Beyond Labor Day

Beyond Labor Day 350Hey Everyone, I hope you had a great Labor Day weekend. It’s fantastic to have an extra day off, but we should reflect on what this holiday is all about. Labor Day was created to celebrate workers and their socioeconomic achievements. Workers came a long way since the Industrial Revolution. In those early years, workers toiled for 12 hours every day to eke out a living. We made a lot of progress over the years and life is much easier now. A family can enjoy a comfortable lifestyle by working just 40 hours per week.

Wait a minute, is this really true? 40 hours/week would fund a comfortable lifestyle 30 years ago, but workers have been losing grounds for a while now. The median personal income for all workers in 2018 is just $33,706, according to the US Census. Wow, that is lower than I expected. Most families can’t live a comfortable lifestyle with that income. However, that’s just one worker. A bigger family can contribute 2 or more workers to increase their household income. Also, highly educated workers usually earn much more income than the median. But even then, most of us work way more than 40 hours per week these days. In the internet age, white-collar workers are expected to be on call 24/7. How many of us really work just 40 hours/week? That model has come and gone. These days, we’re all working longer hours just to get by.


2020 is a strange year. The economy is in dire straits and millions of people lost their income (or made less). Working-class families are seriously struggling. However, rich people keep getting richer. The stock market crashed but came back to hit a new high already. Unlike workers, investors are doing quite well. Our net worth benefited from the stock market recovery and we are richer than ever. The US is bifurcating into 2 societies. The working-class struggles to make ends meet while investors benefit from their investments. I doubt it’ll get better for workers anytime soon. Regular people will need to work more and more to make ends meet. Everyone has a side hustle these days, right? Having one job isn’t quite enough anymore.

Transcend Labor Day

Working is righteous, but it isn’t good enough anymore. It doesn’t matter how much money you make. At some point, you won’t be able to work anymore.

Some workers think they can depend on Social Security to pick up the slacks when that happens, but I wouldn’t be so sure. President Trump already attacked Social Security by deferring the payroll tax. He said he’ll make it permanent if he is reelected. Yay! No more payroll tax, but no more Social Security and Medicare either. (Actually, I’m not sure what he wants to do here.) Where do you think Social Security Benefits come from? That’s right, payroll tax. Social Security is already in trouble. If the government keeps cutting payroll tax, we’ll run out much sooner than predicted (2035). Hey, Trump is running the country like a CEO. He’s cutting benefits to workers and channeling it to the investors. No payroll tax means more income to the corporations. Currently, they pay 50% of the payroll tax for workers. All that money can go to the investors if they don’t have to pay the payroll tax. Anyway, I wouldn’t depend too much on Social Security if you’re young. Instead, you need to become an investor.

Become an investor

All of us need to figure out how to move beyond labor. Labor is all you have when you’re young, but it gets harder as you age. We need to save and invest so we can join the investor class. It will take a long time for investment income to surpass earned income, but you can get there. Here are my tips.

  • Learn about FIRE (financial independence, retire early).
  • Save 50% of your income and invest. This is very difficult when you’re young, but it will become easier as your personal income increases.
  • Save and invest in your tax-advantaged accounts. Max out your 401k contribution as soon as you can.
  • Invest in the stock market.
  • Invest in a business so other people can work for you.
  • Rent out part of your home or invest in a rental property.
  • Invest in commercial properties through real estate crowdfunding.

These are just a few ways to join the investor class. Keep investing and eventually, your investment income will grow beyond your earned income. That’s Financial Independence. After that, you will have a lot more power. You can keep working on what you enjoy, retire, or figure out the best combination for your family.

Are you an investor?

Image credit: Hobi Industri

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, the job became too stressful and Joe retired from his engineering career to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle.

Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.

Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.

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