Personal Finance

The American Dream: Your Well-Paying 9-5 Job Will Build You Wealth—Reality or Myth?

Expertise: Personal Finance
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This is the third post in a five-part series that explores how the traditional “American Dream” does not fit today’s world. The rest of the series will discuss what once constituted success and whether these sought-after milestones should be left alone, tweaked, or changed altogether. Read the first two articles here: “The American Dream: How Has the Definition Changed Over the Years?” and here “The American Dream: Are Traditional Values and Beliefs Helpful or Harmful Today?

In the last two posts of the series, we looked at the current definition of the American Dream and what was wrong with the first two steps. Here we will critique steps three and four.

But first, let’s look at all 10 steps again:

  1. Go to high school and get good grades.
  2. Go to college and get good grades (while probably taking out student loans).
  3. Get a good job.
  4. Continue to spend more as one makes more.
  5. Get married and have 2.3 kids and a dog.
  6. Buy the nicest house and car one can afford (financing both).
  7. Work for 40+ years to support one’s family.
  8. Retire at age 65.
  9. Enjoy the good life.
  10. Leave your children a nice inheritance when you die.

What’s Wrong With the Traditional Version of the “American Dream”?

Step 3: Get a good job.

Let’s begin to analyze the current status of this step by looking at pay and total compensation. These are, without a doubt, a large part of what would make a job “good.”

When someone is looking for a job and they are told they will make $50,000 a year, what does that really mean?

First, they would need to think about how many hours that job will require. Will it be 40 hours a week? Sixty hours a week? Eighty hours a week?

A Gallup poll found that full-time salaried U.S. workers were, on average, working 49 hours per week. (1) And that’s the average.

It includes many people who are in the latter half of their careers and have found ways to decrease that amount of time, sometimes out of necessity for things like having kids at home. The truth for those who are just entering the workforce is that they will find themselves working more than the average of 49 hours per week.

Companies often expect newer employees to work more because they know the young employees are single with no kids and thus have fewer commitments. Also, new and young employees are more ambitious to make their boss/company happy since most are working their first job and want to succeed. It’s the unfortunate truth.

The same Gallup poll found that 25 percent of the salaried workers were working more than 60 hours per week. My guess is that the vast majority of those people were under 30 years of age.

professional young asian female architect wearing casual shirt sitting in cozy office and making architectural sketches. Profession concept. beautiful young girl interior designer drawing blueprint.

Many companies entice new hires with high salaries but also expect them to work much more than 40 hours a week. They won’t say this outright, but they will tell you precisely what you have to get done to “be good at your job,” knowing that your workload will require you to put in way more than 40 hours per week.

What would be the hourly pay equivalent if one did take that job with a $50,000 a year salary, and they only worked 40 hours per week and received three weeks of vacation time? That would come out to $25.51 per hour.

$50,000/ [(52 weeks – 3 weeks) x 40 hours]

But if they ended up needing to work 60 hours a week to “be good at their job,” then that comes out to earning $17.01 per hour. Eighty hours a week? That equals $12.76! Maybe you would be better off mowing lawns?

And, if someone is working 60 or 80 hours per week, what things are they giving up that would make life more enjoyable? The most likely items to be cut would be their time with family and friends, as well as their hobbies.

Is there an annual salary that would make giving up time for those items worth it to you? It’s a personal question that will change depending on who you ask.

The sad part is, however, that nobody gets asked that question. Nobody gets offered a job where the employer says, “I will pay you $50,000 a year, but you’ll have to work 60 hours a week, which means you will have less time to spend with your family and friends and on your hobbies. Do you want the job?”

People find themselves in a job that requires a substantial time commitment to “be good at their job,” and then slowly their happiness takes a back seat. It’s hard to put a price on your valuable, non-renewable resource of time. This is one sad part of the American Dream that is not too glamorous.

Related: How to Ask for a Raise (and Get It)

I have a salaried job. I average way more than 40 hours a week, probably around 55. When I do the math, my annual salary doesn’t look near as good as if it were a 40-hour-per-week job. Luckily, I did the math years ago and was OK with the numbers because I love my job, my coworkers, my students, and my school’s culture. Plus, it’s a very fulfilling and rewarding job.

What if your job is not like mine? What if you dislike or even hate your job? Doing something you dislike or hate for 40 to 80 hours a week is devastating to one’s happiness.

