What Is Your Time Worth?
npr.org
npr.org
This misleads people into thinking that they're actually saving money by hiring house cleaners or dining out to save time.
The mistake is that this only holds true in very narrow situations. If you're an hourly freelancer with more work in your queue than hours in the day, it can make sense to order DoorDash so you can continue working billable hours. The alternative is to stop working, prepare food, and lose out on that marginal income.
Meanwhile, most salaried people or hourly workers on fixed schedules aren't actually saving any money this way because they were never giving up billable hours in the first place.
A more accurate way to read this story is "How much are people willing to pay to save time?"
Unlikely.
I could clean instead of spending $1/hour... or I could spend $1/hour and then use that extra free time figuring out how to improve my skills (and thus earning potential) or find a better job that pays more (thus better leveraging my existing earning potential) or even just to recharge (and thus be able to work harder - earning future raises in the process as my hard work is noticed.) These aren't as direct and immediate as literally being able to immediately work more hours as a freelance contractor, but are no less invalid a means of improving my profits in the long run, even if it means more short term debt.
I'm certain I could drum up extra work or self improvement for myself that has a higher return on investment than $1/hour now. I very strongly suspect most people who earn $20/hour or more can. Borrow a mower! Offer to clean other people's houses for $2/hour! Then, after an hour of cleaning someone else's house instead of your own, you'll be out the same amount of work but have pocketed an extra $1 in the process!
A valid point is raised here: Just because you've profited in extra free time, doesn't mean you'll convert said free time into additional $$$ at your job's hourly rate. You might earn less. However, you might earn more over the long term, by investing in your future in a way that results in compounding profits. A broke college student might reasonably still end up spending $1/hour on a cleaner, so they can have more time to study! Even if that means more debt, and even if their current unpaid internship pays them $0/hour!
However if you work a salaried job, saving an hour on cleaning won't necessarily increase your income by $salary/2080. Maybe if I spent that time working I'd get a bonus or something, but the hours have diminishing returns.
On the other hand, I used to work at a job where I could choose to work overtime, so it was true to say that if I paid $X more in monthly rent to shorten my daily commute by Z minutes I could treat it as an "investment" by working an extra Z minutes per day.
Your time is worth what you will pay for it as well as what other people will pay for it. Hiring house cleaners or dining out lets me buy time more cheaply than buying it by sacrificing salary (because I would have to take a more than 20% pay cut to get a 4-day week).
Even from a theoretical microeconomics viewpoint, that's an entirely rational decision. Homo economicus maximizes utility, not money.
If you cook several meals in one session, the average time per meal is much lower, and becomes faster than spending time to scroll through an app placing an order for a meal every time you want to eat.
I see people talking about "what's your time worth" on hobby forums all the f-ing time. At this point I just assume they're justifying laziness because that's what it is far more often than not.
Interestingly enough, you pretty much never see people who are self employed and could be booking billable hours instead of doing other things invoking the "value of my time" argument for doing or not doing things.
For very long chunks of time it could still make sense to me if I was to pick up a sidegig, like if I could save 10h/week somehow. But saving 1-2h/week, if you don't make money that time, is not worth it (economically!). You might still hate the task or it has a high risk so you decide to hire someone to do it for you, that's fine. But no more "it's less than my rate", if I'm not freelancing I don't have a rate, period.
Your time is worth however much time you save for the organization paying for it.
The fact that their rates are similar does not suggest they're colluded -- the going rate is expected to be similar between competitors in a competitive market. People with higher than average rates will be encouraged to drop their rates when people do not hire them, and people with low rates will be encouraged to raise them when they are swamped with work and are continually told they were the cheapest.
> contractor rates are actually just market rates and thus appear to be colluded
But I’ve also seen these rates “protected” on the supply side (eg keeping resources benched, etc).
Typical salary “bands” for same role, experience, etc. are usually pretty wide. Hourly rate quotes are extremely consistent. Yet underlying value is labor.
To be clear, I’m not asserting that any foul play. Just an interesting observation.
What I know for a fact happens, is if (for example) I were Accenture bidding on a project, I know I'm probably up against Deloitte on this project, let me buy my old coworker a beer, the one that now works at a Deloitte, magically both bids have same rate or Accenture slightly undercuts. This is labor intensive though, so what I'd really do is just bid you a price based on what I or my boss already know Deloitte is going to bid because we've already had those beers and the conversations are just common knowledge at this point. So it's not really collusion, but has similar consequences.
On the other hand, salary bands typically are referred to as "market rates" which is a misnomer. There's no way an efficient market should have that amount of deviation as you mentioned.
