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What is the world’s most valuable commodity? Gold? Uranium? Information? Nope. I reckon that people’s time is the most valuable*. So what I propose is a Time Exchange wherein people can sell Promissary Notes guaranteeing the bearer the right to employ the issuer for a specified number of hours during
a specified calendar period at a specified price.
It sounds a bit complicated, I know, so here’s an example of how I see it working. Suppose that I am an engineer. I’ve just started employment on a three year contract, so I know that I’ll need to find a new job in three years time. So, I float a Time Future guaranteeing the purchaser, say, 5000 hours of my labour (no more than 10 hours to be used in any one day) to be supplied between 1st January 2007 and 31st December 2009 and the rate of pay to be $25 per hour (?). I have no control over who purchases the Time Future but whoever does so has to pay me a face value cost of, say, $100,000 when they buy the initial issue of the certificate. Once on the open market, the Time Future can be traded just like any other commodity and, when the quoted period begins, whoever holds the certificate can call upon my services at the quoted rate of pay. At the close of business on 31st Dec 2009 the certificate’s validity will expire and any unused hours are lost.
The pros and cons for me in this are that I (the engineer) get a good up front sum of cash for doing nothing, but in exchange I have no real certainty of being employed during the period or of where I will be working if I am employed. Plus I’ve locked in my rate of pay for the period (the relationship between the initial face value and the future rate of pay would be critical to the saleability of my Time Future certificate).
For the employers, the pros are that they can secure their labour force and costs for years in advance or just trade away any unwanted time (i.e. employees) that they have in their portfolio. The con is that they’ll have to make an up-front payment before they benefit from the employment of labour (although this will be slightly mitigated by not having to advertise or headhunt for staff).
Initially I see this as being used for highly skilled, in demand employees but eventually it could spread to all sectors of the workforce and could, perhaps, be used by governments and employers to foresee and forestall skill shortages years in advance.
Problems/loopholes: Firstly, you could only be allowed to issue one certificate for any given time period – otherwise you could sell the same hours several times.
Secondly, what to do about people who expire before their certificate does? I’m not sure how to deal with that one but perhaps a cash pool financed by levying a tax on the initial premiums could be used to compensate the certificate holder.
Thirdly, what if the employee just doesn’t turn up when you make the call on their labour? This would, I think, be covered by existing laws on fraud and deception. But the watchword should be ‘Always buy a Time Future from a reputable dealer’.
*Trivia: Actually, the answer is Saffron.
Sub-contracted job
https://www.bbc.co....technology-21043693
[DrBob, Apr 11 2022]
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Hm. Perhaps it would be better if the face value of the future was non-time dependent, as this would allow for fluctuations in charge out rates (be they caused by changes in the market or in the qualifications/abilities of the subject).
Hm. The up front lump sum payment will be a major stumbling block to employers. They won't want to pay out money (a) to what is, essentially, an unknown party (b) that they can be earning interest on for themselves. |
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On your first point calum, I would say that one of the points of these would be to smooth the fluctuations in charge out rates. So, as a potential employee I forego any inflation increases in salary, or at least set my future hourly rate at a level that will be attractive to potential purchasers, in exchange for a lump sum payment now.
Coming on to point a) the certificate wouldn't just be an anonymous piece of paper but a full CV and references would be available for inspection before purchase - and there's no reason why you can't interview the issuer before buying the certificate.
Point b) is more the crux of the matter though and that is a judgement to be made by the purchaser. Will I earn more by investing my cash in the interim than I will save in the future by purchasing the certificate. It would call for the issuer to make a judgement about how they set their rates. In order to ensure that their certificates are worth buying they'd either have to set their hourly rate or their initial lump sum at a level to make it worthwhile buying. |
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This is very interesting. Are you viewing it as essentially a way to lock up an individual resource or a way to mitigate risk for migrant workers for an orange grower? I'm not sure that there's enough of a liquidity issue with rates and skills to justify this, but it is a novel way of thinking about it+ |
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I see benefits on both sides really. For a decent sized company, they can use this as a way of ensuring themselves against skill shortages in the medium term and as a worker I can ensure that I've at least got some savings to fall back on, and time and finances to re-train, should times get hard (the assumption being here that somebody has bought my certificate but no longer wishes to make use of my hours and can't re-trade the certificate).
For small companies it wouldn't be worthwhile because, as you say, the cash flow benefit wouldn't be worth it. Most small businesses don't know whether they're still going to be in business next month let alone in three years time.
Of course speculators could, in theory, buy up the market's entire supply of, say, nuclear physicists but they'd have to shell out an awful lot of cash up front for the privilege and, unlike uranium or diamonds, there's nothing (apart from the education system) to stop a new source of supply from coming into the market.