Frustrated student behind the desk keeping hands on face

There are other undesirable elements to ponder when considering a potential job. The commute is one—it’s wasted time and gas money. The culture of the workplace is another. One of the most common complaints of a job is the people one has to work with, such as an over-demanding boss or coworkers who always gossip. The work environment is a third element. Does spending several hours a day in a cubicle sound enticing to you?

But having a “good job” is not all bad. There can be many obvious positives to a full-time job. If you do like your coworkers, then the social interactions are a positive aspect. Jobs can also provide financial security through paychecks, retirement accounts, stock options, and the like. In addition, many jobs offer paid time off, sick pay, and vacation days. Some even provide an avenue for furthering your education and challenging yourself mentally. Jobs can come with health insurance at a very low cost, too—sometimes it's free.

The point here is that a “good job” may have downsides, such as stress, overtime, and an unhealthy work environment. But it might also provide upsides like stable income, benefits, and mental stimulation.

Regardless, one thing is for sure: Most people don’t take into consideration all aspects of a job when they decide to accept a position. You need to define what a “good job” is for you, and then make sure that is where you spend your 40 to 80 hours per week.

Related: Teens & Finance: 5 Classes Your High Schooler Should Take to Start Out on the Right Financial Foot

Step 4: Continue to spend more as one makes more.

“A low-cost lifestyle enables the saver to accumulate cash and income-producing assets faster.” —From Set for Life by Scott Trench

Today, part of the American Dream is to spend everything one makes. Decades of marketing messages have trained us to do this.

We spend everything we make on cool things like a sporty new car, a posh downtown condo with trendy furniture to fill it, stylish new clothes every season, and maybe even a cool toy like a Jet Ski. But then we find ourselves working so much, maybe six days and 60 hours per week, that we don’t have time to enjoy these nice things we bought.

We’re rarely at our downtown condo—other than to sleep—because we’re at work. We only enjoy our new car as we drive to and from our job. We can only use the Jet Ski on the weekends when everyone else is trying to unload their expensive toys at the same boat ramp. It takes over an hour just to get it in the water—all that to jet around an over-crowded lake.

Spending what we make is a necessity to keep up with the Joneses. If we make $50,000 a year, then we spend $50,000 a year. If we make $200,000 a year, we spend $200,000. And if we made $3,000,000 a year, we’d spend every bit of that, too.

Text sign showing Stop Wasting Money. Conceptual photo Organizing Management Schedule lets do it Start Now Clips symbol idea script notice board text capital cardboard design

We do this without ever thinking of the long-term opportunities lost. If we would only save 10 or 20 percent (or more), we would find ourselves in a much better financial position in just a few years. So much better in fact, that we could eliminate some of those 40-plus years of work that the American Dream requires of us.

“We are spending money we don’t have to buy things we don’t need to impress people we don’t even know.” —Joshua Fields Millburn of The Minimalists

The credit card is much to blame here. Spending has become far too easy and thoughtless. We buy those things we don’t really need, the luxuries that make us look successful, without really thinking through the consequences.

“The rise of [credit cards]makes it far easier to opt for instant gratification, especially with online shopping. Every transaction we make is simply represented as pixels on a screen. We are no longer limited to what we can afford based on what we have already earned–we can now buy based on what we hope to earn in the future! Debt has become the American way, making it hard to see that it is debt that chains us to our jobs [for 40+ years]. It’s debt that keeps us with our noses to the grindstone, making a dying [instead of making a living]to pay off pleasures we’ve long forgotten and luxuries we scarcely have time to enjoy.” —From Your Money or Your Life by Vicki Robin and Joe Dominguez

The new and improved American Dream is about giving up the idea of a brand new car for a used, average car. Giving up the classy downtown condo for living with a couple of roommates in an average part of town. Giving up the trendy furniture for having a slightly worn couch we got from a friend. Giving up the new clothes every season for wearing what we own for three or four years. Giving up the Jet Ski for a used surfboard.

And what do we get in return for those sacrifices? We get to save more and invest more. We get to supercharge our path to financial independence. We understand this is an opportunity to work for fewer years, gaining back several years of freedom.

“Now I will tell thee an unusual truth about men and sons of men. It is this: That what each of us calls our ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary.” —From The Richest Man in Babylon by George S. Clason

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So, we must protest! Protest like crazy that we WILL NOT spend all that we earn!

In the next post of the series, we will continue to examine the remaining steps of the American Dream.

Sources

  1. https://news.gallup.com/poll/175286/hour-workweek-actually-longer-seven-hours.aspx

In what ways are you sacrificing now so that you don’t spend everything you earn?

