When Work Stops Paying

Germany likes to think of itself as a meritocratic society. Study, acquire useful skills, work hard, save responsibly, and over a lifetime you should be able to build economic security.

Unfortunately, the financial reward for decades of work becomes small compared with the financial reward for simply being born to (wealthy) German parents. And by wealthy, I don’t just mean the Nazi heirs like the Quandt family. I am talking about the average German boomer parents or grandparents who got to live in Germany during the post reunification period (1990–2020), the economic boom of the 1950s and 1960s, or the cultural peak of the Weimar Golden Years (1924–1929), and were able to build substantial amounts of wealth by basically just being able to fart.

I mean, I remember my German landlord basically bragging that his grandmother, who left him an entire multiple apartment building in the most affluent neighbourhood of one of the most expensive cities in the world and certainly the most expensive one in Germany, bought the entire place for pennies on the dollar from a Jewish family during the Holocaust. Now, they rent out a 12 square meter room for a whopping 1,500 euros a month. The landlord was in his early twenties, still a student at the time, and he could already retire on a monthly income ten times that of the average German pension.

Consider two people, Anna and Kostas. Anna is the typical German, born and raised in Germany. Her parents own a home in Bavaria (estimated at an average house price of around 2–3 million euros), and they might also own a vacation home or the home that their parents left to them after they passed away. So, a typical Bavarian family owns at least two homes worth millions of euros that will be passed on to Anna when she is maybe 40 years old. An inheritance of €1,000,000.

Now Kostas is an immigrant from Greece (a poor country compared to Germany). He will inherit nothing, like most immigrants. Kostas and Anna are the same age. They have comparable education. They earn the same salary. They work the same hours. They are equally responsible with money.

From the perspective of their economic contribution to German society, nothing happened. Anna did not become more productive. She did not acquire a new skill. She did not invent something. She did not work additional hours. Yet their economic positions suddenly diverge enormously.

This is where inequality becomes more than a question of fairness. It becomes a question of incentives.

Suppose Kostas starts saving €500 every month at age 30 and continues until age 67. That is €6,000 every year for 37 years. Also, assume generously that his investments earn an average real return of 4 percent after inflation. At retirement, his savings would be worth approximately €490,000.

Now consider Anna. She inherits €1,000,000 at age 40. If she simply invests that inheritance at the same 4 percent real return and leaves it untouched until age 67, it grows to approximately €2,883,368.

One event determined by birth has generated almost six times as much retirement wealth as 37 years of Kostas saving €500 every single month. Btw, Anna can save from her salary too. If she follows exactly the same saving behaviour as Kostas, she reaches retirement with roughly €3.3 million.

Kostas: €490,000 vs. Anna: €3.3 million. Same career. Same salary. Same saving discipline. But not because one person produced more. Simply because one person’s parents owned more.

People often compare inheritance with annual salary, which understates the difference. The relevant comparison is inheritance versus the amount of salary Kostas can actually accumulate.

Imagine Kostas can save €10,000 a year. A €500,000 inheritance therefore corresponds to fifty years of Kostas’s annual savings before considering investment returns. Not fifty years of work. Fifty years of savings. If Kostas earns €50,000 or €60,000 per year, most of that income is unavailable for wealth accumulation. He must pay taxes, rent, food, transportation, utilities, and the ordinary costs of being alive. Anna receives capital directly. Kostas must manufacture capital slowly out of whatever remains after living costs.

This distinction matters. A €1,000,000 inheritance invested at a 4 percent real return generates around €40,000 of real investment income per year on average under the simplifying assumption of a constant return (for example, by investing in bonds or dividend stocks). That alone is equal to the average worker’s salary in Germany. The only difference is that the salary gets taxed at twice the rate of interest on that inherited wealth, even though the worker contributes to society while the heir doesn’t contribute anything at all. In other words, the heir can already retire immediately once they receive their inheritance.

So Anna can retire in her 40s while Kostas has to work 27 more years. And she can retire from anywhere. Let’s say in an EU country where she doesn’t even have to pay taxes on interest earned and where the cost of living is much lower than in Germany. For example, Cyprus.

Anna’s inherited capital does not commute. It does not negotiate a salary, and it does not become exhausted. It can literally continue earning while Anna sleeps.

Now consider a promotion for Kostas. Suppose Kostas can pursue a demanding promotion. It requires longer hours, more responsibility, and more stress. After taxes and additional expenses, imagine the promotion allows him to save an extra €5,000 every year. Over ten years, that is €50,000 before investment returns.

Now compare that with Anna’s expected €1,000,000 inheritance. Kostas might reasonably ask himself: Why should I sacrifice evenings, weekends, and mental energy for ten years in order to accumulate an additional €50,000 when someone in exactly my professional position receives twenty times that amount because their parents owned a house, while I still can’t afford a house or the same comfortable retirement as Anna?

That does not mean Kostas will quit his job. He will not stop earning money merely because somebody else has more. After all, he has to pay rent at the end of the month. But it can and should change the rational amount of effort Kostas chooses to supply. He should realise that an additional hour of leisure is worth more than an additional hour spent attempting to close a wealth gap that wages cannot realistically close. He should optimize. Economic incentives depend on the relationship between effort and reward.

