What Do People Do When They're Unemployed?

Last night Jay Leno joked that only 500,000 people attended Bush‘s second inauguration, while 2 million were at Obama‘s. The reason, so he claimed, is that we now have so many more unemployed people.

Good joke, but is it correct? How do unemployed people spend their time? How does unemployment affect time use in the entire economy? What is the lost output from unemployment, and what is the utility loss?

Several of these questions couldn’t be answered until now due to lack of data. A new paper provides some surprising answers.

The unemployed use the time freed up from work for pay almost entirely in leisure and personal maintenance; they do no more household work than employed people. Similarly, in areas where unemployment is perennially high, there is less work for pay, more leisure, but no more household production.

But when unemployment suddenly rises, as in a recession, people shift from work for pay to household production; people don’t take more leisure time than before.

So if we would measure output to include production at home, we would infer that a recession doesn’t reduce total output by as much as we thought; and perhaps the utility burden of a short recession is not as severe as one might imagine.


Derick

Very interesting. Generally speaking the government cures for economic problems are worse than the market readjustment. Just like someone with sleep deprivation is hurt less by the symptoms and fatigue and more by the Red Bull.

liberalarts

Interesting. One thought that popped into my mind is that home production is costly, as least for me. Painting a room or the outside of the house uses not only leisure time but hundreds of dollars of paint and equipment. Fancier cooking involves purchasing more expensive ingredients. Mowing the lawn more often means more gas and so on. So, people who are in high unemployment areas or occupations may avoid extra home production, because they are poor.

Vessel

While this indeed sounds encouraging, it's hard to imagine all the "at-home" banks, insurance companies and car manufacturers that would pop-up with the most recent economic woes.

Working from home may however add a surplus to the market in services, bringing down prices there and worsening the situation there too.

On the upside, having time for yourself and your family may mean a higher sense of well-being. A key here is to tackle the downbeat sense that being financially constrained due to no work causes.

This along with encouraging people to focus on education, art and other proven ways to increase one's well-being may be an upside to a recession.

Michael

People in the service industries might beg to differ.

Ezzie

Not sure about others, but I spend my time taking care of my daughters (saving on babysitting), managing our finances and taking care of a few things around the house a little more closely - but it's true, I do barely more than I was before at home.

discordian

fortunately the longest I've been between jobs was about 2 months.

I spent the time:
- job hunting, mostly on-line and on the phone
- doing jobs around the house
- playing games on my computer

Zach

What does this say about unobservable characteristics of the chronically unemployed and those that are employed? Do these results suggest that those that live "in areas where unemployment is perennially high" are lazy, since there is no higher level of household production? Perhaps the politically correct terminology would be that they "prefer leisure." Similarly, the finding that an unemployment shock leads to increased household production while not affecting leisure suggests to me that the previously employed have an inherent desire to work.

Disclosure: I did not read the paper, only the summarized results from this post.

Colin

I am currently unemployed and attended Obama's inauguration. I did not vote for him and quit my job so I am not an angry unemployed person who blames Bush for his plight. I spend my time reading and have done some traveling both here and abroad during my time off. I have basically treated it as a long vacation, it's been great -- especially if my job interview next week works out.

Scott Supak

Leisure is defined as what? Sitting around wishing I had a job? Trying not to spend money I don't have? How about the under-employed? And those of us in free-lance, in these hard times, have to spend more time trying to hustle jobs, since businesses are cutting back, which makes my productivity go down.

Then there are all the prospective clients who get specific information from me about what I would do if they pay me, and then they go do it themselves, and I don't get anything for it.

Ah, yes, leisure... At least I have a lot less recycling laying around!

jim

Household work, while good for individuals or families, adds nothing to the economy.

Zach

Vessel: I don't believe household production in this context means working from home (for your employer). It includes things like cleaning, cooking, caring for children, etc. In other words, things that contribute to upkeeping a home and/or family.

Ezzie: It sounds like you ARE increasing your home production by doing all of those things, especially substituting your time for outsourced childcare.

jep

Maybe these data suggest that those that live "in areas where unemployment is perennially high" also suffer from depression because they cannot see that things will ever get better. But when people experience unemployment because of recession, along with many others, they may feel "my whole society is experiencing this and we will all come out of it eventually", so they do not feel the level of depression those in chronically underempoyed areas would feel. Depression might significantly contribute to what people are capable of performing.

nancy

Essie,

"but I spend my time taking care of my daughters (saving on babysitting)"

"but it's true, I do barely more than I was before at home"

thus the price of caregiving? I know you didn't mean to, but what did you just say about the price of a full time nanny?

To all The Unemployed

I like to think of it as rel. free time to make the proper adjustments

Jacquilynne

I would guess it says more about the immediate aftermath of unemployment, and severance pay as a way of maintaining your lifestyle than it does about the laziness of the chronically unemployed.

If you're chronically unemployed, you can't afford to paint the house, and even if you could, there's only so many times you can paint it.

If you're recently unemployed though, with some savings and some optimism about the prospect of finding a new job, you can afford to paint the house, and probably haven't done it recently since you were busy working.

Linda

I found 2's comment that "Fancier cooking involves purchasing more expensive ingredients." the point being that home production is costly - quite interesting I might see it idfferently if I were unemployed, but if I had more time at home I would certainly cut costs by cooking rather than purchasing: baked goods, bread, more slow cooking (can use cheaper ingredients)...more basic rather than fancier cooking.

Dood

Not all time spent 'working' in a paid job is actually spent working in the economic sense of increasing output. At first glance it does not seem to be a fair comparison between the employed and the unemployed.

Adam

I was once unemployed for around three months, broken up by several one week temp positions. I spent a few hours a day job searching, and the rest on leisure activities (reading, etc).

It was impossible to really enjoy the "fun time" though, because I was constantly aware of the reason it existed. I didn't need money thanks to savings and my wife's income, but nonetheless the constant feeling of uselessness ruined what could have otherwise been a nice vacation. On certain days during that stretch I would have accepted any token amount of money to do backbreaking labor all day - just to feel that I was being productive in some manner.

I don't want to go through that ever again, and I feel a great sympathy for the hundreds of thousands of newly unemployed.

Renee

If I was unemployed I wouldn't have the money to spend to travel anywhere, let alone D.C.

Work search is a depressing slog through failure-infested waters. If you've been laid off, you've basically been told that your productive efforts are worth less to the company than the people who did not get laid off. That's pretty tough for most middle-class people, who take at least a modicum of pride in their work. After a few months of nothing, video games are right cheerful.

David Rasmussen

Unemployed people read blogs.