Why are we still working?
A century ago, John Maynard Keynes noticed that technological inventions (e.g., coal, steam, electricity) and scientific discoveries (e.g., Newton, Darwin, Einstein) were increasing the efficiency, and thus the overall output, of certain industries.
In his 1930 essay “Economic Possibilities for our Grandchildren,” Keynes wrote,
“In the United States factory output per head was 40 per cent greater in 1925 than in 1919 … We may be on the eve of improvements in the efficiency of food production as great as those which have already taken place in mining, manufacture, and transport … we may be able to perform all the operations of agriculture, mining, and manufacture with a quarter of the human effort to which we have been accustomed.”
Based on his observations, Keynes predicted,
“The standard of life in progressive countries one hundred years hence will be between four and eight times as high as it is to-day.”
According to data from the Bureau of Economic Analysis, real U.S. GDP per capita has increased 6.7x from 1930 to 2020. In other words, the average U.S. citizen is roughly seven times wealthier today than a hundred years ago. Keynes was right!
GDP stands for “Gross Domestic Product.” It’s the monetary value of all finished goods and services produced within a country. The graph above displays the annual GDP of the United States from 1930 to 2020.
“Per capita” means for each person. Total GDP is for the whole country. GDP per capita is the GDP for the whole country divided by the population of that country.
Here, we are using GDP per capita as a proxy for economic wealth. We assume that GDP per capita is roughly the amount of money that the average American is receiving in exchange for the sale of their goods or services (which, for most people, is the work they do as employees).
We are wealthier than ever before
The upward-sloping line in the graph above shows that we’ve gotten progressively richer over the years. The average American has increasingly more money (even after adjusting for inflation). And with that money, we can buy more stuff.
If you were an average American born in 2020, you would have 6.7x more money than if you were born in 1930.
We use money to purchase goods and services that provide for our needs. At the most basic level, we buy food, water, medicine, clothes, and shelter. These are the things we need to stay alive.
Today, it’s easier to keep ourselves alive than it was a hundred years ago because we have more money. You could spend 6.7x less time working and earn the same amount of money as an American worker in 1930.
For some, the “economic problem” is already solved
Keynes wrote,
“The economic problem, the struggle for subsistence, always has been hitherto the primary, most pressing problem of the human race—not only of the human race, but of the whole of the biological kingdom from the beginnings of life in its most primitive forms. Thus we have been expressly evolved by nature—with all our impulses and deepest instincts—for the purpose of solving the economic problem. If the economic problem is solved, mankind will be deprived of its traditional purpose.”
The “economic problem” is “the struggle for subsistence.” It is the problem of our survival, which, in modern times, most of us temporarily alleviate by participating in the economy—by working to earn money and then spending it to satisfy our basic needs.
But this problem has not always been economic in nature.
At the beginning of our history, humanity faced this problem just the same as any other species in the animal kingdom. Food had to be hunted or gathered; it was not available for purchase at grocery stores. Water came from a watering hole; it was not treated and piped by the local municipality. Shelter had to be found; it was not built by a construction company and then listed on the real estate market.
It was not until the division of labor, which in turn led to trade and other economic developments, that the problem became an economic one.
Before division of labor, hunter-gatherers had one job: get food. Now, there are millions of jobs available in the labor market. Instead of picking up his spear and stepping out into the wild to hunt, man picks up his briefcase and rides the bus to the office. Then he gets a paycheck and goes to the grocery store.
Our needs haven’t changed, but our means of satisfying them have.
First, we were like any other animal species. Then, we had division of labor. And now, the divided labor is being automated. As a result, the economy has become efficient enough to produce a steadily-increasing surplus.
The surplus is enough that some people can stop working and still survive for the rest of their lifetimes.
One possible solution to the economic problem: early retirement
Let’s take me, for example. I spend about $36,200 per year. It breaks down like this:
Rent = $1,350 per month = $16,200 per year
Food = $100 per week = $5,200 per year
Travel = $300 per month = $3,600 per year
Health insurance = $400 per month = $4,800 per year
Recreation = $100 per week = $5,200 per year
Cell phone = $100 per month = $1,200 per year
One way to have enough money to survive would be to just save enough. If I think I’m going to live for 50 more years and I spend $36,200 per year, then, in order to retire right now and never work again while still maintaining my current spending, I would need about $1.8 million (probably a little more than that because of inflation).
