Mindset & Money | You Are Paid in Direct Proportion to the Value You Bring

[MIKE AYALA] Thank you for joining me on the investing for freedom podcast. Today, I’m going to talk to you about something that might not be popular with some of my listeners, but here’s the thing you are paid in direct proportion to the amount of value you provide. And I’ve been listening, I mean really for years, but anybody that runs a business or has been self-employed for any amount of time or even been in management, we’re constantly having people come to us and they need more money. And I understand that, cost of living goes up, things that we need in our life go up and we’re looking to our boss or our employer or the government or the tax payers or whatever it is to give us more money. And I think way back to a time, actually, a lot of you don’t know this about me, but I actually worked at Denny’s when I was younger. I was started out as a bus boy when I was 15 years old. And I remember one day I was working a Saturday morning shift and as bussers, we would get assigned these zones. And so a busser would have this section on the right, a Busser would have the section on the left and then there’d be a busser in the back doing dishes. And I’ll never forget this one of my first mentors. And I didn’t even really understand what a mentor was then. His name was Ben French and he taught me a ton about business and just hard work and work ethic. And I ended up working for him in a couple different businesses after that, always in the restaurant industry.

So one day I’d worked this whole Saturday. So we started our shift at 6:00 AM or whatever time it was. And I had been assigned to one of the front zones. And, as the day ended, I think it was a six to two shift or something like that. And cleaned up my area and the other busser cleaned up his area and we’re hanging up our aprons and the other two guys had left and Ben French comes back and he’s like, Hey, you can’t leave yet. There’s a pile of pots and pans back there and the pots and pans aren’t done. And I was like, I wasn’t assigned to the dish section. And he said, well, you guys can’t just leave that for the next shift. He’s like, would you want graveyards leaving you guys a mess? I said, no Ben, but that wasn’t my section. And he said, listen, the other guys left, you’re still here. And that’s why you’re going to be successful. And that’s why they’re not. And I’ll never forget that. I stayed there, I cleaned it up and I remember Ben taught me several things, but I remember at one point in time, I came to Ben and I asked for a raise and he said, look, Mike you’re already my highest paid bus boy. I can’t give you a raise. He said, if you want to make more money, you have to find a way to progress. And the only place to go from here is you become a waiter, where you actually make less per hour, but you make more in tips or you become a cook and you make more per hour. And I said, I want to be a cook. And so he gave me a chance and I was probably 17 at that point in time, maybe 16 even. And he took a chance on me and

started teaching me how to cook. And yeah, it was Denny’s, it wasn’t like I was becoming a chef, but at the same time, it was just such a powerful lesson when I think back to it because I wanted more. And there comes a point where, as I said, you’re paid in direct proportion to the amount of value you provide.

But here’s the thing as a bus boy, there was no, there was nowhere further for me to grow. I couldn’t provide any more value, no matter how hard I worked, and I could maybe make more tips. Maybe I could get a higher percentage from my waitresses because I served them better. But the reality was I couldn’t make any more money. And so I’ve been hearing this a lot lately and this is going to be a little bit controversial, but teachers, and let me say this first and foremost. I fall in the camp of teachers are amazing. A lot of teachers are the only good role model the kids ever have. And education is extremely important. I agree with all that, but here’s the reality. Teachers can only get paid so much because there’s a tap. I mean, we cannot fund, we can’t get teachers to the point that they make $150,000 a year for every teacher. It’s just, it’s not it isn’t possible. And if teachers are making $150,000 a year, then the whole school systems out of whack, and the reason why I’m really talking about this today one of my friends put up a post a while back. And they said, if you take, and I haven’t fact checked this, but I know it’s probably somewhere near this. If you take the entire education budget across America, and then you take the number of classrooms and Andrew and I were talking about this a little bit on the podcast before. So if I’m repeating myself, just bear with me. But if you take the entire budget for all school systems, and then you take the amount of classrooms, it works out to somewhere in the neighborhood of like $285,000 per classroom. And then you look at the average teacher’s salary, which let’s say it’s $65,000. I’m not sure exactly what it is, but 285,000 minus 65,000, basically that’s $220,000 per classroom that’s going somewhere. And so here’s what I’m not, I’m not saying that teachers are not extremely valuable and that they shouldn’t make more. And when you look at those statistics that the average classroom is funded at $285,000, and the teacher’s making $65,000. Yes, the teachers are underpaid, but here’s the thing that a lot of us don’t think about. When we look at the buildings and facilities and the cost to run all that. And I’m not advocating for not paying teachers more, but what people don’t understand is what it costs to run a business or what it costs to run a school district or what it costs to, even manage those buildings.

