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The Math Behind the Modern Economy is Broken
The Math Behind the Modern Economy is Broken
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0:00
You think you're broke because you aren't working hard enough.
0:03
You're wrong.
0:04
In 1980, the median US home price was roughly 3.5 times the median household income.
0:09
Today, in major hubs like New York and San Francisco, that has ballooned to over 10x.
0:15
The American Dream has moved from a reachable hurdle to the height of a 40-story skyscraper.
0:20
You are producing more value than any generation in history,
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but the math today’s economy makes it physically impossible to win.
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The system isn't failing.
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It's working exactly as designed.
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When it comes to wages and workload, most people ask two questions: “Why are we working more?
0:36
And why are we being paid less?” But the question that matters most is the one nobody's asking:
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Why isn't the money we're earning going as far anymore?
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And that’s where we need to reckon with our first brutal reality.
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Inflation has stacked the affordability cards against us. Take housing, where in Q1 of 1980,
0:54
the median home price for an American was $63,700,
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compared to Q1 of 2026, where it’s an eye-watering $403,000. The same honest
1:05
job and clever investment that could've bought you a house in the 1980s can barely cover rent today.
1:10
But it gets worse.
1:11
As of April 2026, the Consumer Price Index, or CPI - the metric that tracks the prices of
1:17
consumer goods - showed that Inflation rates were overshooting expectations.
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As Heather Long, chief economist at Navy Federal Credit Union, put it,
1:25
“Americans are literally getting squeezed now.” Gas prices at this same time were also
1:29
costing $75 extra per consumer per month, which seriously eats into anyone’s wallet.
1:35
You’re probably thinking, “Well, an increase in cost of goods and services over time
1:39
is only natural”. But why do you think that?
1:43
Track notable price spikes throughout US history and you’ll see that there are times
1:47
when costs have been elevated way above the norm: The Revolutionary War, the Civil War,
1:52
and World War II. The strange thing is, after the first two, the prices slowly fell back to a
1:57
reasonable baseline. After World War II, the cost of living kept going up. Why? Figuring out the
2:04
answer to this mystery is the key to knowing why you’re overworked and underpaid today.
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Thomas Stapleford is a historian at the University of Notre Dame
2:12
and the author of “The Cost of Living in America: A Political History of Economic Statistics”.
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According to him, it all leads back to policies set by the Federal Reserve. They believe that
2:21
gradually increasing inflation is actually healthy for an economy like the United States’,
2:26
which invests so heavily in new technology and productivity. And the most concrete way
2:31
to achieve this end is minting new cash and putting it out into circulation.
2:35
In economic circles, this is called “Increasing the Money Supply”.
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This isn’t a video telling you that your life is harder because the Fed
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made a bad decision 80 years ago for no good reason. Like with anything economic,
2:46
we’re dealing with an explosive rigged to colored wires that we need to cut if we
2:50
want to financially survive. And unless you can see the future, you’re essentially colorblind.
2:55
One of the most concrete reasons for ramping up the money supply after World War II
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was to avoid a Deflationary Spiral. If you know anything about macroeconomics, these are two of
3:05
the scariest words in the English language. A Deflationary Spiral was a key driver behind the
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start of the Great Depression, one of the most dire economic situations in American history.
3:15
This is how it works: In the middle of an economic crisis like a recession or a depression,
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people have less disposable income to buy anything but the essentials. A reduction in
3:25
demand in proportion to the supply of consumer goods leads to the price dropping. This in turn,
3:32
leads to production needing to downscale to reduce the supply and level out the costs.
3:37
But this scaling back also means that companies don’t need as many employees,
3:40
so they let people go. Fewer people can afford to spend, while warehouses fill with products
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nobody can afford to buy. Prices and production both plummet in a terrifying race to the bottom.
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That’s what the Fed wants to avoid. But every solution creates new problems.
3:56
One of them is Baumol's Cost Disease,a mathematical flaw baked into the modern economy.
4:01
It’s been one of the huge hidden drivers for why you’re overworked and underpaid.
