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Recognizing When The Odds Are Stacked Against You

For the purposes of this post, imagine a “Money Game” of life as having three players: Worker, Government and Owner. Together, these three players make and spend all the money in the world. Most of us are playing this game as Worker, but need to shift to becoming Owners.

Background: Throughout the 20th Century, Worker’s share of economic output was consistently above 60%, hovering around 63%. If you produced $100,000 worth of output, you and your coworkers claimed around $63,000 of it through wages, benefits, pensions, etc.  Not lucrative, but not too shabby either.

The Problem: But in this new millenium, there’s been a shift change downward. The chart below from the Bureau of Labor Statistics show’s Labor’s Share of Economic Output Over Time:

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Note: You might not have noticed this change on a year-to-year or per-person basis, but you’ll likely have noticed something if you think about the shrinking middle class, and the increasing number of seniors living in poverty. A 1% change in the chart above might seem small, but 1% of a $16.8 trillion GDP equals $168 billion! That amount can change a lot of livelihoods.

Implications: This change has resulted in a net decrease in financial well-being for a lot of people which has included fewer opportunities, decreasing benefits, and disappearing pensions. If you work hard for most of your life while playing Worker, you are more likely than ever to be disadvantaged in the future and even beholden to the other players.

More and more people who stuck with Worker their entire lives find themselves in tougher situations. But if Worker is losing ground, then who’s gaining?  Arguably not Government, since aside from the Great Recession, U.S. government spending to GDP has been relatively stable since 1971 and is likely to fall further in the next 4 years.

That leaves Owner, and that’s where the best position in the game seems to be.

Being an Owner: In our game, an Owner is someone who isn’t reliant on a wage, salary, entitlement or benefit to get by. An Owner claims a part (or all) of the profits of a business, whether it be from stock, real estate, private businesses, trademarks, copyrights, patents, etc. Through creativity, investment, careful planning, luck, force of will, and/or discipline, an Owner retains title to an asset that can reliably generate money by which to live and enjoy life.

If being largely self-reliant and more secure sounds appealing to you, then you might want to spend more time laying out your plan to change from Worker to Owner.

What are you doing to set yourself up for success?

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