A Silver Lining to Unemployment?

(Photo: NCinDC)

(Photo: NCinDC)

Friday’s labor-force data brought liberal outcries, and a comment from Ben Bernanke, that the drop in labor-force participation indicates unemployment is really much higher, and the economy in worse shape, than the 7.3 percent unemployment rate might indicate.  It is true that participation for men is at a postwar low and has decreased by 3-1/2 percentage points since the 2007 cyclical peak; and women’s participation stopped rising in 1999 and has fallen by 2 percentage points since the peak.

Is this so bad? Yes, if labor-force leavers are desperate to work and just get discouraged.  But perhaps no; perhaps it has taken the Great Recession to get Americans to realize that we shouldn’t be working harder than people in other rich countries and should be enjoying more leisure.  If this is so, perhaps there’s a silver lining in what so many people view as the economic doldrums of the last three years.

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  1. Tom says:

    “To realize that we shouldn’t be working harder”

    So it’s a truth that it’s not good to work harder?

    I might need more convincing.

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  2. karen H says:

    Hidden due to low comment rating. Click here to see.

    Disliked! Like or Dislike: Thumb up 21 Thumb down 28
    • brad says:

      If kids today are much less materialistic than their parents ask them to put down their smartphones, ipads, and xboxes. Kids today have been spoiled to the point of not being able to understand the word materialistic.

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    • bob says:

      You just need to look at the iPad and smartphones to know this isn’t even close to true.

      Hot debate. What do you think? Thumb up 12 Thumb down 10
    • J1 says:

      You have to consider the larger picture and not focus solely on initial cost. Yes, you settled for the 16GB Iphone, and yes, it cost a little less (after inflation) than that final generation Walkman, but the Walkman didn’t require a data plan. And a used 2009 BMW is a much nicer car than a new 1987; a junky used car makes a statement, to be sure, but “less materialistic” seems a stretch.

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    • Enter your name... says:

      I think Karen has a point. Younger people are less likely to have (or want) a car, which is surely a bigger material possession than a computer. More of them can live out of a backpack than us older people.

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  3. Wendy says:

    I don’t know about your conclusion. When was the last time you were unemployed? I don’t remember it being very leisurely. I would be more convinced if you were talking about the underemployed. Do you really think people are quitting there jobs so that they can relax more? I image there may be some two parent homes where one parent is now staying home with the kids but I still don’t see how that translates to more leisure.

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    • Mike W. says:

      I’m with you Wendy. I think the Hamer’s point is completely misguided, and confuses macro-level leisure consumption with micro-level leisure consumption. The ‘silver lining’ he suggests would only be relevant if we were talking about macro-level leisure, where the increase in leisure is spread out in small increments across a broad population i.e. instead of a 60 hour work-week, the average person decides on a 55-hour work week and spends that extra 5 hours with family, reading books, etc. In that case, sure, this might be an indicator that people want to work less hard. However, this is clearly not what is happening, nor is it what the statistics referenced above indicate. What is happening is labor force dropout, which means 0% labor and 100% “leisure” as the technical economic term for not-labor activity. As you said, I think we can all agree that this isn’t really leisurely at all on an individual basis, nor should we take the despair of many unemployed people to be an indicator that anyone feels like working less hard.

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    • Enter your name... says:

      Leisure doesn’t mean relaxing, in economic terms. Playing a board game with the kids is leisure, even if you’re there primarily to make sure they don’t get into a fistfight over the rules. Tending the vegetable garden is home production (not leisure), even if you totally enjoy every minute of it.

      At least in the initial periods of unemployment, people tend to spend part of their new-found time in looking for another job, another sizable chunk in home production (cleaning and repairing all those things you never had time for), and some in what the average person would call leisure (=watching more television for the guys).

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  4. Matt says:

    I suspect that the majority of those who are not working have not chosen to not work because they are independently wealthy and wish to dedicate themselves to a life of leisure. That is, unless welfare and food stamps supply enough income that one can live comfortably on them, in which case they should be cut.

