When an individual is employed by another individual or entity, they are normally remunerated for their effort or input by being paid a wage or salary. When an individual is the owner of a business that supplies a product or service, they are usually not remunerated for their efforts but collect what are called profits. Here now we must get away from the enormous complexities surrounding the subject and find the simplicity of the reality. There is no suggestion here that the owner of a business or corporate entity does not deserves remuneration for the effort that they are required to produce the services that they provide to the customers and society at large. To avoid the confusion of the existing complexities (designed to hide the truth from the society) it is necessary to look at the simplicity. As an example, say an individual who has received any form of income, wages, salaries, profits or anything else has accumulated just one billion dollars of assets by the time they reach 80 years of age. Two Scenarios are Presented here
Both individuals are compared with a suggestion of equal amounts of time spent at creating their income. Both individuals work the normal workweek of 8 Hrs. a day for 5 days a week and 52 weeks a year. Both individuals current age is 80 years and have started their earning day at age 15 making their same work week as stated.
At age 80, individual A’s net worth is said to be $8 billion while Individual B’s net worth is $150,000 dollars.
Not that it makes much difference in the final outcome, with the extreme (see later) difference in final net worth an assumption is made that individual A’s yearly living expenses is 4 million dollars a year and individual B’s yearly Living expenses amounts to 80,000 dollars.
The final results in B’s Hourly take home pay calculates to $37.35 per Hour, while individual A’s income calculates to $57,348.52 per Hour.
With any doubt about the accuracy of the above it would be a simple task for anyone knowledgeable in spreadsheets to verify these figures by plugging in various realistic input to get the actual verified output.
Although the sample spreadsheet used for the above calculations are available for those who need more support in the above verification.
Much Love,
Founder.