4:05
The central idea behind intentional inflation is that prices will rise, but so will wages
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as a result of increased technology efficiency in the workplace. So everything evens out.
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But not all the time.
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In labor-intensive sectors, we reach an efficiency plateau where you can’t use
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technological advancement to increase economic efficiency. Take a singer,
4:26
for example. Autotune and post-production mastering technology aside, there’s really no
4:30
way to make singing a more efficient process than it is. It’s a dead end, compared to, say,
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mass market car manufacturing or synthesizing new compounds in the chemical industry.
4:40
A singer singing a song a century ago isn’t any more productive than a singer singing a song
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today. This is true across the arts as well as industries like education and healthcare,
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as sectors that rely extremely heavily on human labor. Meanwhile, technological advances make
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manufacturing more cost-efficient all the time, which increases wages there,
5:01
and in turn decreases or stabilizes price. This is where the Cost Disease comes in:
5:07
Costs in these low-productivity sectors still need to increase
5:10
in order to keep pace with rising wages across the rest of the economy.
5:14
It’s the consumers who bear the weight of that.
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This can have brutal knock-on effects like slowing economic growth over all
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and leading to rising costs for essential services.
5:24
This begins to really explain the structural rot behind why your hard-earned dollars don’t seem
5:29
to stretch nearly as far as they used to. But that’s only one part of this problem.
5:34
And it might just be the perfect distraction
5:37
while the job market pulls out the rug from underneath you.
5:40
The job market is working against you. It's almost impossible to be a worker in the 2020s and not
5:45
feel it. The effort you're putting in no longer seems to match the value you're getting back.
5:50
But that value is going somewhere.
5:52
To understand what's happening, we need to look at the Labor Share of Income.
5:56
It measures where the wealth generated by workers actually ends up: in workers' paychecks,
6:00
or in the hands of owners and shareholders.Some concerning studies have shown that the answer
6:06
seems to be “less and less to the workers.” One actually identified 4 key factors that’ve played
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a role in taking the labor share away from workers and giving it back to the owners of capital.
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The first is technological advancement. They found that when the share of revenues spent
6:21
on research and development goes up by 1 percentage point, labor share falls by up
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to 1.3 percentage points. The threat of being able to replace your workers with a machine
6:31
decreases their bargaining power and keeps them content with low wages.
6:35
The second is globalization, where a 1% increase in the share of revenue coming
6:39
from exports leads to a 0.3% drop in labor share.
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Again it gives the owners greater leverage over their employees. They’ve got freedom
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to relocate if they believe their workers are asking for too much of their share.
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The third is high market concentration,
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where competition is low and the share is divided between a relatively small number of companies.
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In these cases, companies have the leverage to keep their workforces lean and set their terms.
7:04
In countries with strong union presence, like Sweden, this can turn to the workers’ favor.
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But in the US, it almost always shakes out in favor of the capital holders.
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The fourth is intangible factors like copyrights, patents, and trademarks,
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that keep the reins in the hands of the capital holders. That’s especially true when it comes
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to the right to research and development. Again, it’s all about bargaining power,
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and the more value that the shareholders can consolidate at the top of the pyramid,
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the more labor value they can extract from you without consequence.
7:33
The pie keeps getting bigger thanks to technology advancing and your hard work,
7:38
but every time the pie grows, corporate interests readjust the knife to give you a smaller slice.
7:44
The quality of jobs are declining and the number of jobs needed to survive increases.
7:49
Meanwhile, the economy keeps producing more wealth than ever before.
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You're just getting less of it.
7:55
Even if you’re no stranger to the modern workforce,
7:58
2 words you might not be familiar with in this context are “Internal Mobility.”
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This means your ability to actually progress at your workplace. That can be a lateral move,
8:07
gaining the skills to take on a job in an entirely different department; or a vertical move, where
8:12
your skills and experience can pay off in tangible advancement up the hierarchy of your company.
8:16
It’s the American dream, isn’t it?
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That anyone could join a company at an entry level position and,
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through sheer grind and dedication, one day find themselves on that company’s board.
