In a world of billable hours, here’s how to put a value on your day
I always encourage people to think about the value of their time. But actually putting a dollar value on it? That’s complicated.
That was my take-away after several readers sent me Sue Shellenbarger’s Wall Street Journal article on “Do You Know What Your Time Is Really Worth?.” The article had a link to an online tool called ClearerThinking that asks a series of questions about your salary and work habits, and then guides you through thought experiments to figure out how you value your time.
I put in that I work about 45 hours during the weeks I work, but I only work about 48 weeks per year (2160). From tracking my time lately, I see that 42 hours is my long-term rolling average, so that comes out about right. I figured roughly what I earn per hour (let’s call this X) and then the tool calculated that I valued my leisure time at a rate that was 60 percent higher than X. It warmed my economic-minded heart to find out I was more consistent and rational in my answers than the majority of survey-takers, but still, the recommendation was clear: I either need to ask for a raise, or I need to start working less.
I am not interested in the latter. Indeed, I’ve been trying to figure out how to work more. I’d be happy to earn more, but I also know I’m not optimizing my income. I know how to earn more money, and I’m not doing those things.
So what’s going on? Well, I’m irrational like all humans are irrational, but there are complicating factors that go into deciding what my time is worth, and these factors may affect others’ calculations too.
Factor 1 – my husband also earns money. Therefore I probably make some decisions on what my time is worth based on total household income and total time available, not just mine. I imagine lots of couples do this; a non-working party in a high-income household generally doesn’t value his/her time at zero. This person is often willing to pay for some childcare, for instance, or a cleaning service.
Factor 2 – if earning lots of money were my primary motivation, I went into the wrong line of work. I chose writing because I really enjoy it, and I chose the version of writing I do (primarily book writing and essay writing) because it’s what I like best. I’m thrilled to get paid pretty well for something a lot of people do for free. I find it becomes harder to put a rational dollar value on work time when you know that if you had a different job, you’d be doing your current day job as a hobby on nights and weekends. I try!
Factor 3 – happy time and time not spent working are not the same things. While I know that I have a reasonable amount of leisure time (even “me time”), an hour not spent working could be devoted to different things, which I value differently. A lovely trail run on a gorgeous day is one thing. So is a nice one-on-one excursion with a happy child, or a date night dinner. An hour on a rainy Saturday with bickering children is another thing entirely. I imagine some parents who thought they could get away with it have claimed to their spouses that “I have to get caught up on work!” in that scenario.
Factor 4 – it’s hard to adopt assumptions in thought exercises. For instance, in the ClearerThinking tool, you were asked to say how long you’d wait in line for a $100 gift certificate. You’re allowed to have an electronic device, so it’s neutral and not unpleasant, and so in theory, I should be willing to wait at least an hour, but I’m not. I hate lines. Irrationally! I put 20 minutes, but even that might be stretching it.
Factor 5 – how easily do time and money convert to each other? I don’t get tripped up on this one as much, but a lot of people do. I know that an additional quantity of my time could be turned into money relatively easily. That’s one of the upsides of self-employment. When people are salaried, working an additional hour doesn’t always translate so clearly into extra cash. In the long term, I think it often does, and I encourage people to think about that when making decisions (especially childcare decisions) but the path isn’t so straightforward.