    I look forward to the Obama administration defending a future set of unemployment numbers as “Americans deciding not to work so they can enjoy more leisure time.”

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    • Mike W. says:

      Matt – I’m going to have to disagree. We’re talking about labor force dropout, so that means people who were unemployed but actively looking for jobs, who have since stopped looking for jobs. Since unemployment measures only regard the number of people currently looking for jobs, if people give up and stop looking, employment numbers as a percentage appear to go down. That’s what the whole “the economy may be in worse shape than the 7.3% unemployment rate might indicate” thing means.

      Anyone who is independently wealthy and chooses a life of leisure as you have described was probably not looking for a job at any point, so they would not ever have been part of the labor force, and are clearly not the individuals dropping out. If labor force dropout just meant rich people not caring about getting jobs, I don’t think anyone would be concerned.

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  5. bob says:

    We would be golden on working less if everyone actually worked less, instead of not working at all.

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    • James says:

      I would think that (assuming consumer demand stays the same) that large numbers of people choosing to work less (but still work) would actually increase employment numbers. As the currently employed voluntarily refuse overtime, or move to working less than 40 hours/week, new people would have to be hired to take up the slack.

      Indeed, isn’t this one of the chief complaints against Evil WalMart, that it hires a lot of part-time employees?

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      • Joe D says:

        But all of those part-time workers are low-wage. Why not part-time skilled and professional (“knowledge”) workers? If we had single-payer healthcare, the workforce would not be reliant on the benefits package of being full-time.

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      • James says:

        But there are part-time knowledge workers. In fact, I’m one of them, and have known a number of others.

        Nor do I think most of us are in any way reliant on a benefits package for health care (or anything else). Most of us can (as I do, since I’m self-employed) pay out of pocket for any routine needs, thus avoiding all the hassle and transaction costs of involving a third party, whether it’s an insurance company or a “single payer” government bureaucracy. Insurance of any sort ought to be for catastrophic situations only.

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      • Nate says:

        James, if all the healthy people did as you do, the insurance system would collapse. The only people buying full coverage health insurance would be sick people who use it a lot, which is not a viable way to provide insurance. If that situation were allowed to continue, eventually nobody would be able to get any health insurance at all.

        I’m not saying you’re wrong to do what you’ve done, just that it’s not sustainable for large numbers of people to do the same.

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  6. 164 says:

    So the next step would be to look more closely at the numbers… Over time the spread between the U3 and broader U6 measures of unemployment. Then a decomposition of the Current Population Survey data for “persons not in the labor force” looking for trends over time. A quick search finds this table as a good starting point:

    http://www.bls.gov/news.release/empsit.t16.htm

    So how have the numbers of discouraged workers trended over time?

    Freakonomics is about all about interpreting the data not anecdotes.

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  7. steve cebalt says:

    I have never liked leisure time and I certainly would hate having it forced on me.

    “we shouldn’t be working harder than people in other rich countries …”

    Why shouldn’t we? Who says that Leisure is a core American value like it seems to be elsewhere? Do we have to sink to some lower common denominator? Work has virtues and rewards to society that I don’t need to enumerate. Leisure? Not so much.

    Not everyone values leisure as much as you do, perhaps.

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    • momosgarage says:

      In the new economy “leisure” is required to gain requisite skills in certain industries. Two of the biggest companies in the world were founded on skills learned during “leisure time”:

      Biil gates attended the private Lakeside School in 1968. The Lakeside school had a contract to lease mainframe time from General Electric. Bill Gates used that time on the GE Mainframe to practice writing commercial level software at 13 years old. Did your grandparents, you or your parents high school have such a contract in place, let alone even a single computer for student use in 1968? No, they did not. Bill went to a very prestigious high school with access to things in the late 1960′s that only high tech colleges had in place. I’ll give you a hint the tuition for Lakeside school is $27,250 a year today. Bill Gates parents essentially bought him leased time to use a GE mainframe in the 1960′s when everyone else was still using pencils, slide rules and hand writing essays. So if Bill had gone off to work a part-time job in high school at a Taco Stand, someone else instead would have invented a product like Windows.

