The S&P has gained 20% in the past year while real wages in America are down during this same period. President Trump has promised to reverse this long term trend by improving employment opportunity for main street America. Policy reform alone will not succeed; changing this trend will also require a change in behavior by American workers. Corporate America achieves this earnings growth by re-investing in its business. In years of expansion, these investments are significant and can approach 10% of corporate revenues and occur in a variety of forms to include capital investments, research and development and employee training.
As the old saying goes, if you can’t beat them, join them. It’s time for American workers to claim more of the pie by using many of the same techniques these companies employ to improve productivity and grow profits. By viewing yourself as a business owner that sells your labor assets – your skills, energy and time – you can adopt many of the same strategies that corporate America employs to grow its bottom line. By investing in your labor asset just the way businesses invest in themselves, you can grow your earnings and maximize your financial prosperity.
1. Maximize lifetime earnings over annual compensation: Successful companies demonstrate earnings growth over long periods of time. So too, your journey to financial security is not achieved by maximizing earnings this year, but rather maximizing it over your entire career. Make decisions that increase total compensation, employability and longevity to maximize your career earnings. Take the long view by prioritizing your career and development over short-term pay.
2. Improve your labor value through investment: Investments in yourself in the form of education dramatically increase the lifetime value of your labor by increasing average income, employability and the ability to work later in life. Use your income and your time to invest in yourself the same way corporations re-invest their profits, whether it’s through higher education, continuous learning programs, webinars or just working your network.
3. Strategically allocate your largest asset: Companies allocate their resources to their best opportunities to maximize both today’s earnings and tomorrow’s growth. As an owner of your labor, you must not only perform well in your current role, but seek opportunities for growth. Financial success isn’t just the product of hard work and talent – it’s also the result of strategically selecting the best areas to “invest” your labor capital in attractive industries, geographies and skills sets.
4. Build your brand: Corporate America invests heavily to build and grow their brands. As the owner of YOU, consider how your professional choices impact your skills, experiences and network to complement your brand. Remember, compensation comes in many forms: opportunities for brand and network development can be every bit as valuable as cash, bonuses and equity.
5. Create a Legacy through entrepreneurship: The preceding recommendations will help you maximize your income during your working years. However, if you start a business, you can create a going concern that can prosper long after you retire. This choice often represents the surest way to real wealth creation while offering a unique sense of accomplishment and autonomy.
Borrowing established best practices from corporate America and viewing yourself as a business owner will inform your decisions about how to manage, grow and maximize your largest asset—labor. If you are unsatisfied with your compensation or career progression, talk to the boss—you.
Douglas P. McCormick (@doug_mccormick) is the author of FAMILY INC.: Using Business Principles to Maximize Your Family's Wealth www.familyinc.com (Wiley; April 2016) As Co-founder and Managing Partner at HCI Equity, McCormick has spent two decades as a professional investor working with entrepreneurs to help them grow their businesses to create sustainable long-term value.