, women took dictation, and investment banking had yet to become a blood sport.

That Fortune story, a college-commencement address of sorts, identified two conventional paths to wealth: either you join a large company and claw your way up, or you start your own company. You work for yourself or for somebody else.

We decided to fast-forward 40 years and offer that same conundrum to the class of '93. Soon you'll be hitting the streets, faced with putting beans on the table and, someday, braces on the kids. Add a few zeros for those nettlesome necessities like housing and education, and before you know it you're doomed to working for a living.

So how do you get rich in America, and how do you do it fast enough to enjoy the fruits of your labor? How do you make enough money, as Fortune phrased it, "to permit you to spend it as you will without counting the cost too closely -- assuming always that your latent profligacy is tempered by a civilized sense of proportion?"

Getting rich has never been easy. While the latest Internal Revenue Service data show that the number of millionaires rose from 475,000 to 941,000 between 1982 and 1986, 1989 census data reveal that 0.5% of American households held 29% of the nation's wealth. Moreover, only 3% of U.S. households had net worths exceeding $500,000, and that included equity in real estate, likely eroding as you read this. And consider further that only 5% of U.S. households enjoyed incomes of more than $100,000. Raising a family on that sum in any big city puts you squarely, depressingly, in the middle class.

For the ease of argument, assume you lack Magic's magic or Madonna's moxie. Eliminate also the handful of professionals -- the doctors, the lawyers, the traders, and the passel of paper entrepreneurs -- who made out so handsomely in the 1980s. That returns us, more or less, to the hard choice Fortune presented 40 years ago. You can enter a large corporation and rise to the top, or you can start your own company, hoping the venture yields riches proportionate to the risk.

Given that choice, which one is "better" in 1993? Which fork in the road is the one you should travel down?

The large American corporation of 1953 resembled the modern-day Japanese corporation, which exchanges a lifetime of security for a lifetime of service. Fortune, in its 1953 article, depicted the structure of the large U.S. corporation as a "truncated" pyramid crowned by an "obelisk" comprising a handful of well-compensated senior executives. The magazine noted that in 1952 General Motors "distributed $59 million in bonuses to 12,057 executives. Sixty-six officers and directors averaged nearly $122,000 each, over and above their salaries, and the lesser executives averaged $4,250 (all paid over five years)."

Though that was good money, given that a 1953 dollar had five times the buying power of today's, Fortune quickly noted the long odds involved. "Thus the big money at General Motors is perhaps bigger than elsewhere. . . . But the ratio of executives on the top policy level to total employment (469,000) is normal -- about 500, or 0.1 percent. And the percentage of GM executives in the really big money is no higher than elsewhere. In brief, not only are your chances of getting into the big-money group mathematically small; you generally make nothing resembling big money, no matter whom you work for, until you enter that top group."

The magazine further stated that the members of that elite group usually took a generation or more to make it to the executive suite, citing a 1952 survey it had conducted of 900 chief executives, in which 800 were more than 50 years old. The magazine did, on the other hand, cite a handful of "sensational successes," such as the head of GM's Buick division who took a mere 19 years to reach that post.

So how does that compare with today? Is it easier to make a lot of money in a large corporation? The answer is yes and maybe. Some things have changed since 1953, and others have not.

When you adjust for inflation, the big money still goes to a relative few. According to the Hay Group, a consulting firm based in Washington, D.C., that specializes in executive compensation, only 3.3% of so-called exempt (executive, administrative, professional, and sales) employees in 129 large companies it recently surveyed made more than $100,000, and only a third of that 3.3% earned more than $150,000.

Fortune noted that at another titan of its day, the Jersey Co. (today's Exxon), only 6% of employees -- the "policy-level men" -- made more than $16,000 a year. Again, factoring in inflation, that translates into rough parity with probably half that 6%'s earning more than $100,000 in 1993 dollars.

While executive base pay has remained equivalent, what differs markedly between today and the 1950s is the amplification of risk and reward. In corporate America today it's easier to make $1 million quicker -- and it's also easier to lose your job. Note the recent dismissal of Robert Stempel, the man at the very top of the GM obelisk, forced out by his board last October. That kind of coup in the clubby world of a Fortune 500 company would have been unthinkable 40 years ago.

Stempel, 59, invested a lifetime to reach GM's top spot. Today, says the Hay Group's Ira Kay, "you can find people in large corporations who are 10 years out of business school and in their mid to late thirties with a lot of responsibility." That can translate into annual compensation of $500,000 and up. (Again, GM offers a latter-day example of how things have changed. In reshuffling management, GM's board appointed two executive vice-presidents: Richard Wagoner, just 39, as chief financial officer, and Louis Hughes, 43, as head of international operations.)

