Labor and leisure are complementary human actions that pertain to production and consumption of economic goods. Labor is the process of consumption to produce an economic good (production). Leisure is the process of consumption that does not produce an economic good. Consumption without utility is the process of waste. According to Murray Rothbard, in his Man, Economy and State:

labor always involves the forgoing of leisure, a desirable good

Murray Rothbard: Man, Economy and State

This subtle error implies that both labor and leisure are economic goods. Yet only actions create or consume goods. Labor (production of economic goods) and leisure (production of non-economic goods) are human actions that create and consume goods over time. In the purest sense, production implies the consumption of the actor's body, while consumption implies its production.

In each hour he will expend his effort toward producing that good whose marginal product is highest on his value scale. If he must give up an hour of labor, he will give up a unit of that good whose marginal utility is lowest on his value scale. At each point he will balance the utility of the product on his value scale against the disutility of further work. We know that a man's marginal utility of goods provided by effort will decline as his expenditure of effort increases. On the other hand, with each new expenditure of effort, the marginal disutility of the effort continues to increase. Therefore, a man will expend his labor as long as the marginal utility of the return exceeds the marginal disutility of the labor effort . A man will stop work when the marginal disutility of labor is greater than the marginal utility of the increased goods provided by the effort.

Then, as his consumption of leisure increases, the marginal utility of leisure will decline, while the marginal utility of the goods forgone increases, until finally the utility of the marginal products forgone becomes greater than the marginal utility of leisure, and the actor will resume labor again.

This analysis of the laws of labor effort has been deduced from the implications of the action axiom and the assumption of leisure as a consumers' good.

It is neither correct nor necessary to assume leisure is a good, and by doing so imply that labor is an anti-good. It is similarly not necessary to construct the artifice of negative utility ("disutility"). Value is simply a preference for higher utility over lower utility. Both labor and leisure produce goods of (positive) utility.

It is time preference that implies leisure utility is greater than labor utility. By properly accounting for a person's body as property, "leisure preference" follows directly from time preference. As the above quote implies, this is the result of a trade of time without one's body (labor time) for the amount of interest that offsets the value one attributes to time with his body (leisure time).

Time, space and goods are the factors of all production, while labor is the process of production. Labor/leisure and production are distinct names for the same human action. The act of producing is labor or leisure; the act of laboring or leisuring is production. The Pure Bank provides the model of all production. This cycle is clearly evident in the case of self-employment, which is just the example of production. In the case of a wage-earner there are two producers, the employee and the employer.

A pure wage-earning employee obtains borrowed capital and thereby trades for food, education, and equipment, as required for a job. A fraction of his capital is hoarded and the rest is lent to the employer. The employer pays the employee interest (wages) for the term of this loan. The employee recovers his depreciated principal and wage at the end of the job.

The wage rate offsets both time preference for the loaned amount (nominal interest rate) and principal depreciation during the term of the loan. The amount of principal and interest, less depreciation of the fraction reserved, is returned to the employee's creditor. In the case where his capital investment is borrowed from his own hoard, the employee is his own creditor. The return is then hoarded or reinvested in future labor (or otherwise).

A real employer and employee each obtain a market rate of interest. The employee's interest rate is his wage rate. The employer's interest rate is the price obtained for the work product over the time of its production. The employer's production expense is the consumption of his borrowed capital, reserved over that time, just as for the employee. The amount by which interest exceeds depreciation is the increase in wealth to both parties.

The interest rate obtained by both classess of production is the same. The difference in amounts returned is strictly a function of the amount of capital invested, either in individual production (employee) or in managing collective production (employer). A person's maximum leisure valuation can be inferred from the wage rate he accepts, by discounting the implied principal by the market interest rate.

wage-rate = leisure-rate * (1 + interest-rate + body-depreciation-rate)

The employee trades leisure time for labor time to the extent that he values the amount of interest more than the value he attributes to leisure time. Leisure preference is a restatement of time preference, where one's own body is the economic good being loaned to production in exchange for interest.

Money wealth is generally lower at an early age, implying a higher money time preference. Over time wealth accumulates and time preference decreases. But the opposite is true with leisure preference. Money and one's body are not the same property, and are not generally exchangeable. At an early age, one has the lowest leisure preference. As one's body depreciates with age, the amount of it declines despite money wealth, increasing leisure preference. This may eventually require a higher-than-market interest rate to offset the preference, resulting in retirement. Money time preference and leisure preference affect each other as they tend to move in opposite directions. To the extent that the objective of labor is to increase wealth, less wealth decreases leisure time preference and more increases it. This may also result in retirement.