Many of you that are listening to this right now, or your real estate investors, or you want to get into real estate investing or owning businesses. You’re probably happy in your job or your career. You’re making good money, but you want more. And that’s the thing that I’m really saying. I don’t care if you’re a teacher. I don’t care if you’re a doctor. I don’t care if you’re a business owner, you are never, ever, ever going to get all your needs met by that one stream of income. And so you can’t look, if you’re a teacher, you cannot look at the school district and say, Hey, I’m currently making $65,000 and in order to live the lifestyle that I want, I need to make $125,000. And I want you to pay the difference. That’s what I’m really getting at.

So I don’t care who you are. I don’t care what industry you’re in. I don’t care what business you’re in. I don’t care how much education you do or don’t have, in order to get what you really want out of life you’re going to have to figure out how to provide more value. And so if you’re a teacher and you want more money, and I’m sorry that I’m picking on teachers, I just, and I’m going to come back to the building and the total budget and all of that. But the reality is, if you want to get everything you want out of life, if you’re a teacher, if you’re a firefighter, if you’re a police officer, if you’re a government employee, if you’re one of my employees, it’s funny because I have this, I have this open and honest conversation with my employees. I want them to go out and do more.

Dylan Burns the guy that edits my podcast and does a lot of our video content and everything else. And he’s worked with me a long time. I’m telling him constantly, like he’s finding ways to go out there and make other money. And as a teacher, you’re going to have to do the same. As a firefighter you’re going to have to do the same. We cannot expect to earn more doing certain types of jobs. Let’s take it out of the teachers and the firefighters for a second. Let’s move it to auto workers. So a lot of times unions are constantly advocating for more. We need more money. We need more money. We need more benefits. We need a bigger percentage. We need shorter hours. Well, here’s the thing that people don’t understand. Who’s going to pay for that? If all of a sudden the cost of building cars goes up by 12%, guess who those savings get passed on to. They get passed onto the consumer. It ultimately hits the bottom line of the consumer. What I think a lot of people don’t understand whether it’s an employee at a HVAC company, whether it’s an employee doing maintenance at an apartment complex, whether it’s a grocery store clerk, if they’ve never been in business, then they don’t understand that bottom line. And here’s what I’m really saying. If you want to make more money, if you want to earn more, you have to provide more value. You get paid in direct proportion to the amount of value that you and as a hairstylist, you could work at super cuts, and this is how much you’re going to get paid. Or you can decide that you’re going to, focus on a certain type of clientele. And then you get paid more. Unfortunately, as teachers,

you can’t do that. Because, well, you could do that. You could go teach private. You could start your own tutoring company. You could do something like that. And then guess who decides what you’re going to charge? You do.

But if you’re going to join the system, if you’re going to join the program and you’re going to sign up to work for the government, whether it’s the IRS or whether it’s a school district, or whether it’s a firefighter, you’re going to get paid in direct proportion to the amount of value you bring. And here’s where the problem comes in. We constantly think as individuals that we’re bringing more value than what we’re being paid for. I don’t care, you talk to almost anybody, whether it’s in government, whether it’s in private business, whatever, they always think they’re underpaid. I put this post up a while back and I don’t even remember what the post was, but the guy came in there and he was like, Oh, I agree with you a hundred percent. I think he’s in the, I think he’s in electrical service company or something. I agree with you a hundred percent. My boss charges a $100 an hour and I get paid $35 an hour and the rest is profit. And so he’s like basically, $65 an hour is profit. That’s not profit. They have to pay for trucks. They have to pay for all the office salaries, the accounting salaries, the dispatcher salaries they have to pay for worker’s comp insurance. They have to pay for health insurance. They have to pay all the taxes, all this stuff, people in general, right now think that business owners are just living high on the hog. Here’s the thing. We take all the risk. We take a hundred percent of the risk. We’re the ones that have our houses mortgage. We’re the ones that are out there borrowing money. We’re the ones that have to pay the debt. And I’m not here to say that anybody’s better than somebody else. But what I am saying is that you’re paid in direct proportion to the amount of value that you provide. And guess who decides whether you stay there and are valued properly or not. You do.

If you think that you’re undervalued, then quit. If you think that you can do a better job and make more money, then quit. And I don’t care if you’re a teacher, I don’t care if you’re a lawyer. I don’t care if you’re a doctor. I don’t care if you’re an HVAC technician working for your boss. I don’t care if you’re a contractor framing houses, and you think you can do it faster and better. It’s America, go out there and do it on your own. And that’s really the message. I’m not here to argue with the fact that you’re not making enough money or any of that. What I am saying is you decide, you choose to stay there or you choose to go out there and do your own thing. And so let’s bring it back to, the average. And again, I haven’t fact checked this, but again, I think it probably makes sense. As soon as I saw that post the

average classroom, the budget per classroom is $285,000. The average teacher makes $65,000. So that leaves $225,000 or $220,000.