But thanks to the modern financial system, I don’t need nearly that much, because I can invest my money and get a return.
If we assume I can get a return of 4% per year, then I only need $905,000, which I would invest to earn $36,200 per year—enough to cover my expenses in perpetuity, without depleting my nest egg.
I personally don’t have that amount of money in my bank account, but there are people who do. For those people, their economic problem is solved. They have enough. They’ve won the game. But still, some of them keep working. Why?
Why aren’t more people retiring early?
Well, some people are.
The percentage of adults ages 55 and older who are now retired has risen 2.2% (from 48.1% to 50.3%) from Q3 2019 to Q3 2021.
And half of Americans (49.9%) expect to retire before they turn 62, which is an increase of two percentage points, compared to two years ago.
But half of Americans still expect to work past age 62. Why don’t they expect to retire earlier?
For some, the financial math doesn’t work out. They have lower earnings, higher expenses, or both.
For me, my annual expenses are $36,200 and my magic number for retirement is $905,000. Based on my expected after-tax earnings (minus my annual expenses, adding to my existing savings), I’ll be able to retire in 10-15 years (when I’m 37-42 years old).
But things could change.
If I start a family, my expenses will increase. If I decide to quit my career in software sales to work as a journalist, my earnings will decrease. Then my retirement timeline will be extended.
On the other hand, if I make early retirement a priority, I could reduce my expenses as low as possible (maybe as low as $20,000 per year) and work harder to earn more in my software sales career, then maybe I could retire in 5-10 years.
My situation is somewhere in the middle of the widening rich-poor gap in the U.S.
As of Q3 2021, the top 10% of households in the U.S. held 70% of the country’s wealth, while the bottom 50% held 2.5%.
37.2 million people are living in poverty in the U.S. The “poverty threshold” in 2020 for one person under age 65 was $13,465, in terms of annual income.
If wealth were distributed equally in the U.S., everyone would get roughly $55,468 (GDP per capita in 2020) annually, but not everyone gets this much because a disproportionate amount of the wealth goes to exorbitantly wealthy people like Jeff Bezos and Elon Musk.
As it is, even though our country’s wealth has increased 6.7x per capita in the past 90 years, some Americans are still struggling to make ends meet.
So, returning to our question: Why aren’t more Americans retiring early?
The answer: Some are. Some can’t. Some can but aren’t.
Why do individuals who can retire continue to work?
After stepping down from his position as CEO of Amazon, Jeff Bezos is still working on his other companies (Blue Origin and The Washington Post) and non-profits (The Day One Fund and Bezos Earth Fund).
Why does Bezos continue to work? What motivates him? It’s not to satisfy his basic needs. He has enough money to afford a million lifetimes.
It could be that he has an altruistic desire to make the world a better place, and that’s why he has switched his focus to space travel and climate change, instead of online commerce. I do believe that some people continue to work because they believe in what they’re doing and they want to make a positive impact.
But I also think that other people are motivated to keep working (beyond what’s required to provide for their basic needs) in order to satisfy their needs on the higher tiers of Maslow’s hierarchy, e.g., love, esteem, and self-actualization.
And this is because of what we value—and, as a result, encourage and incentivize—as a society.
We give love and esteem to those who are rich and successful. We are attracted to prosperity and abundance. We envy those who have more than us. We applaud rags-to-riches stories. We regard greed and gluttony as virtues rather than vices.
These societal norms motivate people to continue to pursue monetary wealth, even beyond the point at which their basic needs are satisfied, because they think that more money will make them more worthy of love, a promotion will earn them respect from their peers, and their work is somehow fulfilling their purpose.
But is work really the best way for us to satisfy our higher desires? Or are there better ways, other than work, to satisfy our needs on the higher tiers of Maslow’s hierarchy? If there are better ways, would we consider changing our values as a society to encourage behavior other than endless work?
There was a time when our economic values were necessary. We were still a struggling species, ascending the food chain. We had to fight to survive. We didn’t have enough.
But now, what more could we possibly want? We have enough to satisfy all our basic needs. We have won the economic war with nature. So why are we still fighting like we’re the underdog?
