I think time is quite liquid. Let's say I get 500k/year on my current job and someone asks me to join his company for peanuts, but with a good chunk of stock. We could calculate the difference between 500k and peanuts and say that instead of joining that company, I'd pay him this difference every year. That difference would be enough to hire a small team for a small salary, but with stock options. The problem that most founders have is the unspoken refusal to accept that my time is worth this much.
Time isn't liquid. If instead of giving a startup time, you gave them literal cash, then it would make sense that you get preferred (instead of common) stock, to protect against the founder just selling the company immediately for the value of your cash (as was mlyle's point). If you give them your time instead, there's no risk of them immediately selling off "your time", and so it makes sense that you get common stock instead of preferred stock (at least for this one consideration).
The other general point I think you're making though, is that if we look at the value of the time being invested by a startup employee, their ROI is much worse than a literal investor in the company.
This is true, and somewhat unfortunate I think, but I think happens because VCs control larger amounts of capital and thus have more leverage. Both in terms of absolute amounts, but also how quickly they pay it out.
You taking a $400k paycut for 4 years and a VC investing $1.6M are numerically the same, but the VC gives up the $1.6M immediately, whereas you give it up over time, and can at any time decide to stop investing. When you first start, maybe your ROI is worse than a VC's, but three years in, maybe the ROI of the time your investing _then_ will have improved relative to a VC that tried to invest three years in.