In today's typical Fortune 500 company, a manufacturer with about $2 billion in sales and 20,000 employees, there might be about 2,000 white-collar jobs, says Kay. Top executives fill 10 positions and earn $500,000 or more. Another 40 are senior executives "earning well over $100,000 a year." The next level down, "upper middle management," numbers about 70, with salaries ranging from $80,000 to $120,000. Those are all "big money" positions for one key reason: they offer the chance to own company stock.

Today if you get into the executive suite, it's possible to become very wealthy, says Peter Chingos, a compensation specialist at the accounting firm of KPMG Peat Marwick. "The '90s and the '50s are worlds apart in the way executives are compensated," he says. "In the '50s an executive received a salary and nominal cash incentives, and limited opportunity to participate in stock options. Today executives participate in a wide range of ways to enhance estate-building opportunities." Chingos says that outstanding corporate performance based on such measures as return on equity, assets, or capital can easily double a CEO's base salary, which at a typical Fortune 500 company averages around $1 million a year.

In the '50s base salary was the principal form of compensation. No more than 2% of company stock was set aside for stock-option grants, and perhaps 5% of the work force received bonuses. Today, among the Fortune 1,000, 3% to 10% of company stock is set aside, with 25% of the work force eligible for bonuses. Moreover, stock compensation is given as outright awards of shares, not just options that carry little or no premium if the stock does not appreciate over the life of the option (usually 10 years).

The money in big companies may indeed be big, but working for a large corporation is riskier today than it was 40 years ago. Says Susan Rowland, a compensation specialist at the Valhalla, N.Y., consulting firm of Towers, Perrin, Forster & Crosby: "The stability of large companies is no longer what it once was. Going into the job market in 1953, you could place your bets and do it with a pretty safe feeling. The pace has moved so quickly since then that now it's harder to do."

Rowland says one prudent path to wealth would be to consider what she dubs the "halo effect." Join a large blue-chip company, where, because of the organization's size and complexity, the CEO's pay tends to be higher than the norm. "That effect carries over all the way down through the organization in the form of higher compensation," she says. She also advises entering a company in a growing industry of the future in favor of one in an industry whose best days are behind it. Yet she cautions that because of the pace of change today, a halo can quickly tarnish and a hot industry can quickly cool. Lending credence to Rowland's point, Fortune's 1953 article referred to GM as "that paragon of good management and profitability." That characterization was apt: in 1954, GM, with 60% of the domestic auto market, would hit its high-water mark.

The increasing variability of compensation also furthers risk. The Hay Group reports that as recently as 1985 just 8% of a CEO's total pay package was in long-term incentives, with 52% in base salary. Last year those numbers had shifted considerably -- to 31% and 35% respectively. Moreover, the larger the company, the higher the overall pay and the greater the amount of compensation tied to performance. In a Towers, Perrin survey last year of 270 large companies, the CEO's base salary at the 75th percentile of compensation was just 24% of total compensation. That compares with 63% at the 25th percentile.

Meanwhile, says KPMG Peat Marwick's Peter Chingos, there's an accelerating trend among large corporations to push incentive-based pay down into the ranks. Today about 95% of Fortune 1,000 companies have a stock-option program (versus about 25% 40 years ago). "At least 60 of the Fortune 1,000 give equity incentives to all employees," he says.

Chingos says equity incentives offer an effective way for large companies to retain and reward ambitious employees. They also enable the company to establish a clearer link between worker and task. As Susan Rowland puts it: "People coming out of college and into corporations today are being asked at an early age to focus on the business and what they can do to improve it. They're being asked, individually, to create value. It's a much riskier time."

That point is driven home by the relentless downsizing undertaken by corporations, and one group in particular is vulnerable. "Middle-management jobs are being eliminated far out of proportion to their numbers," says Eric Greenberg of the American Management Association (AMA). Each year, the AMA conducts a downsizing survey of its 7,000 members. While middle managers account for 5% to 8% of the total work force, they represented 19% of the layoffs over the last four years.

Greenberg says large corporations are searching for an "irreducible minimum" of employees. As a result, 63% of this year's AMA sample of 836 companies that had downsized reported they had done so more than once. He says, "You see a lot of companies announce four and five separate reductions." More startling, the number of companies reporting future layoff plans rose from 14% six years ago to 25% last year, while the number that actually downsized in the year after each survey has usually been much higher than expected, ranging from 36% to 55%. And the average number of positions eliminated by the largest companies in the survey -- those with 10,000 or more employees -- rose dramatically from 133 in 1991 to 317 last year.

One thing is clear: the large corporate pyramid of the '50s is being broken down into semiautonomous smaller pyramids, with each responsible for its own profitability. George Bailey, an organizational-change specialist at the consulting firm of Sibson & Co., says computer technology has dramatically "flattened" traditional organizations, creating a "trend toward employee empowerment and involvement." In the '50s, he says, the rule of thumb was, each manager would oversee 5 people. "Today it's one over 7, and pretty soon it will be one over 15."

