The idea in a nutshell: The most fundamental decisions we make are about how we structure and spend our time. Big companies buy the time you sell (in a transaction called paying wages ) and, in so doing, take advantage of a misunderstanding most people have about costs. People sell their time at a marginal rate. But then they sell almost all of it. To me, that means they undervalue the price they charge. In short, people sell their lives to corporations for far less than they’re worth.
We sell our lives at a marginal rate
One thing we covered in detail at school and university was the concept of utility. One of the most important differences in utility to understand (in my view) is the one between total utility and marginal cost. There are lots of classic examples around.
- You’d rather have a diamond than some water: However, if the choice you faced was having a thousand diamonds in exchange for never being able to drink water again, you’d choose the water because you need it to survive.
- All teachers are more valuable than all athletes: However, some athletes get paid to a good deal more because one particular athlete (for example, a great soccer player) might be worth more than the average teacher.
It’s important to understand the differences because they will help in evaluating how you are ‘selling your life’ to the company you work for.
The thing that really helped me understand how this works was an example of a man whose farm generated 5 bags of grain to use per year. With the first, he made bread to feed himself. With the second, he made more so he had a safety margin from starvation. With the third, he fed his animals. With the fourth, he made whiskey and with the fifth, he fed pigeons. The marginal value of the 5th bag was the satisfaction he derived from feeding pigeons but the total value of the grain was the difference between life and death.
The idea I am presenting here is that we sell around half of our lives to companies in exchange for wages but we value what we are selling them at a level as low as pigeon feed.
The Average Australian’s working life
- The average Australian works 40 hours a week
- They are paid $1160 per week for the time.
- Working from leaving school to the point you can retire under the current Australian laws means you’d work 45 – 50 years. That’s a total of approximately 90,000 hours.
- Total earnings $3m in today’s money.
If someone asked you to sell them 50% of your waking life for $3m, would you ? Does that seem enough ? You have valued your life at a total cost of $6m if your answer is yes. Especially since some estimates suggest that 80% of people hate their current jobs.
Alternatives to working for ‘the man’
My goal has been to develop a ‘product’ which can generate income online. The benefit of selling a product, especially one like software (or better yet a web page) with a very low cost of replication is that it is scalable. If I sell the hours in my day, I can only sell 24 hours. If I sell a webpage to enough people, it can make more money than 24 hours wages.
It was this that caused me to start whatphone.com.au I get to work a few hours a day doing the high value bits of improving the site. I enjoy a lot of the benefits of real work like purpose, direction, structure and social contact. But then I also get to run along the beach every day, spend time with people I like doing things I enjoy and pursue my hobbies.
Summing up – it’s not all plain saiing
The same model that I’ve used here can explain why doing a small amount of work, to cover the necessities of life is a sensible thing to do. Work provides a bunch of benefits like purpose, structure, social engagement, exposure to new ideas and so on. It’s not a bad thing. It becomes a bad thing when people invest their every working hour performing tasks for a company and are paid a per hour for their endeavours. If, as now seems common, people get up, shower, commute, work long hours, come home and sleep, the reality is that you’re exchanging a the majority of your waking life to work related activities. Obviously, it’s this which causes the famous sayings like ‘You won’t be wishing you’d worked a bit longer when you’re on your death bed.
The way we work is changing and it could be that life expectancy continues to increase dramatically. Being trapped in a system which perpetuates this exchange of life for low wages is not something I relish.
I must confess, however, that as I transition to the point that I no longer need to work the long hours I did for most of my time in Corporate, I have had to consciously think about what I want to do with the extra hours in the day. I have had to make myself realise that I have the opportunity to watch Ted talks, sail with friends, read the books I have on my list and otherwise make the most of the time. It leaves me wondering whether the time I spent working was partly out of laziness and an unwillingness to create time in which I could enjoy the alternatives.