      It was “leisure time” that gave Bill his edge, not “boot straps” or “sweat of the brow”

      Mark Zuckerberg got his first computer in the 6th grade around 11-12 years of age in 1995 or 1996. Did you even own a home computer in 1995? My parents certainly did not own a home computer in the mid 90s, nor did many others in neighborhood at the time. What did a computer cost in the mid 90′s? At least $1,000 back then, that $1500+ today per inflation. Computers were significantly more expensive during Bill Gates time and much less so for Mark Z, but during Mark Z’s time the software cost were the “new expense” that Bill did not have.

      It was “leisure time” that gave Mark his edge, not “boot straps” or “sweat of the brow”

      Their parents PAID for them to be AHEAD of the game in regards to technology and education. Those fruits paid off in the end, despite neither going through the motions to get a diploma for their mostly completed college coursework, at prestigious universities.

      It was “leisure time” that gave this edge, not “boot straps” or “sweat of the brow”, if they had worked part-time while pursuing their studies they would both be somebodies employees today.

      Same goes for the executive leadership at Riot Games and petty much every other venture capitalist backed company making their mark today. CEO’s of today, for better or worse, don’t start from the bottom or come from the production line. They come straight from their parents basement; and lately its been the ones who seemingly “sucked on the teet” the longest who seem to be getting the investor money needed to start their businesses.

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      • SB says:

        Who’s advocating that 13 year old get part-time jobs? Also, you’re clearly speaking to the exceptions. No one is concerned that 13 year-olds are not in the labor force. I’m concerned about the 32 year old guy down the block who says, “Meh, why work? Uncle Sam has me covered.” No one is complaining about rich kids not working. They aren’t a drain on society.

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      • James says:

        “CEO’s of today, for better or worse, don’t start from the bottom or come from the production line. They come straight from their parents basement…”

        Sorry, but even aside from asking why on Earth (aside from the money, of course) I’d want to be a CEO, kids learning about computers, or anything else, does not qualify as leisure time. It’s education.

        There are also lots of us out here making a better than decent living in various tech fields without the dubious benefits of having had computers &c at home. Bill Gates may have had computers in high school, but people like Larry Ellison did not, yet managed to make a similar-sized pile anyway.

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      • momosgarage says:

        @SB

        Have you been keeping up with the new? It seems not.

        Before 1990, 40% of teenagers had part-time jobs while in school. This is a relevant statistic because today only 20% of teenagers in school have part-time jobs. Teens at one time did make up a sizable portion of the workforce and such changes should be acknowledged.

        Although not my primary point, I do think there is plenty of evidence that teens today do not have the opportunity to get part-time jobs, BUT are beginning to develop advanced skill-sets that COULD be MORE helpful in their future adult employment than say “working at a taco stand after school”. Bill Gates and Mark Zuckerberg are very good EARLY examples of two people who made use of their free time developing specialized skills that could not be learned at a MINDLESS part-time job or in school. In the end they leveraged that free time learning into long term careers.

        Leisure time today is far more valuable today that it ever was in the past. Things change so quickly that without “leisure time” many employed people today will CERTAINLY “wither on the vine” and become obsolete and unemployable in the near future. I don’t know what the solution is, but free time to learn and keep up with changes in the workplace is going to become a HUGE cultural issue in the near future for many people of all ages and classes.

        @James

        As for your Larry Ellison comment, both Steve Jobs and Ellison also figured out the value of “Leisure time”, but unlike Gates and Zuckerberg they did not come from wealthy families who would pay their living expenses while they learned on someone else’s dollar.

        So how did they get free time to learn without having a wealthy family backing them, paying for rent, food, etc?

