Thursday, May 11, 2017

Notes on Monetary Equivalence and the Price of Time

What determines whether individuals are willing, to structure their time commitments on economic terms? It's a question which assumes greater importance, as traditional (20th century) economic roles become less certain, and earlier cultural means for mutual coordination have largely disappeared. Regaining monetary equivalence for our personal aspirations and obligations, involves more than just reliable compensation. Likewise, the time price terms of our economic engagement, will deserve careful attention as well.

Employment commitments are most worthwhile, when they generate constructive time use options which extend beyond one's actual workplace. Whereas if one's employment is too uncertain or sporadic, it becomes difficult to maintain personal goals and aspirations beyond basic survival needs. Our employment roles increasingly serve as a signal to others, whether the levels of personal commitment we seek are within our means. For instance: If paid work means transportation and related amenities which requires the majority of one's pay (and stamina), we might be better positioned for meaningful work which is capable of preserving our energy, even if it carries no monetary reward.

Our willingness to engage in the workplaces of the present, is also referred to as the reservation wage. From Wikipedia:
In labor economics, the reservation wage is the lowest wage rate at which a worker would be willing to accept a particular type of job. A job offer involving the same type of work and the same working conditions but at a lower wage rate, would be rejected by the worker. 
An individual's reservation wage may change over time depending on a number of factors, like changes in the individual's overall wealth, changes in marital status or living arrangements, length of unemployment, and health and disability issues. An individual might also set a higher reservation wage when considering an offer of an unpleasant or undesirable job.
This explanation is interesting, in that it draws from a wide range of equilibrium factors which go well beyond what employers are willing to pay, or what various constituencies may "expect" them to pay. Yet many environmental settings which affect decision making processes for economic engagement, have not been fully explored. What combinations of environment factors could contribute to our willingness to work for a lower reservation wage? Should populations become willing to explore environmental designs which are more conducive for mutual employment, there would be less need to worry about the supply side factors which are being changed by automation.

Another consideration is the fact many of today's divisions of labour, include strong undercurrents of reward and punishment elements. A "fortunate" job tends to be not only full time with benefits, but includes intellectual challenges as well. This makes today's default job "remainders" all the more unfortunate. Not only do they tend to be temporary and/or part time without benefits, there's something else: more of these jobs in the near future revolve around assisting others.

Is not society giving the impression that low skill work is a default or "punishment" position, for those who did not "try hard enough", or possibly just weren't smart enough to succeed? Will society become even more dependent on security cameras to ascertain who accepts life as it is, hence assists others gladly with a good heart, versus those who do so only reluctantly and even grudgingly?

Perhaps as economic roles are discussed in the years ahead, it will be possible to reevaluate the labour roles which are driving what could become a permanent wedge between class levels. Much of 20th century social mobility was a result of tradable sector transformation, not the time based product of non tradable sector activity. Indeed, some of the latter has not changed, for centuries.

Are these hard divisions of labour really a rational, long term approach? Some who assist others do so gladly. Still, what is difficult for many, is that society assumes this is all these individuals are capable of doing. If we found more ways to share the work of high skill and intellectual challenge, the vital work of assisting society's most vulnerable, young and old alike, would surely benefit. Perhaps high and low skill work needs to be coordinated more fully, so that everyone's time will hold more value.

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