Tuesday, June 11, 2013

What's Your Time Worth? It's Complicated...

No one can put a precise dollar figure on an hour of his or her time -- it's just way too complicated.

Yes, you may be a lawyer that bills clients at $350/hr, but that doesn't mean that volunteering to coach a Little League team for three hours every Saturday means you're coughing up $1050 each time.   Of course it's more complicated than that, UNLESS you were 100% certain that you could be using that time to bill clients and you somehow COULDN'T bill those hours during any other three-hour time block throughout the week.  If that scenario could somehow play out in just that manner, then yes, you'd have a great case to make.

Other things aren't so clear.  If you make a 120k/yr to commute to Marlborough, you're not really *losing* money when 495 gets backed up and you get stuck for an hour.  With any salaried position, it's just not that cut and dry.  It's way too pat to take your annual salary, divide it by the # of hours you work, and say that a pointless, stupid meeting "cost" your company [insert dollar amount here] of your time -- because part of the benefit of having salaried employees is that they can do various things for you, and help in various ways.  Maybe you've referred some great clients to the firm.  Maybe you helped close some important sales.  That's why they see the value in paying you a set amount of money each year...it builds some predictability into both sides of the equation.

Someone once tried to tell me that because Bill Gates *makes* more than 100k/second (this was during a headier time for MSFT), it would not be worth it for him to pick up a $100 bill during the workday.  Even the teenaged version of me knew that to be drivel at the time -- it's not as if Bill Gates is actively engaged in a process that yields north of $100/second.  But there are enough people who really somehow believe (or believed) that line that perhaps it proves a point about the difficulty of valuing your time.

I made $75 yesterday for 1.5 hours' worth of "billable" work as a tutor.  Sounds awesome, right?  If you quickly saw that number, set up a proportion involving 40 (for hours) in the denominator and solved for the missing variable, you'd think I was pulling in tons of money each week.  And if that really were the case, I would be.

But consider this:  If someone lives in the Back Bay, and I live in Lowell, there's no truly easy way to slice it.  Factor in a walk, a wait, a commuter rail ride, another walk, a short taxi hop (hey, it was pouring!), and then the time spent "on site" plus the reverse of all those things I just laid out, and suddenly the hourly rate has gone way, way down.

Throw some prep time in for good measure, and that hourly wage has now hit single digits.

I must be a huge sucker, right?

Well, again, not so simple -- the value of time has to be based in large part on opportunity cost.  I can't make a reasonable conclusion about that time without considering how else it could have been used.

Plus, there are other intangibles -- the train time can be used for reading, Facebooking, or other personal pursuits.  Can that really be counted?  And I like to walk anyway, so is the trudge across the Common and down Boylston St. really so bad?  The needed prep time will go down over time, so how does that factor in?

With any consideration you add, there's always another "but what about..." to throw into the stew.

One thing is for sure, though -- I can get a heckuva lot more bang for my proverbial buck by "boxing" in my availability to specific time blocks.  If I can schedule the appointments during those blocks, great; if not, too bad.  Multiple students in a row without in-between travel time adds up to some darn good money.  For an individual trip all the way in and back, I'd come out better stocking the shelves in a supermarket.

To summarize:

Lesson #1:  Valuing your time is complicated.  No easy answers.
Lesson #2:  Even taking Lesson 1 into account, schedule "optimization" can greatly tilt the value equation in one's favor.  


C R Krieger said...

It is even more complicated when you start considering DCAA and billable hours vs total hours and the issue of total time accounting.

Not enjoyable.

But, at the end of the day, it is how one feels about one's time allocation.

Regards  —  Cliff

The New Englander said...


Exactly. It's about how one feels. If I'm so tired that I can't even move off the couch on a weekend morning, and you say, "Come rake my leaves for $200/hr" but I say "no," then I'm basically saying that my time AT THAT MOMENT is worth > $200/hr. At another day and another hour, maybe it'd be different...but it's like anything else in the market -- it's worth whatever value someone places on it.