8:26
But these days, it seems more and more like the promise of internal mobility in most jobs
8:31
holds about as much water as a real Christmas Eve visit from Santa Claus.
8:35
Part of this is a phenomenon in corporate America that some people are calling “The
8:39
Great Flattening”. It’s where the middle management class are downsized
8:42
in order to “streamline” a company and increase operational efficiency.
8:46
From tech giants like Amazon, Microsoft, and Google to huge retailers like Walmart,
8:51
and Starbucks, it seems like flattening the corporate structure is the order of the day.
8:55
But you don’t see the savings.
8:57
In fact, it seems like it might be stacking the cards even further against you.
9:01
Not only will you lose a lot of the guidance and morale that middle managers provide,
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you also lose the middle management promotion track. It’s like they’ve detonated a bridge
9:11
between two sides of a long river, with labor on one side and capital on the other.
9:15
The lack of internal mobility in a world of ever-rising costs
9:19
has driven literally millions of people into working multiple jobs just to make ends meet.
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The data backs that up.
9:25
According to the U.S. Bureau of Labor Statistics, 9.3 million Americans reported working multiple
9:30
jobs in November of 2025. It made for 5.7% of the total active labor force at the time.
9:37
And this isn’t just a full time job and a part time job or even two part time jobs.
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For half a million of those Americans, two full time jobs have been fully
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accepted as standard operating procedure to anything above treading water in life.
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The burnout is real.
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This is particularly bad for workers in Gen Z, who’ve entered the labor force in a world
9:57
of technology-induced economic uncertainty. Fewer people than ever are employees, with true salaries
10:03
and all the attendant benefits. Instead, people are becoming part of full-time “contractors”
10:07
for different companies. The expression for this is “Income Stacking”, and it feels like
10:12
a far cry from the world of the 20th Century, where one income was often enough to get by.
10:17
But even if you’re not working multiple jobs, there’s a good chance you still
10:21
probably feel drained at the end of the week. What makes work so insanely exhausting that
10:25
it feels like our lives are losing space and energy for anything but more work?
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It turns out that it’s not just you losing your stamina.
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It's the result of a concerted workplace strategy that’s grinding you away to nothing…
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A corporate buzzword you probably hear a lot is "Efficiency."
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It’s one of those words that helps shareholders sleep comfortably at night.
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But like anything that delivers a quick dopamine hit, it comes with real costs if
10:50
you reach for it without thinking. One of the most dangerous and shortsighted
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corporate decisions made in service of so-called “Efficiency” is Lean Staffing.
10:59
And it’s one of the main reasons you feel like you’re always overworked.
11:02
This tactic is exactly what it sounds like. Running your company with the absolute bare
11:06
minimum of staffers possible for it to work. It results in employees pulling double duty
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and wearing many different hats. In the past, Lean Staffing has been an emergency measure in
11:16
times of dire financial straits at a company. But some of the management class have figured
11:20
that it’ll lead to even higher profits to run lean when the revenue stream is solid.
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This, by the way, is kind of like taking morphine when you’re perfectly fine,
11:29
just in case you break your leg later. It might feel pretty good in the short term,
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but in the long term, you’re on a collision course with real trouble.
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And that’s just for the owners and shareholders.
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For you, the ground-level worker, the awful side of lean staffing will be apparent a lot quicker.
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There’s a reason why another name for this kind of corporate structure is
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“Just-In-Time Staffing”. Hourly workers - who make up around 55.8% of workers in the
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US - need to break their backs responding to the immediate needs of their employers.
11:57
The result of these corporate structures for workers is generally horrific fatigue.
12:02
They work long hours with huge numbers of complex tasks in a high pressure work environment.
12:07
It probably won’t surprise you to hear that absenteeism tends to spike in Lean
12:12
Staffing situations. Workers frequently get physically sick from the exhaustion of overwork.
