More Rationale for Formalized Time Value

Could some of today's lost labour value - which manifests in low workplace participation - become more closely associated with economic time value? Since the turn of the century, evidence is growing, which suggests a change in perspective might be helpful, regarding our economic interactions with others. For instance, a working paper from the IMF, offers further quantification of a declining U.S. labour share. From the summary:

The U.S. labor share of income has been on a secular downward trajectory since the beginning of the new millennium...We show the decline in the labor share is broad-based but the extent of the fall varies greatly...We find that in addition to labor institutions, technological change and different forms of trade integration lowered the labor share. In particular, the fall was largest, on average, in industries that saw a high initial intensity of "routinizable" occupations: steep declines in unionization; a high level of competition from imports; and a high intensity of foreign import usage. Quantitatively, we find that the bulk of the effect comes from changes in technology, that are linked to the automation of routine tasks, followed by trade globalization.

Due to their internalized revenue structure, tradable sector institutions are the first to respond to the pressures of employment costs, in order to remain competitive at a global level. Nevertheless, even local forms of non tradable sector activity, face external revenue pressures in the form of political wrangling over budgets. Often, instead of moving towards the automation which tradable sectors employ, non tradable institutions will sort (the publicly sought after) personal time based product into peripheral employment categories. In other words, administration is more likely to remain the fully compensated non tradable sector core, in response to budget pressure.

Clearly: In all of this, some aspects of the old formula for land, labour and capital are beginning to shift. Even though human capital is vitally important in the 21st century, both the specific skill emphasis and the dependent status of today's non tradable time based product, make it increasingly difficult to fully optimize human capital in a general equilibrium setting.

In alternative equilibrium settings, a marketplace for time value, would also coordinate for mutually desired time priorities. The need for such options only became evident recently, due to earlier widespread assumptions that institutional employment mostly "replaced" personally managed time priorities for many employees. For instance, personally defined labour utility was previously explored by W.S. Jevons, and Henry William Spiegel also explains in this passage (re real time costs), why personal time preferences were not given careful consideration:

He visualized work as initially irksome but becoming pleasurable over a certain range of hours of moderate length. After this range was passed, labor would again become irksome and increasingly so with a longer number of house. Work would come to a stop when the falling marginal utility of the worker's product or of his wages was exactly offset by the increasing marginal disutility of effort. If work ceased later, the marginal utility of the product would fall short of the marginal disutility of labor, and total utility could be increased by a reduction of working hours. Jevon's analysis, ingenious as it is, has exerted little influence on modern economic thought because it is grounded in the unrealistic assumption that hours of work are under the control of the individual worker.

Even though our ability to personally manage time is important for total factor productivity, today's institutions are not designed to capture many of the time preferences which could be aligned between individuals and groups. Also closely related to choice factors such as these, are the wide income disparities which affect personal time choices for the production and consumption of practical and experiential product. Whether or not one chooses life enhancing active experiential roles, largely depends on the already existing economic claims on one's personal time. Society is already beginning to question more costly forms of experiential product which are presently framed as economic access.

While a total factor productivity framing for time management didn't appear necessary in the economic settings of Jevon's lifetime, much has changed since then. Only consider that given the fact people now invest in human capital for future work as a desirable product, one's ability to coordinate time effectively, can greatly contribute to a productive outcome. Indeed, some have forgotten how business leaders such as Charles Handy were already stressing before the turn of the century, how we would all need to become more responsible for the personal management of our time and economic contributions to society.

Human capital has the ability to become a more substantial component of wealth, than is presently the case. How to think about human capital as a central production feature? While many have described production processes as the utilization of land, labour and capital, time centered services production can be thought of place, time and applied human capital - all of which function as a vessel for knowledge dispersal.

Building mutually desirable sets of time value, involves a process of discovery which would initially appear as though inefficient. Nevertheless, this is the way that any new organizational process begins, and what's important in this regard, is that the kinds of productivity gains that are possible, can be thought of somewhat differently from those which are externally defined. Gains in economic time value, also have considerable bearing on one's personal requirement for a reservation wage. As Tim Harford notes in a recent post: the work we do in the future, needs to be sufficiently lucrative to compete with today's gaming realities.

There's another benefit for a time centered marketplace which goes beyond the gains of personal well being: The ability of matched time value to relieve the often unnecessary pressure of knowledge valuation, thereby bringing knowledge dispersal out of a (too) dependent non tradable sector position. Since matched time value is a self contained input and output mechanism, it allows the varied dynamics of both experiential and pragmatic value, to be captured and recorded in a single unit of measure.

Fortunately, it's not necessary in every instance to conceive of the full value of what is contributed and received in each instance of knowledge or skill use, especially insofar as recipients only need increments of skill and knowledge in any given moment. Too much coordination potential has been lost to extensive human capital preparation, with no personal ability to economically reciprocate during the entire process. By making use of time as prioritized measure and personal management, real gains in services generation and personal time preferences, are possible.