More than 99.9% of employees are poor. More than 70% of employees retire poor and have to depend on social security and other transfer programs to survive.
The big question is why would a person work for 40 years, having a constant salary every month, and still retire poor? It is ridiculous.
I have friends who held big positions in the public and even private sector but they are still poor at retirement. These were not just junior employees but senior officers earning hundreds of thousands.
After studying the situation for long, I figured out why almost all employees end up poor.
How much companies pay their employees
I did a study that showed that companies only spend around 5% of their gross profit on salaries.
Despite the employees working hard to make the profit for the business, they only get 5% of what is made by subtracting the total sales over the total cost of sales.
The bigger problem is that few people at the top earn more than the majority at the bottom. The CEO, Vice Presidents, COO, CFO, etc. take almost everything as the junior officers take home nothing.
This means that after subtracting the expenses (Which might be catered for by the additional income from the non-core business), shareholders get everything else.
Individuals behind the corporation
Every corporation in the private sector is owned by people. These people are called shareholders. These are the people who get everything. Employees work for them.
Shareholders never show up to work. They have understood the secret of success. They leverage the effort and experience of other people to succeed.
The work of shareholders is to travel the world and work only when they want to. They do not have to work. At the end of the financial year, they take home millions in dividends and still retain their shareholding.
Even if they do not get dividends, profits that are plowed back into the business grow the business and make their shares more valuable.
Why not become a shareholder? All they do is enjoy life and smile to the bank.
Going up the corporate ladder?
As we grow up, our teachers and parents tell us to work hard and get good grades so that we can get a good job. They then advise us to work hard, specialize to get promoted.
Everyone in the organization wants to become the CEO. However, only one person can be the CEO at any particular time. This means that many never get to become CEOs. They chase what they never achieve.
Why not start a company of your own and become a CEO right away? Of course, you have to hustle your way up but it is all worth the effort.
If the probability of becoming a CEO in the corporate world is one in every 10,000, it is not worth aiming to become one. That is like gambling.
Just become one right away and build your empire. In your empire, no one can fire you or control your income.
The fallacy of promotion
Employees spend their lives chasing promotions. Assuming you are a junior officer in a company. You are told to work for 3-5 years diligently to get promoted. After 5 years, your salary increases by 500 dollars. Are the 500 dollars worth the 5 years of diligence?
You often see go-slows and strikes on the streets of workers asking for a pay rise or allowances. After a week on the streets, each receives a 20 dollars allowance package and they go back to work. Is this worth the time and effort?
This life strategy is a big fallacy of the majority.
Why lose control?
Why leave your income in the hands of people who have no concern over your needs? Your employer only cares about your output and not your welfare. He wants to pay you as little as possible to increase his revenue.
This means that employers are pursuing their interests, not yours. If that is true, why do you allow them to determine what you earn? Your pay rise is at their mercy. They decide what you earn even without considering the increase in your bills.
To be successful, you have to take control of your income.
10 reasons why employees are poor
Here are 10 reasons why 99.9% of employees are poor.
1. They do not own any system
As we pointed out in this post (How to succeed in life), success principles have not changed over the years. The factors of success may change but the principles are the same.
In the hunting and gathering age, the chiefs owned the big titles and the villages and people hunted for them. For the agrarian age, those who owned the plantations became successful while the rest remained poor.
In the industrial age, those who owned the factories made fortunes while everybody else struggled through life. In the information age, those who own timely and relevant information get rich.
This means that ownership is the principle of success. This is why the most successful people are business owners.
Employees become poor because despite working for a money-making system, they do not own it. They are like the people who hunted for the chiefs or the peasants who worked in farms.
Own something today. Even if you do not quit your job, start a side hustle and let others work for you. In all you do, make sure you own a money-making system.
2. They focus on a fixed income
Employees have a constant income that only changes after many years. This means that no matter how much effort they put, it does not necessarily bring more income.
How do you grow rich by relying on a fixed income? It is not possible. To become rich, your income has to increase over time.
The prices of goods increase daily. This means that your income will have less purchasing power tomorrow. If your income is constant and yet the prices of goods are increasing, is that progressing or retrogressing?
