Why having a job no longer leads to the American Dream
When I was in high school nobody ever said anything to me about owning my own business. I had three choices: go to college, join the military, or get a job. When my parents got a divorce, college was taken off the table. That’s ok though because later I learned that I wasn’t really being given a choice. All three options led to having a job.
This is the same dilemma that almost all Americans are presented with as young adults. For generations parents have been telling their children to get good grades so that you can land a high-paying job with good benefits. This career paradigm is ok for some people but for most Americans it isn’t a good fit.
Only about ten percent of working age Americans own a business. This includes the mere four percent who own a business that employs other people. The rest of us are working for The Man. Some of us work for those small business owners while others work for big companies in corporate America.
We trade the productivity of the best years of our lives for a wage, some insurance, and a few weeks off every year.
But is having a job so bad? Aren’t all those things good? Steady paychecks, insurance, vacation time, even employer matching on your 401(k). Good stuff, right? Mmm, yes but no. All those things are generally considered staples of a full-time job. Certainly, the sales pitch for having a job makes them sound really good but (especially nowadays) they completely fail to meet people’s needs.
Here are eight ways that having a job hurts you.
1. They Don’t Pay You What You’re Worth
Without knowing you or the type of work you do, I can tell you that this is almost certainly true. Employers pay you what the job is worth, not what you’re worth. Not only that but wages haven’t been keeping up with inflation.
Over the past several decades, disposable income has been steadily going down. We are at a point where 45% of Millennials feel that they will never achieve the financial status of their parents.
Now it takes two incomes and a side hustle to get where a family was with one income 50 years ago. Unfortunately, this trend is only going to continue. While the stock market is doing well and the GDP is on the rise, the typical employee isn’t seeing the same growth.
2. Your Benefits Suck
Health Insurance has taken a big hit in America recently. Whether you’re a professional within the healthcare community or a consumer, you’ve probably felt the pinch. Almost everyone agrees that costs have gone up while the bang that you’re getting for your buck has gone down.
Between monthly premiums, huge deductibles, and 70/30 cost-sharing (or worse), many American families are being put in a position where they have to decide whether or not to even opt in to their insurance.
Vacation time is another slice of the benefits pie that few people brag about. In America we’ve always been behind the rest of the industrialized world when it comes to paid time off. After the introduction of the Affordable Care Act, employers were financially motivated to carry more part-time workers, widening the gap.
When your 401(k) and the interest on your mortgage are your biggest tax shelters, you are in trouble. For better or for worse, middle class wage earners are the tax mules of the United States. Not only do they get whacked the hardest with the tax bat, they have the fewest options when it comes to tax deductions.
In addition to that, the IRS takes its bite before you even see your check. Compare that to a business. Even a small, mom-and-pop business gets its money up front, deducts all its costs first, and then pays taxes. Bigger companies have the muscle to negotiate even better deals with state and local governments for tax breaks.
4. Only One Revenue Stream
The first three reasons deal with topics that we are familiar with in the world of being an employee. Now we’re moving into the realm of things that we rarely, if ever, come into contact with in what Robert Kiyosaki calls the ‘E Quadrant.’ The first of those is that most of us who have a job only have that one stream of revenue.
If we do something to supplement our income, it typically has most of the same characteristics as our regular job. Sure, it’s extra money but it isn’t that great. The best reason to have multiple streams of income is to make the flow of money coming in resistant to changes that only affect a sector of the economy.
For example, let’s say that you are a security guard. During the day you work your regular job and some nights and weekends, you work overtime or have a second job. An economic downturn that affects your main job will also hurt your overtime/second job.
5. No Passive Income
There is very little about having a job that encourages a person to work on creating passive income. We’ve been sold on the idea that having one full-time job should provide us will everything we need to enjoy a long, happy life. Well, I’m here to tell you that it just ain’t true.
With a job, you are always trading time for money. When you are young, that isn’t a big deal. As you go through life though, you should be working to convert your active income into passive income. That is a subject all its own but for now I can promise you that whatever you are doing in your 30s and 40s, you don’t still want to be doing in your 50s and 60s.
And don’t expect Social Security and your 401(k) to save you. Social Security is quickly running out. As of the writing of this article, it is expected to run out in 2035. It will probably be replaced by something else, but everyone agrees that it will be worth significantly less.
Also, we live in a world of fiat currency. There is no telling what is going to happen to the money supply in ten years, much less forty. Having passive income – and the knowledge of how to create it – is much more valuable than a lump sum of money.
6. No Control Over Your Income
In America we’ve seen this story play out over and over again. American companies have had no problem moving jobs to places like Mexico, India, or China. Other times companies downsize, ask employees to take pay cuts, or go on furlough. As an employee, you have no say in the matter.
I’m not here to bemoan the “evil corporations” though. This is about who you are and what you can do to take care of yourself and your family. Companies are going to act like companies, that will always be true. As long as you only have one skill set and are dependent on an employer for your livelihood, you run the risk of having the carpet pulled out from under you.
7. Very Little Agency Over Your Own Life
While we could see a shift towards more work-from-home jobs in the future, right now almost all jobs are location dependent. You have to drag your carcass in there every day to do what you do. This seems pretty normal but the problem comes when you need to visit a sick family member or want to get out of the heat or cold of wherever you live.
Having a job not only limits your mobility, for some reason it also saps a person’s desire to get involved in their community. I don’t know why this is. Most people hunker down and focus on their job and only their job. They tune out or actively avoid things like volunteering or participating in jury duty. You could probably ask one hundred people when the last time was they went to a City Council meeting and you’d either get a blank stare or the answer would be in years.
8. The Best Years of Your Life Go to Someone Else
The worst part about this whole job thing is that is consumes the best years of your life. Forty hours a week (if not more), fifty weeks out of the year, you are giving up your time and energy for someone else. If that isn’t bad enough, this happens when you are most fit and capable of living your purpose.
By the time you get to retirement, you are tired and broken down. You probably have some repetitive stress injuries from all those years of doing the same thing. Maybe you have enough saved to get by on but current statistics suggest that most people won’t.
Most people are so institutionalized by a life of work that they have no idea what to do with themselves. So, for one reason or another many retirees return to the workforce.
We are still clinging to a notion of work that is a century old. The world has changed so much in that century that it makes no sense to keep doing things this way.
Right now most Americans start working in their late teens or early twenties and don’t stop until they are in their seventies. Changes to pay and benefits leave many families without an adequate safety net. Our instant gratification culture has left most families without a solid retirement plan.
Ok, that’s enough cloud. Let’s look at the silver lining. We live in a great country with tremendous resources and nearly unlimited opportunities. With technology what it is today we have access to all the tools we need to be successful. We don’t have to work for someone else. We don’t have to be stuck in a particular place.
There is no rule that says you have to have a job. Working is about adding value to people’s lives which, in turn, makes society better. You can tell who you are adding value to by who pays you. When you own your own business or are an independent contractor, you add value to many people’s lives. When you have a job, you are just adding value to the company. Then I guess you’re hoping that company makes the world better.
Start now. Increase your financial literacy, get out of debt, and save money. Once you develop those habits, look for ways to move from being an employee to a business owner.