The withering away of management enhances opportunity, Bailey believes, for the skilled worker who heretofore might have been relegated to a corner of the corporation, never having a say in how the business was run. "Today it's very possible to make money in companies not by supervising people but by being a contributor," says Bailey. He believes corporations will continue to evolve into smaller groupings of dedicated specialists. "Everyone will become a professional and be responsible for his or her own skill set. You need to be thinking of yourself at all times as a professional and be ready to offer yourself to the highest bidder. It's going to be possible to make good money in big companies in jobs that are more skill based. The trend is definitely toward paying less on seniority and more on value added."

The restructuring that George Bailey points to within major corporations is part and parcel of what others say is happening outside them, producing fertile conditions for the creation of small companies. Paul Reynolds, a professor of entrepreneurship at Marquette University, labels the phenomenon "disaggregation." He points out that the number of people working for large companies has been declining for 25 years. "It's much easier to start a business today," says Reynolds. "There are support systems in place that are much more attuned to dealing with small and medium-size companies." Much of that support is technological, he says. "One plant with 200 employees can turn out five times as many different products today as it could 10 years ago. And as the cost of transportation and communication declines you can serve a geographically larger area but a more narrow product or service niche."

Bruce Kirchhoff, a professor of entrepreneurship at the New Jersey Institute of Technology, echoes Reynolds: "The economies of scale in manufacturing have dropped dramatically primarily because of the automation of machine tools." Data from the Small Business Administration bear him out. Between 1988 and 1990 the country lost 974,000 manufacturing jobs. But manufacturers employing fewer than 20 people mitigated the carnage by adding 220,000 jobs.

Kirchhoff argues that small-business-survival rates are higher than commonly perceived. In a recent study, he followed 812,000 small businesses (with fewer than 100 employees) over an eight-year period. While 28% ostensibly survived, his research revealed that each year 3% of the sample changed ownership or type of ownership "at random or at the whim of the owner." That means that over the eight years, 24% of the sample appeared to disappear but, in fact, did not. Thus, 52% of the companies survived, not 28% as the data had first shown. "That's not bad," says Kirchhoff. "One of every two small companies actually survived." He concludes: "Small business is far more viable, and there's far less risk in starting your own business than people think. Entrepreneurs are far more hardy than we ever believed."

Kirchhoff's research also has shown that new-business starts often increase during hard times. Recent data from Dun & Bradstreet show that new-business incorporations rose 7% in the first six months of recession-racked 1992. That was after five successive years of decreasing starts.

What the work of academics like Kirchhoff and Reynolds suggests is that technological change has rigorously reshaped the economic landscape. Practitioners like Jon Bayless agree. A general partner at the Dallas-based high-tech venture firm of Sevin Rosen, Bayless sees technological change occurring in "waves" that "tend to be self-creating and that roll through the environment and change the landscape." Waves create what Bayless calls "discontinuity" between the status quo and new methodologies. "Typically, large companies do not react to discontinuities because they're so busy servicing the market created by the last wave," he says. "The new mind looks at the landscape and says, This doesn't make sense. That's why you get 22-year-old kids like Steve Jobs creating big companies."

Jeff Tarter, editor and publisher of Soft Letter, a Watertown, Mass., newsletter that follows the PC-desktop-software industry, considers it noteworthy that IBM, with all its resources, "has never internally created a successful software product." Contrary to conventional wisdom, he sees ongoing disaggregation, not consolidation, in his industry. "The popular wisdom is that big companies gobble up the little ones, but software is a niche business," he says. Market niches are often defined -- and protected -- by the imagination of the people who create them. "I see $1-million software companies that own two-thirds of a $1.5-million niche," says Tarter. "They have no competition, and they have very close relationships with their customers."

Because of ongoing technological change, Bruce Kirchhoff argues, opportunity today will occur in unlikely places. He cites retailing, where economies of scale, embodied by hugely successful companies like Wal-Mart, seem critical to success. "The wave of opportunity I'm watching for now is in the link between retail and wholesale. I'm looking for a creative wholesaler that can link into small retailers so they can deliver personalized service to the local community at the same cost and savings as Wal-Mart." Kirchhoff says that a decade ago running a sophisticated cash-register system tied into inventory control at a Wal-Mart store cost $1 million and required a minicomputer. Today that amount is closer to $5,000 or $6,000. "Inventory control is everything in retail. It represents 90% of the assets of any retailer. Small retailers do not have that kind of control -- yet. Most people think the issue is scale. It's not; it's the ability to control inventory. Clearly, an evolution is coming. A lot of people are not happy wandering through Wal-Mart."

