What Is Time Banking? Should You Join a Time Bank?

As America's Great Recession morphs into something we might call the Great Malaise, it may be time to revisit an idea that arose back in the worst days of the financial crisis: time banking.

Back then, out-of-work Americans who lacked a regular paycheck but still needed "stuff" hit upon an idea: Just because you've lost a job doesn't mean you can't work. So why not barter or trade favors to people who need your help, in exchange for help they can give to you? Thus was born the concept of the "time bank."

Time banks, an idea rooted in common sense
At its most basic level, the idea was for two people to trade favors. For example, John might want to take his wife out for a date night Monday. So he'd ask Dave to watch his kids for a couple of hours, offering to return the favor on Friday so that Dave and his wife could go out and catch a movie.

With a little imagination, pretty soon you realize that John could just as easily mow Dave's lawn in exchange for baby-sitting services (or vice versa). Or maybe John would ask Dave (who's a CPA) to do his taxes for him. In exchange, John (a plumber), would fix the leaky faucet in Dave's kitchen.

Simple, right? Now take the concept just one step further, and you've got yourself a time bank: Dozens, or hundreds, or thousands of Johns provide services to similar numbers of Daves. For every hour's worth of favors they do, they earn credit at a virtual bank -- credit they can later draw upon to receive an equal hour's worth of favors for themselves in return.

An idea whose roots are dying
America isn't the only place where the idea has appeared. Indeed, the front page of last Monday's Wall Street Journal featured a story on how time banks, and even alternate currencies sponsored by banks , are flourishing in Spain in an environment of 24.6% national unemployment -- and youth unemployment of 50% and up!

Here in the U.S., we're not that bad off yet. Still, with 1 in 12 Americans who are looking for work unable to find any paying job whatsoever, it would seem there should be enough men and women out there, in need of services and able to render services of their own in turn, that time banks could flourish here, too. But that's not the case.

So why aren't they?
At first glance, time banks appear to make a lot of sense, but they're not exactly taking off like wildfire. Search the database at TimeBanks.org, for example, and you'll find multiple time banks operating along the American West and East Coasts, and in parts of Wisconsin and Michigan. Yet vast stretches of America have essentially no exposure to the concept. In all of Indiana, there's exactly one time bank. One in Nevada. One in Utah. Tennessee -- apparently a hotbed of communism -- has two.

Why not? Probably because time banks only make economic sense to a limited subset of people. If you're out of work, living on a fixed income (Social Security, food stamps, what have you), and have time on your hands, then sure, it makes sense to spend an hour of your time -- an hour you can't get paid for in any case, and that would be otherwise wasted -- "earning" an hour's worth of services from someone else.

For most people, though, time banks only make sense if the service you're "withdrawing" is of equal or greater dollar value than the service you're "depositing." Say you're a lawyer. You bill $200 an hour. Do you really want to spend an hour drafting a will for a neighbor in exchange for an hour's worth of baby-sitting that costs $10?

Probably not. Logically, the smart thing to do is work an hour, get your $200 paycheck, and buy not one hour of baby-sitting but 20 hours. Trading baby-sitting for baby-sitting makes economic sense. Trading lawyering for baby-sitting just doesn't.

We... are... the 92%!
For the 8.3% of Americans who are looking for work, want to work, and just plain can't find a job, time banks sound like a reasonable response to an intractable problem. They're worthy of serious consideration, and can help to make a tough situation a little bit easier. But to the 91.7% of us who do still have jobs, time banks just don't make sense.