Leave a comment below. 

Dan is a high school Business/Marketing teacher, real estate investor, and personal finance advocate in Denver, Colorado. He and his wife have a variety of real estate investments including multifa...
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    Michael Steven Harris
    Replied 11 months ago
    Hey everyone this is why I say I love my job. I get paid hourly so do my bosses. So I work fifty hours a week I get paid for it. The job itself involves me helping people. This week I'm working 62 hours. But, I go skipping into work.
    Dan Sheeks Rental Property Investor from Denver, CO
    Replied 11 months ago
    Hey Michael. Getting a job that pays hourly is one great way to make sure you are trading your time for money in the most effective way. Thanks for your comment.
    Brian Tisler Real Estate Investor from Oshkosh, Wisconsin
    Replied 11 months ago
    I'm at the point in my life I'm looking for my "2nd act." Something fulfilling and make a difference in the world. Can I ask what you do?
    Danni Catambay
    Replied 11 months ago
    This blog post speaks a lot to what went through my mind when I graduated Yale in 2006. At the time, the average new hire was getting paid $36K/yr. Because Yale sends a lot of students to Wall Street, I assumed this salary came with a hefty time commitment (and because Yalies are almost universally type A's). I wanted nothing to do with it so I went to grad school and eventually got a job paying me $55K/yr, but with some creative time management and housing, I got my weekly time commitment down to about 26 hrs. Unfortunately I wasn't able to continue that sweet set up and now I'm working for $12/hr because I can work less than 40 hrs/wk this way and for me, I'd rather use my brain to make income on my own terms through real estate than sell my time and possibly my soul for wages at someone else's behest. It's scary because I've never really made poverty work before, but I'm betting on myself that this will only be a temporary blip before I'm on my way to being better off than I ever was before.
    Tracy Selfridge Investor from Lexington SC
    Replied 11 months ago
    Great article Dan. Especially the part about how much that you are actually being paid per hour. This is something small business owners learn too. Maybe not initially but eventually.
    Dan Sheeks Rental Property Investor from Denver, CO
    Replied 11 months ago
    Hey Tracy. Thanks for the comment. I agree, first-time entrepreneurs definitely get a wake-up call about how many hours it takes to run a business and how that affects your hourly rate. But most are hoping they see the returns later on. It's always a risk, but can be the best risk one ever takes!
    Robert Hernandez Flipper/Rehabber from Dallas, TX
    Replied 11 months ago
    I have been investing real estate since 2001. As well, my partner and I purchased and were awarded 15,930 acres off-shore in Alaska. Why did we seek out this property? Oil. With multiple reservoirs going down to 26,000 ft. We have had production for a couple of years now with reservoirs at 7500 ft depth and 10 ft depth. all paying very good, but the first BIG reservoir will begin oil production in 2020. There will be 10-wells, producing 3300 BOE every day. These are Oil Royalties at it's finest. So with that said. I stepped out and began thinking out site the box many years ago now. Prior to acquiring this off-shore property and before I got started in real estate, yes I too, was stuck in a 9 to 5 J.O.B. Though the job or company I worked for, was my own, I was there day in and day out 7 day a week. Hope this shakes up your thought process, as we can all think out side the box. We can all dream about a better life, a better place to work and of course more money. Working for oneself can be accomplished. You simply need to go after you 'I wants'. I never went to college, hey, I barely graduated high school. Be persistent and go for it. Much Appreciated Robert Hernandez www.robertbuyshousesdfw.com
    Amanda Gant from Washington, DC
    Replied 11 months ago
    Thanks for Sharing, Danni. So open. I graduated in 2008 and my first job was $35K, too. So... I find real estate easier to do having a full-time job, bc I am using conventional loans every so often to invest again and again. I am about to net $60K in rental profit (after PITI, utilities, and condo fees, people). But, I will keep going, bc I like my job now, it also pays well, for me... so I am hoping to quickly pay down some CC debt (that is how I got 5 properties in DC on an NGO salary). but, it is hard, bc I really want to be free. But, not quite there yet. So, I tell myself every day that I am very lucky. I really COULD walk away from work at this poitn if I wanted to. But, no. I want to get rid of the $50K CC debt, and buy a few more places, so that I have freedom to travel around the world (plane tix are expensive) once I stop working full-time. The only regret I have, is that I did not know abotu real estate sooner. I started when I was 30, now I am 34. Plan to be retired by 37 or 38.