        Its simple, they lived like HOBOS as needed, crashing on couches, sleeping in cars, etc. I’ll give these two this much, they certainly had foward thinking and very abstract insight into the need for “leisure time”. They somehow figured out, without much worldly experience, that having available “leisure time” for learning was essential to get ahead, but without family backing they simply reduced their living expenses to zero and in turn solved the problem of being poor.

        I would ague doing so still works, BUT the stigma of doing this kind of thing today is a LOT more risky than when they did it. In the 1970′s you could get away with no home address, credit history, or even a car for that matter. Some companies won’t hire people who don’t have a smart phone at the interview or park a crappy car in the lot on interview day for Christs sake.

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      • RandomJokester says:

        Who had computers in 95-96? My parents bought me my first in 82, a ti-99 4/a that was less than $500. By 95-96 I was already on my 4th or 5th computer.

        I’m no Zuckeberg and my parents were far from rich, nor were the parents of most of my friends who also had pcs (Vic 20s, Ataris, C64s, etc.) Your dates and prices do not support your argument as much as you think.

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      • momosgarage says:

        @RandomJokester

        My argument is about the increased economic value of “leisure time” in 2013. I only used Bil G. and Mark Z. as examples because NEITHER of them worked part-time jobs when they were teens and young men. Both of these men as teens used this free time developing skills that were needed to create new ways of doing business. What they learned in that free time COULD NOT have been learned in school or at some part-time job available to to people of their age in their respective eras. The only reason I put cost and price points in there is because I agree with other comments here that “leisure time” is NOT FREE, somebody pays for it. In the case of Bill and Mark it was their parents and in the case of Steve Jobs and Larry Ellison it was the kindness of friends letting them both crash on their couch for free.

        It seems you have missed the totality of my points and have taken a very simple view of the obvious chain of event that lead to the current economy, where those of means whom also have free time to develop new ideas are going to be taking the lions share of the available economic pie. Those without free time to evolve and learn are going to be in a world of hurt when trying to earn ANY wage or start businesses in an economy that only values skills which cannot be learned on the job in entry level positions or in formal schooling.

        Forbes published a great article outlining my point:

        Are Creative Careers Now Reserved Exclusively For The Privileged? by J. Maureen Henderson

        Read it, maybe then you will start to understand what I mean.

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      • James says:

        “Some companies won’t hire people who don’t have a smart phone at the interview or park a crappy car in the lot on interview day for Christs sake.”

        So what else is new? Some businesses have always used non-job related criteria in hiring. Used to be wearing the right sort of clothes, having the right social connections, playing golf at the right clubs – or having the right sex or skin color. Nowadays maybe it’s having the right smart phone. But you miss a lot of talent that way.

        OTOH, my last actual in-person job interview was IIRC in 2001. People hired me, sight unseen, based on papers or other work I’d done, and some email interchanges. I haven’t even seen one of my largest clients in more than a decade.

        “Both of these men as teens used this free time developing skills that were needed to create new ways of doing business. What they learned in that free time COULD NOT have been learned in school…”

        In fact, those skills easily could have been learned in school, and arguably would have produced technically better products.

        (And just as an aside, there is nothing TECHNICALLY difficult about implementing something like Facebook. The trick is in realizing that there are a lot of people out there who positively desire to share the details of their lives with strangers – something that seems utterly alien to me.)

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      • momosgarage says:

        @James

        Okay so now you have stooped so low that you are criticizing the Facebook business model and ways venture capitalist are funding companies today.

        Thanks for throwing all your credibility right out the window.

        Nobody was taking about that abyway, just the trends of how free time to train is evovling in the new economy

        …and no Bill Gates was not going to learn anything he did on that mainframe in 1968 in High School, maybe at tech college of the day, but he was still 3 years away from that. Same with Zuckerberg, he was a high school student. BTW Zuckerbergs parents paid for him to a attend a tutor for programing before he entered college.

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      • James says:

        Please tell me how I am criticizing Facebook’s business model. As I said, it took a stroke of inspiration (if not actual genius) to recognize that a lot of people might want to use something like that. (Now I may be implicitly criticizing that part of the human race, but that’s a different matter.) As for the technology: learn something about it, and you’ll realize that it really is comparatively simple to implement.

