If the house is paid off, you have that equity. Maybe it's $500k instead of $1million, whatever, it's still worth money.
To your second question... the difference is a wage is based on adding economic activity while the land value increase is almost exclusively rent-seeking. Apples and orangutans.
To your second question... the difference is a wage is based on adding economic activity while the land value increase is almost exclusively rent-seeking. Apples and orangutans.