I did some quick research and I think a lot of times people just want to fight and they just don’t think about this, but I did some quick research in the average high school in America in 2016, cost $42 million to build. Now for those of us that are, just employees and I’ve never really thought about what $42 million is. Well just think about it in terms of your own house. I mean, if you own a $500,000 house or a $250,000 house, just think about what your mortgage is. And then think about the government building a $42 million high school. Now here’s the crazy thing. They have to get government bonds. They have to pay that back. It has to get paid for not to mention the janitors that have to maintain that facility, not to mention the utility costs that go into that facility. So that’s where the other $220,000 is. And not to mention the superintendents and the district buildings and then a lot of state superintendents. And then the national education association that, has to get paid from somewhere. And I’m not advocating that all that is good or that all those people should be paid more than the teachers. But what I am saying is we just don’t factor all that in there. And so just like the electrical guy, he said, well, my boss is charging a $100 an hour. I only make 35. So my boss is making a $65 an hour profit, no, he’s not. There’s all these other expenses. There’s the shop. There’s the building, there’s the trucks, there’s the insurance. I’ve already said all this, but it’s the same thing with the school district. Fire trucks, if you’re a firefighter. The fire trucks are million dollar trucks or whatever. So there’s all this other stuff that goes into funding that, and I’m not picking on government. It’s the same thing, with the private entity.

So you’re paid in direct proportion to the amount of value you provide. And here’s what I really want to say to you. If we all keep advocating for making more money and we want to look to our boss as our supply, or we want to look to the government as our supply, or, we want to look to somebody else constantly to pay us what we’re worth. That’s going to be a battle that you’re going to fight and struggle with forever and ever. And so hopefully I haven’t lost you and hopefully you’re not pissed off at me by now, because there really is a good message in all of this. Only you decide, you’re the one that decides what you’re going to get paid. You’re the one that’s going to decide how much value you add. And if you’re not getting paid for the amount of value that you believe that you provide, then quit, then leave. I did that in 2004, by the way. We were making good money. I had a young family, we jumped, we took the risk. We went into debt, we pulled our

401ks and we went into business, me and a partner. And it was the best thing that I ever did. Was it scary? Yes. But when I felt that I wasn’t being paid or reaching my full potential, I took the risk. And by the way, every, since then, too, when I get to a point where I feel like my business, isn’t going to pay me what I need in order to get to where I go, what do I do? I create another stream of income. And so I don’t care if you’re an employee. I don’t care if you’re an employee. I don’t care if you’re self-employed. I don’t care where you’re at. Your one stream of income is most likely, never going to provide the value that you feel you’re worth. So you’ve got to go out there and figure out how to make more streams of income come.

And rather than fighting with the union, get together. And rather than fighting with the car manufacturing company or the union gets together, the teacher’s union fights against the school district, or, the firefighters union or the steelworkers union or whatever. And I’m not picking on unions either. A lot of times, it’s just employees that are pissed off and they all go into the boss and say, Hey, we’re not making enough money. That’s the wrong approach. Because regardless you’re paid in direct proportion to the amount of value that you’re adding. And if you feel like that you’re underappreciated or undervalued, then move on. I’m not saying you can’t go ask for a raise, but the reality is most of the time you’re going to tap out at a certain level where you just can’t be paid anymore, military, private business, whatever it is, you’re going to hit a ceiling. And if you’re constantly looking at that job or that government, or that career, or that city, that municipality or whatever is your supply, you’re going to live your life frustrated and disappointed. So I’ll say it one more time. You are paid in direct proportion to the amount of value that you provide. And if you’re not making enough money, figure out ways to go out there and provide more value in other ways. And when you do that, even in your current job, you might get a raise. It might be a dollar a year or whatever, but eventually you’re going to tap out.

You can only make so much money because that business owner can pass only so much savings onto the consumer. If you think about it, if wages increased 5% every year, then that means, just think about this. If overheads 50% with taxes and everything else, if your boss pays you an extra dollar a year or an hour, then he’s got to raise that rate by $2 an hour. And then he’s got to figure profit in there too. So it’s probably $2.20 an hour times X amount of employees, and it’s just not sustainable. And so the reality is you’ve got to figure out how to take your time and go out there and get paid in direct proportion to what you’re worth in other ways. So I’m an advocate of multiple streams of income, whether it’s real estate, whether

it’s through side businesses, whether it’s through leaving the current job that you’re in and starting your own business, whether it’s as a teacher, maybe you start a tutoring business on the side, or maybe you start an online learning platform do some kind of online courses where you build that course once, set it, forget it. Maybe figure out how to tutor. If you see these students are stuck on the same thing over and over, figure out how to create some kind of tutoring program around that. There’s so many things you could do, but rather than focusing on the negative and I’m not being paid enough and blah, blah, blah, figure out how to provide more value and I’m going to leave it at that.

Hopefully you’re not pissed off at me. This was really not about teachers or firefighters or, HVAC technicians or whatever. Just in general, I’ve been hearing that a lot. We’re constantly battling. We need more money and yes, teachers are underappreciated, underpaid. But the reality is that can only go so far, have a great day.