Other reasons that people continue to work
We have given at least two reasons why people continue to work even after they have enough wealth to provide for their basic needs for the rest of their lives: altruism and satisfaction of higher needs. But there are still other reasons.
In his book Man’s Search for Meaning, Viktor Frankl writes,
“No instinct tells him what he has to do, and no tradition tells him what he ought to do; sometimes he does not even know what he wishes to do. Instead, he either wishes to do what other people do (conformism) or he does what other people wish him to do (totalitarianism).”
It might seem ridiculous to suggest that we don’t know what we want to do, but I actually think it makes a lot of sense, especially in modern times.
Sometimes we have a clear idea of what we want to do. If we are hungry, we want to eat. If we are tired, we want to sleep. These are our animal instincts. But what about after you’ve satisfied all of your animal instincts? What do you want to do then?
This is the position in which we now find ourselves. Our hyper-advanced economy has made it so that the satisfaction of our animal instincts is quick and easy. But then what? What do we do with our free time after our obvious physical needs are met?
We don’t know what to do with ourselves. So we’re just doing what we’ve always done. We’re still working. We’re still behaving as if we’re struggling to survive. But why?
Some people don’t have a choice. They don’t have enough to retire yet. They don’t have the minimum amount of money that they need to pay for their expenses for the rest of their lives without working. I think this “minimum amount of money” is actually less than people think. We think we need more money due to consumerism, but this is a whole other conversation.
Some people have a reason to keep working. We’ve already mentioned altruism and satisfaction of higher needs. Other reasons include providing for a growing family or affording expensive hobbies.
Some people are just doing what everyone else is doing or doing what they’re told. It’s not easy to go against the grain. You need a good reason to do so. Absent that, it’s easier just to go along with the status quo, which is a work-centric society. So not only is the incumbent working lifestyle well entrenched, but the alternative is unclear.
What else is there to do besides work?
What would we do if we didn’t spend most of our time working? What would we do with all that free time?
We have some evidence from precedent cases, and it’s not encouraging.
Keynes writes about nervous breakdowns among well-to-do housewives:
“ … common enough in England and the United States amongst the wives of the well-to-do classes, unfortunate women, many of them, who have been deprived by their wealth of their traditional tasks and occupations—who cannot find it sufficiently amusing, when deprived of the spur of economic necessity, to cook and clean and mend, yet are quite unable to find anything more amusing.”
Frankl writes about “‘Sunday neurosis:”
“That kind of depression which afflicts people who become aware of the lack of content in their lives when the rush of the busy week is over and the void within themselves becomes manifest. Not a few cases of suicide can be traced back to this existential vacuum.”
There’s even some evidence to suggest that people who retire earlier die sooner.
Think about your own life. Can you remember a time when you had lots to do (work, social events, errands, chores) and then, all of a sudden, it was all finished? You looked down at your to-do list and everything was checked off. And you asked yourself, “What do I do now?”
This happens to me most often during the workday. I’m rushing to get everything done, moving fast, not thinking twice, just going from one thing to the next. And then, all of a sudden, it’s all finished. I’m all revved up and ready to go, but there’s nothing else to do.
When this happens, usually I go to the gym to work off my excess energy. But then what? After the gym, I make dinner and shower. And it’s after I shower when I really don’t know what to do with myself. Because there’s nothing left to do, except to wait to fall asleep.
Based on my observations of myself, my friends, and my coworkers, we’re not very good at being bored.
Blaise Pascal wrote,
“All of humanity's problems stem from man's inability to sit quietly in a room alone.”
This is our “permanent problem”
Keynes wrote,
“Thus for the first time since his creation man will be faced with his real, his permanent problem—how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.”
Our permanent problem is not the economic problem.
The economic problem has already been solved for some, as we discussed earlier. It’s these people who no longer have to work (housewives, retirees) who are already being faced with our permanent problem: how to occupy the leisure.
And the economic problem will be solved for an increasing number of people, in at least two ways.
First, economic progress will continue and GDP per capita will increase. As a result, more people will have the option to retire early.
Second, new developments in automation will result in technological unemployment. Robots are stronger and smarter than humans. Technological labor will become increasingly superior to human labor. As this happens, universal basic income will start to seem like a legitimate policy proposal.
