Too little pay on the job? Owning your own production may be the answer.

Having a hard time getting ahead? Is your salary getting you down? Increasingly, this is all too common and unfortunately, it is by design. Only so much wealth can be created by one individual’s work. Past that point, additional wealth must be generated off of the efforts of others. This is the guiding principle behind any corporation and if you can align with one that pays well, then there is no issue. However, this is an exception to the rule as companies rarely pay a worker more than they have to.

And why should they? It’s a problem in economics. There are two concepts of interest here; marginal cost and marginal benefit. The marginal cost represents a small increase or decrease in the cost from the initial starting point. The marginal benefit is the change in benefit achieved by the change in cost. The two are combined as a ratio to determine how much benefit the next dollar buys. To a corporation, a worker’s marginal benefit will run out quickly at any cost beyond market rate. Why, because the corporation could have just as well hired anyone else at market rate.

For the individual, the problem of marginal cost and benefit is reversed. A person who owns their own production, in the case of a sole proprietor or single person corporation has an interest in maximizing their own total benefit. This is the point in which the income that they bring in is built up to the point where the marginal cost equals the marginal benefit. This is the maximum point of income generation at which beyond this point any additional work results in a loss for the individual. It is in this principle, that many self-employed have come to appreciate the liberating feeling of their work “on their own terms”

About Steve @ FPO
Hello FPO readers, I have been writing on financial topics for about 12 years now, but I have only recently reignited the fire of publishing online. I have to say, its good to be back. I am an electrical engineer by trade who enjoys all topics engineering and financial. I started Financial Place Online (FPO) to create a value added financial news and education website that would provide a refreshing daily financial read. Financial Place Online websites are built around the principles of consumer empowerment, leveling the playing field, zero spam tolerance, and none of those annoying sidebar or banner ads. For us, it's all about enjoying a good read.

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