One of the things that I did wonder about though is, taking nuclear physicists as an example, that if a company steps into the market early in order to secure the services of, say, the top 5 scientists in the world, will other employers, who also need the top 5 scientists, be forced to pay above the odds for those of lesser ability? |
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Aside from a handful of the best engineers, for example, I can't see why even large companies would prefer this to their current employment processes. |
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I like the idea, but see many situations where it just wouldn't work. Orange harvesters will do about the same job for any orange producer, so this may work well. At higher levels, there is more than pay that comes into consideration. I wouldn't use my engineering skills to work for weapons design, and I know lawyers who wouldn't work on the corporate (aka dark) side of law. And that's just the tip of the iceberg. There's location, work environment, promotion potential, and many other issues that would be a deal breaker if not in line with the employee's goals. |
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Doing a quick bit of maths...
Assumption:
I expect to earn, say, $50,000 in the current year and expected pay rises are equal to inflation (2.5% in the UK). This takes my expected salary to $52,531 in the final year of my contract.
If I sell my time, in three years time, for a salary of $50,000 a year for three years then anyone picking up that contract will save $19,387 in expected (note: expected) salary costs. If an employer invests that $19k for the next three years they can earn (optimistically - taking the current UK base rate of 4% as my return) $2,326 in interest. So making an up front payment of $10,000 to secure my services in three years time at the quoted rate makes sense in pure financial terms.
If, instead, I sell my time at the rate that I expect to be earning at the end of my current contract ($52,531 per year) then anyone buying the certificate still stands to save $8,011 in wages outgoings over the course of the contract. The return for the employer is less and so I'd have to set my premium lower in order to make the certificate an attractive purchase. |
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What about the psychological effect of getting paid up
front, and then owing your soul to the company store? It'd
get pretty hard to keep showing up at work after several
years without a paycheck. Especially if your self-control
to spend money is anything short of miraculous. As an
example, try accepting a deposit for the full amount up
front, for, say, building a custom table, and then realizing
it'll take you 2 extra weeks, and meanwhile another rent
payment is due. The feeling sucks, I know from
experience. Not a perfect analogy, I know, but similar
enough for me to decide not to participate. |
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And what if a mid-life crisis hits you square in the middle
of the contract, and you just want to fly to Thailand and
sell shell collages on the beach? |
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I'll take the money in installments. |
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//Secondly, what to do about people who expire before their certificate does?// Get life insurance as part of the contract to cover the damages. |
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Interesting idea. May have a use for rare skills, but it seems to require a degree of clairvoyance on the part of the employer - who knows what will be happening in 3 years time? |
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This would make the Finnish rich. It's been official policy to assign no homework, and yet Finns are some of the world's best students. I see Finnish students doing the homework of rich and overweight Yanks. |
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//I (the engineer) get a good up front sum of cash for doing nothing, but in exchange I have no real certainty of being employed during the period or of where I will be working if I am employed. // |
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So the initial bond is only a down payment on your labor? These bonds may be worth it for the top five percent of the labor market. If the initial bond IS the payment for your labor, you'll probably be happy to have earned the money and not have to work. |
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//Of course speculators could, in theory, buy up the market's entire supply of, say, nuclear physicists but they'd have to shell out an awful lot of cash up front for the privilege and, unlike uranium or diamonds, there's nothing (apart from the education system) to stop a new source of supply from coming into the market.// |
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Not just the education system, the time required to get educated. Even a perfect education system can't turn 18 year old James into a nuclear physicist in a month. |
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//What about the psychological effect of getting paid up front, and then owing your soul to the company store?// |
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And also there are a lot of people, sorry, too stupid or short-sighted to properly value their labor or even realize they're going to need to actually work for that time and will have to do so without additional payment. Maybe the bonds should just reduce the required wage to minimum wage for the agreed time. |
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//So the initial bond is only a down payment on your labor?//
No, I saw it as full payment. And yes, you are right, that part of my original comment doesn't really make sense, does it! |
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It would smooth the market for temp agencies. They would be able to shop in advance and guarantee workers for future contracts. Factories being built would be able to lock in future labor to reduce risk. |
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Also a great way to implement a kind of quasi UBI (when combined with a requirement to pay at least minimum wage). A government could offer citizens an advance payment on their labor a month at a time and then sell the labor on the open market. |
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People whose labor isn't worth having or who refuse to come in don't get to/have to work but still get enough money to live on. |
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People willing and able to work get the initial payment, the minimum (or otherwise negotiated) wage, and they get to prove their value and may choose to take themselves off the dole and float their own bond or only agree to come in for a traditional wage or salary beyond the already paid-for bond. So people on welfare have a guaranteed way to work as much as they like complete with a workplace to go to, without risking their welfare payments in any way. |
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If you're clever about it, you could find jobs that can be done
two (or more?) at a time, & "double book" your time. Eg: you
could do call-centre work while washing dishes in a
restaurant. |
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BBC Radio claims that Essex was once a Saffron growing center. Wouldn't that be even easier? |
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link added for neutrinos_shadow. |
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[DrBob], thanks. The firm should have simply hired the
Shengyang crowd themselves. Savings! |
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