So, whether by their own choice (early retirement) or by the force of economic progress (technological unemployment, universal basic income), more and more people will be faced with our permanent problem. In other words, we will have to learn how to “live wisely and agreeably and well,” without work as a constant distraction.
How can we solve our permanent problem?
The most common solution, currently, seems to be continuing to work. One way to avoid our permanent problem is to just pretend like our economic problem hasn’t been solved yet. Even those who’ve already made more than they can spend in a lifetime continue to work.
This can be a sensible approach, for the time being, for several reasons.
First, there are the reasons to keep working after you’ve already solved your own economic problem that we discussed earlier: altruism, satisfaction of higher needs, providing for a growing family.
Second, we are evolutionarily designed to work, in the same way that all species are designed to survive. Even if we don’t continue to work strictly for an economic purpose, we may need to continue to work in some capacity for the sake of our health.
Third, some people just love to work. My father, for example, has been working in the construction industry for more than half of his life. He loves what he does. He has told me on more than one occasion, “If you love what you do, you’ll never work a day in your life.”
For the most part, these natural motivators for humans to keep working can be channeled in a healthy direction.
The obvious reason is that not everyone can retire all at once. The economy isn’t completely self-sustaining and run by robots quite yet (although I think we can get there). Some human labor is required to keep the lights on and flip the switches.
Another reason is that, while we have largely solved our economic problem in terms of providing for our basic needs, there are still some margins of the economic problem that haven’t been solved yet: advances in medicine, scientific discoveries, environmental sustainability, education.
Also, a percentage of the global population is still living in poverty (even though this is actually just a problem of distribution and not a problem of overall production). So whatever work we need to do to raise everyone to a minimum standard of living seems to be a legitimate priority before the rest of us kick our feet up.
We can still work, but we can change how we work
While the economic problem has been solved for those who are in a position to retire early, there are still plenty of reasons why people want or need to work.
But I think there’s a subtle shift that still needs to happen here. We need to be honest with ourselves about why we’re working. We’re not working because we need to struggle to survive. We’re not working because there’s an enemy who we need to defeat.
Rather, we’re working because it’s healthy for our evolved bodies and minds, other people still need our help, and work can be fun.
If we change our thinking about “why” we are working, I think “how” we are working will change as well, and we can start working in a way that is healthier, more sustainable, and more aligned.
What will we do when we finally finish working?
But I do still think there will come a day when we really won’t have to work.
Poverty will be a phenomenon of the past. Robots will run the economy. And we’ll realize that we have enough.
When this day comes, what will we focus on?
My intuition tells me (and my hope is) that spirituality and art will take on more importance in our lives. We’ll continue to work, but we’ll work on things like creation, healing, heightened consciousness, self-discovery, and love.
And the best part is, if this sounds exciting to you, you don’t have to wait. You can do this now. You can work to solve your economic problem on an individual level and then spend more time playing in these non-economic spaces.
Our societal values will start to shift away from work-centricity
Keynes wrote,
“I see us free, therefore, to return to some of the most sure and certain principles of religion and traditional virtue‚ that avarice is a vice, that the exaction of usury is a misdemeanour, and the love of money is detestable, that those walk most truly in the paths of virtue and sane wisdom who take least thought for the morrow. We shall once more value ends above means and prefer the good to the useful. We shall honour those who can teach us how to pluck the hour and the day virtuously and well, the delightful people who are capable of taking direct enjoyment in things, the lilies of the field who toil not, neither do they spin.”
As long as our capitalist values stay the same on the societal level, nothing will change. People will continue to work tirelessly because that is how they can earn love and respect for others.
In order for our values to change, we need to know that there’s an alternative. What’s more, we need to realize that the alternative is preferable. It won’t happen all at once. There will be early adopters and then at some point we will reach the tipping point.
The shift is already in motion. The FIRE movement and the Great Resignation are early signs. It will not be an easy transition. There will be pain and opposition, as with any transition. But this transition is inevitable. The more we communicate, the more we can reduce the pain.
All in all, I think this is a step closer to utopia. It’s an opportunity for our species to rise up out of our animal nature, an opportunity to heighten our collective consciousness, an opportunity to deepen our relationship with our true nature.