Wages up 528% since 1980. The S&P is up 19,512%.

I want to show you a number that changed how we think about generational wealth.

Since 1980, wages in the United States are up about 528%. That’s a real number. Adjusted, unadjusted, it doesn’t matter much… the direction is clear. People who work for a paycheck have made real progress over the last 45 years.

Over the same period, the S&P 500 with dividends reinvested is up about 19,512%.

That’s a 31 times gap. Between what you earn from your labor and what you earn from owning assets. Over one working career.

I’ve been sitting with that number for a while. And I think it explains something a lot of parents in our world are trying not to admit out loud.

The Race Nobody Told Your Kids They Were In

Your kids are in a race whether they know it or not.

If they build a career, work hard, get raises, save 15 percent of what they make, and do everything the previous generation told them to do… they’re still going to end up 31 times behind the person who owned assets over the same period.

Not because they didn’t work hard. Because wages and assets don’t grow at the same speed.

And the gap isn’t 5 percent a year, or 10 percent a year, or 20 percent a year. It’s about 8 percentage points. Stretched over 45 years. That’s the whole thing. Eight percentage points, compounded over a career. That’s the 31 times gap.

If you want to understand why the same house your parents bought in 1980 costs what it costs today, why the middle class feels squeezed, why your kids’ friends can’t afford to buy in the neighborhood they grew up in… this is most of the answer. The people who owned assets kept going. The people who worked for a paycheck kept up with inflation and not much more.

What This Means for Your Family

Here’s the part most parents in my world are not comfortable thinking about.

If your kids don’t own anything by the time they’re 40, they don’t catch up. It’s not a matter of trying harder later. The compounding they missed in their 20s and 30s is not recoverable through effort in their 50s. The math doesn’t work.

Which means one of two things has to happen. Either your kids become entrepreneurs and end up on the asset side of the equation through building something. Or they get a boost early enough that compounding does the heavy lifting for them.

I want to be clear about what I’m not saying. I’m not saying you should hand your kids a portfolio and call it good. That’s a different problem, and it usually ends badly. Kids who inherit assets they don’t understand tend to lose them, and they often lose their sense of purpose along with them.

What I’m saying is that the strategy of “work hard, save, and everything will work out” was already fragile in the generation that raised us. For the generation raising kids today, it’s not a strategy at all. It’s a slow slide backwards, in the exact market conditions where assets are compounding faster than they ever have.

The Conversation Most Families Aren’t Having

We just did a family retreat with about a few families from our community. Kids of every age, from little ones to young adults. And one of the things we spent time on was helping the kids start actual businesses. Not lemonade stands. Real ventures they could keep running.

By the end of the weekend, every single kid had presented a business idea. A few of them had built websites. The girls in one group built a whole thing from scratch, live, using AI tools. And what struck me watching it wasn’t the businesses themselves. It was that most of these kids had never been asked before to think of themselves as owners. Not employees. Not future employees. Owners.

That shift, at ten or twelve or fifteen years old, is worth more than most inheritance strategies I’ve seen. Because it puts them on the right side of the 31 times equation while there’s still time for compounding to work.

You don’t have to run a family retreat to do this. You can start with one conversation. What would it look like for you to own something. What would you want to build. What would you want to invest in. Not “what job do you want,” but “what do you want to own by the time you’re 30.”

Those are different questions. The second one leads somewhere the first one doesn’t.

The Deeper Point

The 31 times gap isn’t a reason to be cynical about work. Work still matters. Purpose still matters. Building something that has meaning still matters, and money isn’t the point.

But if you’re a high-earner reading this newsletter, chances are the reason you’re where you are is because at some point you moved from earning wages to owning something. A business. A practice. Equity. Real estate. Something that grew independent of your hours.

That move is the whole game. It’s the move your parents may or may not have made. It’s the move your kids are going to have to make one way or another, and the earlier the better.

The 31 times number is not a scare tactic. It’s just math. And once you’ve seen the math, it’s very hard to unsee.

Until next week,

Justin