12:17
And the science is in: If you’re overworked, it is going to make you sick, and if you keep doing
12:22
it for too long, it is going to kill you. The BBC reported in 2021 that people working more
12:27
than 54 hours a week are at major risk of dying from overwork. It happens to almost a million
12:33
people every year. Overwork is, in fact, the single largest driver for occupational disease,
12:38
thanks to the genuinely ruinous effects that stress can have on the human body.
12:43
Bosses are enjoying the image of paying out fewer salaries on their balance sheets. Meanwhile,
12:48
you’ll be doing twice as much work as before, with tight-turnarounds that don’t allow for any slack.
12:53
Speaking of Slack, the increasing role that technology plays in moderating the
12:58
workplace is another factor that makes you feel so overworked all the time.
13:02
Before the advent of computers, you’d clock in at 9 and go home at 5 at most jobs. Now,
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thanks to Zoom and Slack, your boss can wait around in your pocket, or your living room.
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It destroys the traditional separation that makes work-life balance, well, a balance. Especially for
13:18
the “digital nomads” of the world, you’re never on, but also, you’re never really off, either.
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But it gets even more intrusive.
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The cottage industry of employee monitoring software, also known as “Bossware”, has
13:30
increased your standard level of workspace even more. It puts you in a kind of work panopticon.
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You feel the need to always be on your best behaviour in case a live feed of your screen
13:40
is being watched, or every keystroke is being logged and fed straight to HR.
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This is even worse in a flattened, Lean Staffing setup, where your bosses might genuinely have the
13:49
free time to actually sit and watch what you’re doing all day. You might think that maybe, even
13:55
though it’s killing you, you just need to work a little bit harder to push through the barrier.
13:59
But that might be working against you, too.
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You’ve probably heard the old phrase, “No good deed goes unpunished.” And in the corporate world,
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there’s plenty of evidence that this is actually empirically true.
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Welcome to the world of Performance Punishment,
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where hard work earmarks you as exploitable rather than employable..
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If you’ve got a great track record for quality work and hitting deadlines,
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there’s a good chance you’ll find more work being delegated your way.
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But not with any greater compensation for the overtime. Maybe it’s because you genuinely
14:28
are an exceptional employee, or maybe it’s your co-workers intentionally getting more loaded onto
14:33
your plate with weaponized incompetence. In either case, the result is the same:
14:37
You’re getting punished with extra overwork for the crime of… Actually doing your job well?
14:43
You might think that maybe good work like this will make you a shoo-in for career advancement.
14:48
That’s rarely the case.
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Most companies won’t want to start paying you extra for hard work you’re already doing out of
14:53
the goodness of their heart, because they don’t have hearts to appeal to. Advancing you into
14:58
a different department for your hard work would also be counterintuitive to their purposes, too,
15:03
because who would fill your shoes? Sometimes,
15:05
doing your job too well will be the ultimate tipoff to your employers
15:09
that you should just keep that job for as long as you can physically stand it.
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And when you eventually leave either due to frustration or health problems,
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then they’ll consider who else they should get to fill your broken shoes.
15:20
You’ll be little more than a memory. You’ll be lucky if you get more than a thank you and
15:24
the standard severance package for the time, energy, and health you poured into all this.
15:29
The economy isn’t what it used to be. Thanks to fundamental oversights in the financial systems
15:33
of the United States, costs will continue to climb while wages will continue to stagnate.
15:38
The labor share of value will continue to tip more of the wealth you create into the
15:43
pockets of your bosses, who are laying off middle-managers and running skeleton crews
15:47
while posting ads for jobs that don’t exist on listing sites. You are frozen in place,
15:51
working yourself to the bone at one or more jobs, where technology erodes the
15:56
boundaries between work and life. All the while, performance punishment ensures that
16:00
any attempt to work yourself out with hard work just digs you deeper into the hole.
16:05
You’re overworked and underpaid because that’s how you’re most useful to the system,
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and until the system itself changes, that’s not going to change for you either.
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So if you're overworked, underpaid, and still falling behind, the system should be breaking.
16:19
But it’s not. Find out why in “Real Reason Why The Economy Has Not COLLAPSED Yet.”, or watch this!