It's a niche where I can legitimately say if you can afford less you don't need the value multiple I bring, and it's just straight contract labor, not consulting.
When the chips are down, sure, I absolutely do market work to survive, but when they're good, I can afford to do a value based pitch. Certainly a dynamic. :)
What the hell is your problem with Ben Franklin, NPR? Can't you talk about any of the thousands of things he did before jumping straight to his sins?
Otherwise it's a good article.
I personally think Benjamin Franklin's antics make him even more qualified to give life advice.
It reads to me like two "amusing" things he used to do (without moral judgement), but it could be meant to be a positive and a negative for contrast as well.
I don't think flying a kite is strongly positive, more like just amusing, so I'm inclined to say those are two surprising facts.
He wasn't an autist who had an obsession with kites, he was conducting expirements with electricity during a thunderstorm.
Glaring sins is basically how we can tell our historical figures apart in history class (you know the king that was extra ugly due to inbreeding, the one that liked to have a bajillion lovers, the one that was a religious nut, etc).
I can't think of a single historical figure that is treated with reverent respect to the point that such a jab would cause even a blink, _including religious figures._
The fact that Jefferson owned slaves doesn't really cast any shade on what he had to say about aborculture.
"Patriotism" has been promoted to extreme lengths in the last century, with fun shit like the Pledge of Allegiance. (Where would we be had we pledged allegiance to the king instead of having a revolution?) And "un-American" heretical ideas like communism were weeded out with religious fervor.
I think the massive reduction in frequency of Constitutional amendments is related. We were supposed to be improving and adapting our democracy on the fly, but now we've been convinced we're supposed to treat is as holy writ instead.
In any case, I think that number is very individual. For example, tons of people in America who make in the $7-15/hr ish range spend hours of their time on "beermoney" tasks, which pay only a few dollars an hour. Is their time, then, worth the $2ish/hr they make with beermoney tasks? Then you have the marginal value of time. Say you're buying tickets to an event: you might spend, say, $8 to skip a 20 minute line, but you wouldn't spend $50 to skip a 2 hour wait - that is, as the duration gets longer, your hourly rate gets lower. And of course people will often pay exorbitant amounts of money to save time in specific situations (you're late for a date so you call a taxi, you're late for a meeting so you take the high speed train etc.)
Personally, I have saved insane amounts of money by "setting my rate low", so to speak, doing everything to save money from taking cheaper flights to building my own home (a boat.) Firstly, a penny saved is actually between 1.6-2 pennies earned after taxes and other benefits. Secondly, additional work has many hidden costs - commute, stress, time spent finding a job, etc etc - that mean your job costs a lot more time than the time you're paid for. And finally, saving has a bit of a "momentum" behind it. Change your own oil and the first time might be difficult, but the third time will be easy, and oh hey, maybe I can change that light myself, and soon enough you'll save tons of money over the life of your vehicle. Expensive habits, however, tend to build on each other: oh, you got an iPhone, those Airpods do go well with it, oh and the Apple watch would work great with the fitness app to track my health... and suddenly you've spent $2000 on unnecessary consumer electronics - which, to earn back, you'd need to make an additional ~$3200-$4000 of pre-tax, pre-benefit income!
I think a big problem is that people don't really understand the "cost" of each additional dollar earned. For most people reading this, of each additional dollar of income, the amount you actually get after accounting for everything is somewhere between $0.48 and $0.60. Seriously! It's not just your federal marginal tax rate, it's many other things - state taxes, many forms of government benefits, reduced insurance rates below a certain income, you pay more for your kids' college, etc etc etc. And that $0.48-$0.60 is assuming you make a decent income (if you don't make a decent income, or have kids, this number is even worse!) If anyone's interested in this kind of thing, I would highly recommend the interactive page on benefits cliffs by the Atlanta Fed.
- Single adult earning $52k a year in NYC makes an extra $1k. -Only- considering taxes, that extra $1000 is actually an extra $603.
- Single adult earning $52k a year in Idaho makes an extra $1000, after taxes that's an extra $634.
- Single adult working in NYC making 220k a year makes an extra $1k, that becomes $523 after taxes.
- Now let's factor in benefits: Single parent of 2 children in America, earning nearly anywhere between $20k and $40k: earning an extra $1000 will earn them somewhere between $100 and -$500 after taxes and benefits. Yes, that's right, you can earn $1000 extra and end up with _less_ money in your pocket! If you're wondering how, take a look at the Atlanta Fed's page on the benefits cliff.