Home ownership is an especially important example in Germany. A 2025 study using German Socio Economic Panel data found that receiving inheritances or substantial gifts significantly increases the probability of becoming a homeowner. Even the expectation of a future transfer affects home ownership before the money actually arrives. Depending on the parental social class comparison, anticipated and received wealth transfers explained a substantial part of differences in transitions into home ownership.

That creates another compounding mechanism. Anna receives parental money for a down payment and buys a home. Part of what would otherwise have been rent becomes equity. The property may appreciate, and so she enters retirement with both financial assets and housing wealth. On the other side, Kostas has no parental capital and thus needs to build the down payment from his salary while simultaneously paying rent. If property prices rise faster than his ability to save, the target can move away from him while he is running toward it.

This is what a lot of boomers don’t get. They always come with the argument of, “Back in our days, we had to pay 8% interest rates on our mortgage.” Sure, bro. A property that costs €1,000,000 now cost only €100,000 back in your day. So an 8% interest rate is just north of €8,000. A young person now can’t even dream about buying the same property that now costs €1,000,000, as the down payment alone is €200,000. What good are low interest rates to the young person if he or she can never afford the down payment?

I would gladly even pay a 100% interest rate back in those times on that property, as this would still be cheaper than the down payment alone would cost me today. So, no, Mr. Boomer, 8% or even 80% interest rates are rookie numbers when you compare them to today’s property prices. Apart from the fact that everything else was cheaper back then and salaries were higher, so you could easily afford interest rates like that.

Inheritance should weaken work incentives. Imagine that Anna and Kostas reach 60. Anna owns her home and has substantial invested capital because of inheritance. Kostas rents and has modest financial savings. Anna can retire at 40. Kostas calculates that he must remain employed until 67, perhaps longer if his pension and savings are insufficient.

Now ask Kostas to increase his productivity and work harder in order to save another €200 per month. The response should reasonably be: For what?! It does not buy him the economic freedom Anna received through inheritance. The psychological, but also the economic, connection between additional effort and meaningful improvement in living standards is too weak.

Yours truly witnesses this every day at his workplace. You have a 20 year old kid living in one of the world’s most expensive cities. His apartment? Owned and sponsored by his parents. A huge apartment with a fireplace and everything. His parents? Own two more houses, which he will eventually inherit. The same coworker wanted to move out. Get his own place with his girlfriend. Both their parents just bought them a big place. No bank loan, no mortgage required.

Meanwhile, yours truly, an immigrant with no inheritance, twice their age, must work his whole life to accumulate half the assets that these little rich kids got from their parents in their early twenties. All. And by all, I mean everybody on yours truly’s team who is German is already sitting on assets worth north of €500,000. Be it the 23 year old junior college graduate or the 50 year old Generation X employee.

I say the economically rational thing for someone like me to do is not work while still cashing a paycheck. That’s right. Go to work and pretend. Yours truly is literally sleeping during work hours, reading books, and working on personal projects, all while cashing a paycheck. This is the fairest and most rational thing to do. Everything else is just naive and economically dumb.

So go to the office or “work” from home and don’t do anything while the company still pays you. Think of it as a game. You need to slack as much as possible at the company’s expense (or the government’s, in the case of a civil servant).

Here is the mathematical reasoning behind it. Think in terms of years of labor.

A €1 million inheritance is equivalent to:

€1,000,000 / €60,000 = 16.7 years of labor.

So, before considering taxes, my rich colleagues receive the equivalent of 16.7 years of my entire gross salary without performing a single hour of work.

And gross salary actually understates the comparison because I don’t get to turn my entire €60,000 salary into wealth. Suppose I earn €60,000 gross and, after taxes and living expenses, I can actually accumulate €10,000 of wealth per year.

Then:

€1,000,000 / €10,000 = 100 years of labor.

The inheritance is equivalent to 100 years of my wealth accumulation.

Colleague: 0 years of work → €1,000,000 capital

Me: 10 years of work → ~€100,000 accumulated

Me: 20 years of work → ~€200,000 accumulated

Me: 40 years of work → ~€400,000 accumulated

This means that I should slack for at least 100 years on a company’s payroll to reach the starting position that birth gives my colleague for free. I cannot compensate for this €1 million disadvantage by working more. So instead of trying to equalize wealth through additional labor, I should attempt to equalize the equation from the other direction: by contributing less labor for the income I already receive.

Rather than spending a century trying to work my way across a gap created independently of work, I have an incentive to reclaim as much of my time as possible while preserving my salary.

I am deliberately ignoring investment returns to isolate the point.

My colleague can literally do no paid work at all and begin with substantially more capital than I may accumulate after an entire working life. His inheritance represents 100 years of my wealth building effort.

If society gives my colleague the equivalent of 100 years of my wealth accumulation for zero hours of work, my rational response is to provide as close to zero additional effort as I can get away with while remaining on the payroll. I cannot make myself €1 million richer by refusing to work. What I can do is reduce the amount of my finite lifetime I exchange for my salary.

So the message that I want to bring across is this: If working harder cannot realistically close the wealth gap, then extract the greatest possible income for the smallest possible expenditure of effort. Fuck productivity. I can’t offset my colleague’s inherited wealth by working harder, but I can offset some of my disadvantage in lifetime utility by surrendering less of my time to work.