Money is a renewable resource but time is not
Since leaving salaried employment to work for myself, my relationship to time has transformed in ways that are good, bad, and not ugly, but undeniably….weird. The math of salaried employment is relatively straightforward: you trade a relatively consistent amount of your time for financial compensation (which is also why people who routinely work beyond the hours of a normal work week, or take work home with them after their normal office hours, are effectively participating in undermining their own salary).
But when you are self-employed, the math of time and money totally changes. You are no longer earning a dependable, predictable monthly salary. You are bringing in variable amounts of money depending on what you have negotiated with a variety of clients. And unless you have figured out a way to totally standardize every aspect of your business and have a predictable way to bring in a reliable number of reliable clients…the reality is that your monthly revenue is likely to fluctuate. That’s just the nature of running a solo business.
Within the small business world, there is a lot of emphasis on selling your services based on value or as a package, not based on hours/hourly pricing. But the reality is that no matter how you price your work, there are hours being factored in at some point in the equation that translate into the revenue you bring in. If you write a book and then sell it, those hours at the front end will hopefully transform into a book contract, advance, and if you’re really lucky, maybe even royalties if you earn out your advance. If you pitch a consulting or research contract to a client and then they agree to do business with you, then the hours come afterwards to deliver the work so you get paid. Even if you don’t price per hour, savvy business owners have a general sense of how much time something should take, so they don’t accept or negotiate prices that would not bring in enough revenue to pay their bills.
This is where the opportunity cost of time comes in for self-employed people and why it has fundamentally changed my relationship to time and money. Before I entered the wild west of self-employment, I worked for fifteen years in academic libraries as a salaried worker. I commuted on-site five days a week to work normal business hours, with only a few exceptions like the first several months of the COVID-19 pandemic and my sabbatical. My monthly paycheck was the same regardless of what was happening at work. If I was on vacation or out sick, was helping to organize a conference or had a rare lull between service commitments, whether the archive was super busy or super quiet, I received the same paycheck each month, and it only changed on an annual basis when either a promotion or union-mandated pay increase and benefits election amounts were used to adjust my salary.
Now, my self-employment math means that there are typically a certain number of hours I need to work every month, with an average hourly rate of X, to ensure I am bringing in enough revenue so that I can:
- a) pay my taxes (which are higher than before due to self-employment taxes),
- b) pay my business operating expenses (website hosting fees, Zoom license, etc, and also closely track these expenses with receipts and bookkeeping since IRS-approved business expenses reduce your taxable income), and
- c) pay myself a reliable amount so I can cover my living expenses, fund my retirement, and also enjoy life.
When you are a salaried academic librarian and asked to do volunteer service work, the cost-benefit analysis is typically “Do I want to do this work? And will it benefit my career somehow?” Obviously, salaried people have to run some calculations based on whether they have workplace support and energetic bandwidth to do service. For academic librarians in a tenure-track system that counts service towards promotion and tenure, these decisions do have some degree of indirect economic consequences. But in general, most academic librarians’ salaries are not directly and immediately impacted by performing service work. When I worked in academic libraries, my salary did not change depending on whether I was chairing a conference program committee or faculty executive committee (a ton of ongoing work stretching out over months or years) versus a lighter weight commitment such as performing peer review of an article (a one time commitment of a few hours).
In contrast, now that I’m self-employed, there is also another question I have to ask, which is whether I can quite literally afford to do uncompensated service work (or, even work that is poorly paid). This is where opportunity cost comes in. Opportunity cost is an economic term that means when you make a choice, you lose out on the benefits from not making a different choice. When I choose to take on service work, there is an opportunity cost of not otherwise using those hours for work that pays me. In other words, if I know that I can generally allocate X hours a month for revenue-generating work, allocating some of those hours for work that will not result in direct monthly revenue generation means that I am choosing to forego potential additional monthly revenue.
That trade-off is one I’m willing to make, especially since I have a lifelong orientation to service, and since no business spends its time solely on billable client contracted projects anyway (in order to run a business, you also have to set aside time for non-billable work like marketing, bookkeeping, etc). My career has been immeasurably helped at every stage by those who volunteered their time to help me, and I consider it a reciprocal obligation to the universe to pay back that help as much as I can afford to do so.1 But this trade-off now that I am self-employed is calculated far differently than when I was salaried.
One of the ways in which running this calculation has become pretty weird is that I find myself increasingly having to decline requests for unpaid and underpaid work that I would have been much more likely to say yes to when I was salaried. This is awkward and weird because I really like being helpful (and I think I have a reputation in my profession for this?), and I can tell some people are offended when I say no, or tell them I can only accommodate their request if the stipend is increased. Something I wish more people understood is that stipends might be lagniappe for someone who is already salaried, but most stipends for unclear service work commitments or talks do not come close to the actual compensation needed to do this work well if you aren’t salaried.
Time and money are both forms of currency, but they function differently. Money is a renewable resource, but time is not. I can do all sorts of things to change how my revenue is replenished–increase my rates, bring on more clients, invest profits from my business somewhere, cut expenses, etc. Because time is a non-renewable resource, this requires me to be incredibly discerning in how I use it. Even if I bring in assistance or remove various commitments, I cannot invent more time in my week or month. I have the exact same number of hours each week and each month that you do. I love self-employment, and I know that if I don’t use my most precious finite resource, time, as responsibly as possible, my business will not have staying power.
- I’m running for SAA Council this year, and am fully cognizant that if I am elected, it will likely artificially depress my earning capacity over the next few years since it is a major time commitment without compensation. I do not think it is an accident that I am the only non-university person running for Council, since university-based archivists typically have the highest rates of support for service work. If I am elected, I apologize in advance to those I’ll be serving with for how much of a stickler I will be for not wasting time. Now you know why. ↩︎
Categorised as: life