Successful people never rely on a fixed income. This is why Donald Trump gets only 1 dollar as the President of the United States. He is not interested in fixed income. His profits from the Trump Organization are enough.
Profits have exponential growth. As a business person, you might be broke today and a millionaire tomorrow.
3. They work for money
Working for money is the wrong strategy for wealth creation. Successful people let money work for them. This is the power of passive income.
If you have to rise early in the morning every day to go to work to get income, you are in big trouble. What happens if you cannot work again?
Wealthy people get money even as they sleep. Money is working hard for them day and night. It is this income that makes people rich.
4. They trade time for money
Employees sell their time to get money at the end of the month. This is why they have to report to work at a certain time and leave at a certain time. Their salary is pegged on the number of hours they offer.
Employers, on the other hand, understand the value of time. They look for people with time and hire them.
Time is more valuable than money. This is because time is a fixed resource. It is an equalizing factor in life. Money is not a fixed resource, more and more can be made every year.
Successful people are not paid based on the amount of time they work but on the value they provide.
5. They love security more than risk
Employees will always be looking for a secure job. Security is more important to them than the potential reward of risk. As they seek security, they fail to focus on the reward.
Employers, on the other hand, take a lot of risks. This is how they make millions. High risk is always related to high returns. High risk, high reward.
6. They follow well set out rules
Employees are encouraged not to break the rules. They have to follow them to the letter. When they break rules, they are fired. This hinders a great factor of success; creativity.
Entrepreneurs grow by breaking rules and setting new ones. This encourages creativity and innovation.
To be successful, you have to think outside the box and break some rules. You cannot just follow without questioning. The corporate world is not the best place to do that.
7. They have no control
Employees lack control. They are told when to report to work, when to go home, when to go on leave, what they should do for the day, the goals they should achieve, what they should earn, etc.
This shows that employees lack control over their own lives. This is not the best environment for success. To get success, you have to be 100% in control of your life.
8. They specialize
Employees work in a single department. They get to know everything about that department and nothing about any other field of work.
Due to that, employees want to get postgraduate education in a certain specialty. As they specialize, they know more and more of less. They soon realize that they are trapped. They cannot do anything else because they only know about their area of specialization.
Entrepreneurs have to know everything. They know less of more. Even if they get further studies, they do not specialize, they take a general course like an MBA.
Make sure you know something in every relevant area of your life. Avoid being trapped in a single-specialty unless that is your desire.
9. Most hate what they do
I have interacted with many employees and I know this for a fact. Many employees hate their job. However, they do not dare to quit because of fear. Remember, their greatest motivation is security.
They would rather suffer in a job they hate than quit and lose security.
When people graduate, they just apply for any available job. They do not care because their greatest goal is just to get a job. After some time, they realize that the working environment is so limiting and they become bitter.
Since they do not want to quit, they suffer all the way and become bitter in life.
Entrepreneurs start a company they love to manage. They get satisfied to see it grow. They enjoy working on it day and night. This is what true life is about.
10. They are many
Since employees are very many, they tend to earn less. Why are teachers underpaid and doctors overpaid? Because teachers are many but the doctors are few.
When the supply for labor is more, its price (wages) decrease. This is a general economics principle. As more and more people offer their services, employers can afford to pay less because there are more people in the job market.
As more and more people graduate and become potential employees, wages will keep reducing. Employees will earn less and less in the future. Many others will lose their jobs because of technology and automation of jobs.
To be on the safe side of life, you have to distance yourself from the masses. This is because the masses are always offered a bad deal.
Final thoughts on why employees are poor
If you want success, you cannot be an employee. You have to be an employer. Even if you will be an employee in one company, make sure you are an employer in another.
The strategy of working for promotion is not financially sustainable.
Lets recap. 10 reasons why employees are poor:
- They do not own any system
- They focus on a fixed income
- Employees work for money
- They trade time for money
- They love security more than risk
- Employees follow well set out rules
- They have no control
- They specialize
- Most hate what they do
- They are many
All the best as you position yourself on the right side of life. Without this positioning, life will always be a real struggle.