How do I get a high income?

Some jobs are better than others, plain and simple.

Your personality and aptitude will influence the types of work you find desirable. But, most people agree on what jobs are undesirable (ever watched Deadliest Catch?)

Money can offset this somewhat, but the saying “you couldn’t pay me enough to do that” exists for a reason.

After working with many wealthy people, I’ve noticed a few common threads in their stories. Not with their personality, all successful people work hard, take risks and have a bit of luck. Rather there are a few technical characteristics about the work itself.

1. Their skillset can be the foundation of a business
2. They can use their skillset without the support of a large organization

Working in a job that has these qualities allows you to climb the “Hierarchy of Labour”. Which refers to the different types of labour you can perform, with each successive step providing more earnings power, autonomy and responsibility.

1. Basic Labour
   • Any standard task, paid hourly. The types of jobs you typically work during high-school, college.
     • Sweeping Floors
     • Line Cook
     • Mowing Lawns
2. Skilled Labour
   • More specialized skills & tasks, paid hourly. These jobs require some academic or hands on experience to perform.
     • Bookkeeper
     • Truck driver
     • Any of the trades
     • Law clerk
3. Selling a Packaged Service or Product
   • Further specialized (but not by much), paid for service provided
     • Any of the trades, paid for service
     • Architect providing site plans
     • Lawyer
4. Starting a Business around the Product
   • The end product is the exact same as Step 3, but owning the company increases the value that you receive directly, rather than sharing profits with your employer. In most situations Steps 3 & 4 are the same.

The biggest difference is how you’re compensated. Being paid for your judgement or service and not your time. This removes the direct relationship from money and time, allowing you to earn much higher rates of pay.

To provide a concrete example, below is a real story from the owner of a pool construction company, Jim.

1. Basic Labour
   • He starts out working summers during high school and college for another pool construction company. He doesn’t mind the work, and after a few summers becomes knowledgable and over time gets more responsibility. He’s making $17/hr, $34,000 annually.
2. Skilled Labour
   • After a few years he’s a supervisor and the go-to guy on the job-site. He can complete the job from start to finish and is a real asset to the owner of the business. He’s making $30/hr, $60,000 annually.
3. Product
   • He goes to his boss, the owner, and says, “Instead of paying me hourly, why not let me hire my own guys and build the pools. I’ll send you a bill for the construction, you sell the pool and provide the materials”. His boss agrees and now he’s making $1,250/per pool and they install 8 per month, $120,000 annually.
4. Starting a Business Around Product
   • After a few more years Jim leaves his former company and starts his own company. Now he’s selling the pool, buying the materials and building the pool. Each pool sells for $30,000 and he can profit $10,000 per job. Things start off slower than his old company, doing 1 pool/month, but after a few years he’s doing 4 pools/month, earning $480,000 annually.

The same core truth runs through all the stories I’ve heard. They begin doing a basic task for an hourly wage (but doing it well). They learn how they can package that labour as a finished product. And when you can sell a finished product your potential profit is much higher

In Jim’s case the earnings for each “rung” on the ladder was:

1. Basic Labour
   • $34,000
2. Skilled Labour
   • $60,000 (1.75x basic labour earnings)
3. Product
   • $120,000 (3.5x basic labour earnings)
4. Starting Business Around Product
   • $480,000 (14x basic labour earnings)

The first couple jumps are smaller. But the final step, creating a business around a product, dramatically increased Jim’s earnings.

This is not an easy path, it requires time and tangible skills. In this particular case it took about 20 years to get from Step 1 all the way to Step 4.

Think about where you are on the labour hierarchy and how you may move to the next level. If you’re in a position where you can’t climb the rungs it may be time to look at a different line of work, assuming increasing your income is a priority.