Labor Day

Below is my off the cuff response to the article, "It's Labor Day, Let's Celebrate" posted on Fast Company. I hope it gets some people thinking.


In many ways we are better off than our parents. More of us are college educated. More of us own our homes. Our productivity is higher as well. The major difference is that capital and labor have changed their respective ratios in American life. As wealthy as we are, there is actually less capital per laborer if you include the populations of nations to whom we now outsource. The result of this change is that labor is less expensive than it was and capital is dearer (when compared to the number of potential investments, not in raw numbers). So, wage earners in the US will continue to watch their earning power decrease while capitalists or investors should continue to see their profits increase."What should be done?"Each of us has a responsibility to look out at the world and recognize the reality of our times. The reality now is that you must begin to derive more of your income from investments and over the course of your life rely less and less on wages."How?"Don't buy a new car. Don't buy a house beyond your reach. Don't go out to dinner as often. Cut back on luxury spending. Accumualate capital and then select good opportunities to invest in for income."But I don't want to cut back."Too bad. Our world is changing and the standard of living purchased with labor is dropping. The standard of living purchased with investing is improving. Which side of the change do you want your family to experience?If you keep relying on labor as your sole source of income, your family will soon be poor.