In economics, the predominant view of an unemployed worker is that the worker is an idle resource. From the perspective of the macroeconomy, unemployment is a wasted opportunity. If someone wants to do something productive, but the right employer has not yet hired that worker, that smells like waste.
Standard economic theory counts houshold-provided labor as a resource to be used in a firm's production function. Therefore, we've branded unemployed individuals with an unfortunate label -- an idle resource. I say this label is unfortunate because it is easily misconstrued, and it colors the way people think about unemployed workers.
In this post, I object to the term idle resource in an effort to clarify what (exactly) unemployed workers do. I have XX main points.
1. The term idle resource suggests that something valuable (workers' time) is doing nothing.
Then, the tacit implication is to put that resource to use in doing something, anything -- because anything is better than nothing. If an unemployed worker is labeled as an "idle resource," it's natural to think that putting them to work in any job is an improvement.
But, that's clearly wrongheaded. A sizeable fraction of the unemployed would turn down a signed-sealed-and-delivered job offer from McDonalds. In addition to avoiding the social stigma from taking a McDonalds job, people value their free time at a higher rate than many employers -- not just McDonalds -- are willing to pay.
In other words, an unemployed worker's time isn't doing nothing. Perhaps the worker is exercising more, cooking more meals at home, enjoying a book he never got around to read, spending more time with his children, and so on. These activities have incredible value, and they are all part of the broad (and broadly-neglected) category of leisure.
My point? Unemployed individuals are looking for a job, but they won't accept any job. That's because their time still has value as leisure. Let's not pretend that it doesn't.
2. The term idle resource suggests that unemployed workers aren't actually doing anything.
The image of an idle, unemployed worker is that of someone just waiting by the telephone for an employer to call. This suggestion that workers aren't doing anything is offensive. Finding a job is a difficult task. Depending on search intensity, looking for a job can be a full-time job
Moreover, a typical job search requires filtering out bad matches, reflection on job qualifications, careful crafting of resumes, writing of cover letters, and interviewing with potential employers. Looking for a job is not easy, and there's no pay aside from the prospect of landing a job.
Even worse, from a social perspective, none of this effort creates anything of value, and it takes away from other activities (i.e., leisure, investment in skills, etc.) that would surely produce value. For this reason, I view too much searching for employment as a misdirected resource -- rather than idle resource.
So, my view of unemployment is one part worse and one part better than the standard idle resource view. On one hand, devoting all of your time to searching for a new job while unemployed is a waste of your (and society's) resources, more so than just sitting there. On the other hand, being unemployed means that you have loads of free time, and you can use that time for valuable leisure activities.
Enjoy your time because whether or not you have a job, time is your ultimate resource.
This is the third post of unemployment week on This Young Economist. Tomorrow's article, "Structural, frictional, and cyclical unemployment," discusses the different types of unemployment with reference to the unemployment we see in today's economy. See you tomorrow.