    Vaughn K. from Seattle, WA
    Replied 11 months ago
    You people are blowing my minds! I did running start in HS (community college while still in HS), but didn't go to full on university... I had multiple day jobs when I was getting my business going (I've been self employed for over 10 years now), and they all paid around that, or higher! Without spending 4 years getting a degree, or the mountain of student loan debt... All also had plenty of opportunity to advance to varying levels depending on the job in question. One a good person could break into 6 figures no problem. How/why people are so impressed by college degrees when so many jobs start off comparable or worse than things where you don't need to waste your time/money is beyond me. Comp sci, medicine, etc I can understand... But most of the rest... I just don't get it.
    Lee Lanphear from Chattanooga, Tennessee
    Replied 11 months ago
    Great read!!! I found this very helpful, Thanks.
    Dan Sheeks Rental Property Investor from Denver, CO
    Replied 11 months ago
    Hey Lee. Thanks for the comment. Glad you found it helpful.
    Kevin Moules Rental Property Investor from Turlock, CA
    Replied 11 months ago
    Dan, Thanks again for the posts. Before I quit my 7-4 this year and went full time with my handyman business i read through Your Money or Your Life. That book is just amazing! and really opens your eyes! I think everyone should read it. I live in CA central valley and folks drive 2 hours each way to the bay for work. However, I wonder how many of them have calculated their actual hourly wage of adding the additional 4 hours of drive time every day? That's at least 20 extra hours a week of traffic and stress. Not just that, if they calculated their actual hourly wage they could probably find something with a 30 min drive that pays their "real" wage. They would be less stressed, way less fuel cost, less wear/tear, ect.. so many benefits!
    Dave Rav from Summerville, SC
    Replied 11 months ago
    "But Kevin, living and working in CA I make $125k a year. Thats good money. Never mind my commute." - Really not a smart thing. Totally agree with you they are watering down their salary and wasting time. Oh and that $125k a year is nothing in CA (as you well know). Especially if you live within 40 miles of a major metro - esp San Fran! You can spend $500-750k to own a home without even trying. All of a sudden that $125k is looking more like $65k...
    Vaughn K. from Seattle, WA
    Replied 11 months ago
    Which is why I am moving inland soon! I don't live in CA (thankfully!), but am in the disaster area known as Seattle, WA. I'm tired of making 6 figures and not getting much to show for it. Once I'm moved I should be able to set myself up to retire in a few years really. It's amazing how people delude themselves about these things. As I tell people all the time here in Seattle, in most of the country a high school dropout who learns a middle of the road trade has an actual objective standard of living higher than an Amazon employee pulling 6 figures here! He can buy a nice 3-4 bedroom house in an okay neighborhood, drive a decent car, put a few bucks away to retire, take a vacation now and again, etc. Not so much for even the average white collar worker in major coastal cities anymore.
    Vinson Bullock Investor from Cincinnati, Ohio
    Replied 11 months ago
    Kevin, Can you please tell me the author of this book? Thanks in advance.
    Dan Sheeks Rental Property Investor from Denver, CO
    Replied 11 months ago
    Hey Vinson. Scott Trench wrote Set for Life. Dan
    Dan Sheeks Rental Property Investor from Denver, CO
    Replied 11 months ago
    Hey Kevin. You are spot on!
    Mark JOhnson Investor
    Replied 11 months ago
    Graduated high school? check. College degree? Check. Good job? Check. Spending equal to income? No. Start investing in real estate at 33? You bet. Turn in keys to corporate office front door at 49? Check. Go to mountain cabin on a Monday because it's sunny that day without using vacation days or lost wages? You bet. That's my measure of real estate success!
    Dave Rav from Summerville, SC
    Replied 11 months ago
    Awesome! I love this. Good stuff
    Benjamin Papet
    Replied 11 months ago
    Great Article !!
    Dave Rav from Summerville, SC
    Replied 11 months ago
    Great points. I do agree with the salary topic and suggestion that companies try to get you to work more than 40 hrs/week (if full time) without your knowledge. I have been fortunate enough to steadily reduce my "day job" to less than part time this year. I started in 2015 with going to 30 hours per week. Then in 2016 about 25 hours per week (which changed my status to part-time - and had implications for benefits). As of 2019, I fluctuate between 18-25 hours per week and my mindset is totally different than in 2015. If I have any major commitments at work that serve to lower my hourly rate, I ask to be paid for that. Its just smart.