        But again, all that is pretty much irrelevant to a discussion of leisure time. If you are spending time learning things as a kid, or developing some new product as an adult, that is not leisure. It is work which you are doing “on spec”, in hopes of earning a return months or years later rather than in a paycheck next Friday.

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      • momosgarage says:

        @James

        Then we have a VERY different perspective on why Mark Z. and Bill Gates were messing around with computers as teenagers in the first place. As far as I can tell neither of them was playing with computers and programing “on spec” when their first products were created. At that points in their lives they were both just rich kids with lots of spare time on their hands, nothing more. That’s why I mentioned the “hobo” lifestyles of the young Steve Jobs and Larry Ellison, I believe in contrast, these two made a conscious decision to free up as much leisure time for themselves, in their early life, so they could work “on spec”, in your words.

        I understand what you are saying, it has truth to it, but it doesn’t invalidate any of my points. I think you can’t see the big picture of how people with paid for “leisure time” today which is then used to invent and explore are more likely to be the “winners” in our current capital venturist driven economy. If you had actually taken the time read up on my example of Riot Games, you would realize that those rich kids, just like Gates and Zuckerberg, were also NOT working “on spec” when they came up with their product. Again, they were just rich kids with lots of spare time on their hands.

        The day of the “worker bee” is over. I’m not saying that I am either for or against this evolution, I just see the tidal wave of change coming and have moved to higher ground, while folks like yourself think you can dig in. This wave of the well heeled “leisure elite” will crush you and the tide from their wake will sweep your career away, without any thoughts of remorse or introspection.

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    • Phil Persinger says:

      Steve–

      On the other hand, I tell folks that I have a job so I can afford to sit at home every morning with a cup of coffee and stare into a corner for an hour….

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      • Steve Cebalt says:

        Dear Momosgarage: You make a lot of great points.

        Hi Phil: Your idea of leisure does appeal to me…and it makes me wonder about the people in the other post from Mr. Levitt today about people rejoicing over the new in-flight rules that allow gadgets during takeoff and landing. Really? This is an issue? People can’t be at peace with their thoughts for 10 minutes at a time without Angry Birds to amuse them? Your staring into a corner = thinking and reflecting, which are still productive verbs in my book. It’s just that many people don’t assign value to “thinking.” They have to be “doing.” Thinking IS doing, as you well know!

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  8. J1 says:

    Again Dan, show this stuff to somebody outside the faculty lounge before you post it. Or if you don’t want to do that, at least run it past somebody who doesn’t have tenure. Seriously, I’m trying to help.

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    • Alex in Chicago says:

      Indeed, this post makes no sense.

      If he were right, we would be seeing more people at the high income levels in their 30s, 40s, and 50s working fewer hours, instead of the poor in their 20s, 30s leaving the workplace.

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    • caleb b says:

      Dan’s posts win the award for “most out of touch” all the time.

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    • Phil Persinger says:

      J1–

      If this helps, check out this relevant paper Hamermesh has published

      https://webspace.utexas.edu/hamermes/www/MicroGift.pdf

      I think it’s the basis for his post here, and the devil made him simplify his thesis….

      At one point around 1970 I recall serious discussion of a guaranteed annual income in this country precisely to mitigate the couch-crashing lifestyle that start-up businesses often require. Some posters here may think that developing a business is work, but I think there’s an argument to be made that start-ups fall into a gray area between work and obsessive hobby….

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      • J1 says:

        Thanks. I’ll check it out.

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      • momosgarage says:

        @Phil Persinger

        Thanks for posting this, not surprisingly it totally jives with my comments posted here, but does a much better job of tying together real life examples than I did.

        I Wonder why people got so worked up about my observations with the status of the current job markets and the real changes in how we currently must use “leisure time”, which has a much greater affect on our ability to generate income than it did in the past.

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