Tarter and Kirchhoff find an advocate in David Birch, president of the Cambridge, Mass., economic consulting firm Cognetics. He notes that in 1954, about 117,000 U.S. businesses started up. In 1992 that number approached 700,000. Birch says there are currently 500,000 small U.S. companies growing at 20% a year. Meanwhile, Fortune 500 companies now lay off 400,000 people a year on average, and one-third of Fortune 500 companies fall off the list every five years. "It used to take 20 years for that to happen."

Birch says that 40 years ago small companies were much less of a force in the economy because they simply couldn't cope with the cost and effort of doing business far from home. Trans-Atlantic travel or even phone calls, let alone barriers relating to trade and culture, were simply too complex and expensive for small companies to deal with in the '50s. Those impediments are disappearing all the time. Birch notes that the computing power that cost $1 million 40 years ago today costs $15,000. Observing that 87% of all U.S. exporters are small companies (with fewer than 500 employees), he says, "People assume that small firms are competing for a zero-sum pie. We represent 5% of the world's population, but a much larger percentage of its technology. I see the United States as home base for a large number of firms able to flourish in wide-open territory."

A recent survey by the market-research firm of Phoenix-Hecht, based in Research Triangle Park, N.C., found that of 163 millionaires surveyed, 74% owned their own businesses, and 60% of them said they were still working. The average annual income of the millionaire in the survey was substantial but not huge, $137,500. The real money was tied up in their companies.

But in starting a small company in today's economy, there is another consideration: creating a company should not be confused with building equity. While it may be increasingly easier to do the former, it seems increasingly harder to do the latter. The man who currently sits atop the Forbes 400, of course, contradicts that notion. A college dropout and very motivated maverick, Bill Gates today holds nearly $6.3 billion of Microsoft stock.

That hefty chunk of capital is somewhat of a red herring, argue some, such as Jeff Tarter of Soft Letter. "The typical software entrepreneur is not terribly motivated by visions of enormous wealth," says Tarter. "The goal is often independence." From that, he adds, often evolve highly profitable small companies -- companies that can produce pretax returns of 30%.

Tarter's point touches on a fundamental flaw with young companies in an era when information is so fluid and the cost of manipulating it continues to drop. A focus on building equity -- often considered a worthy "long-term" goal -- may preclude a more important pursuit, generating a steady stream of income.

"It's easy to start a company. It's hard to get to the point where you can create liquidity," echoes Dick Shaffer, a principal in Technologic Partners, a New York Citybased high-technology consulting firm. He says that from 400 to 500 computer-related companies get venture capital each year, but no more than 10% will ever go public. Says Shaffer: "Most small businesses are proprietorships. They reflect the personality of the owner. Once the owner gets bored or dies, that's the end of the company." Equity should not be held out as the Holy Grail if you start a company. Steady income and a way of life are what matter. Bruce Kirchhoff argues: "Most small-business people are not interested in creating a store of value. To them annual cash flow is what's important." Kirchhoff notes the wide discrepancy between the current market prices for private and public companies. "A private company might fetch only between 2 and 5 times earnings, while investors pay multiples of 10, 20, and 30 for public companies."

Kirchhoff says one way to get rich is to forget about starting a company. Buy a private company. "They're tremendously undervalued. You can often pay back the purchase price out of earnings in two years."

Fortune's address to the class of 1953 ultimately urges the second, less traveled path upon its audience. It evolves into a paean to the company starter, citing such positive entrepreneurial traits as "self-confidence," "the common touch," "a mechanical bent," and "optimistic visualization."

But that piece ended with the usual caveat. The last paragraph reads in part as follows: "If you have and use all these traits, you will find that you never quite know when your working lets off and your personal life begins. Your business will pervade practically all waking hours and, if the psychologists are right, your sleeping hours too."

Dick Shaffer says that today the energy required to start and sustain a company -- especially one that will truly make you rich -- is enormous. "If you want to live a balanced life, starting a company is probably not a good idea. It requires focus, drive, and a willingness to endanger your mortgage, the money you've set aside to educate your kids, and your marriage."

Then again, the same stresses can be felt inside today's large corporation. "Downsizing tends to create higher levels of frustration among ambitious people," says Jon Bayless. "It means fewer resources and fewer paths to the top." He sees a lot of middle-aged people spinning out of corporations to start their own companies.

The answer to this dilemma rests with you. Some people are more social than others. Some people take strength from structure. Others hate it. They crave independence like oxygen.

No matter the choice, the risks can never be banished -- nor will the opportunities ever disappear. Big companies are not going away. To the contrary, many will be more vibrant organizations going forward faster than they were in the past. No matter the hurdles, the number of small companies being created will likely not diminish.

Venture capitalist Jon Bayless, an acknowledged partisan in this debate, says, "My intuitive sense is that starting your own company has always been the best way to create wealth." And then he speaks to a larger truth. "And even if you don't get rich doing it, you'll still have more fun."

If fun in your work is primarily what you're after, then you have also likely taken the first step toward making money -- which someday might even mean getting rich in America.