The economics of unemployment

One of my favorite classes in business school was economics (which is not to say that I excelled in the class– enjoyment and excellence are two totally different things). There is a certain level of predictability/structure when it comes to the flow of money and I like knowing that there are rules or guidelines for how these decisions are made.

One concept of economics relates to costs: fixed/variable, sunk, opportunity. I think that’s it. Not totally sure. I actually had to ping my friend because I couldn’t remember one of the costs listed above. See my earlier caveat re: interest vs. excellence.

So the cost that I’m going to discuss today is opportunity cost which is the idea that in pursuing one thing, you are giving up other options. If you consider life a series of investments, every option pursued has a possible outcome and it is each outcome that you are probably contemplating as you decide which option to take. And for each thing you decide to do, there are a bunch of things that you’ve given up (the opportunity costs) and you want to be sure when making that decision that those options won’t generate better outcomes. It’s an academic concept that is totally applicable to life.

I am focused on opportunity costs because over the weekend, I found out that that a third friend had quit (yes– chosen to leave) a job in the past two weeks. That’s right: in a time when jobs are scarce and fear is high, I have now three friends in my immediate circle who have chosen to walk away from employment. The specific circumstances in each case are different but generally speaking they were unhappy– unhappy enough that quitting altogether and giving up a paycheck to stay home and spend 100% of their time and energy applying to new roles was the better option.

I wondered about this strange coincidence. I have a good number of friends who are unhappy or bored or dissatisfied or generally feeling stifled in their current roles but a paycheck is a paycheck and so they continue on, keeping their ears open of course to other options but not rocking the boat too much until they have squared away a solid exit strategy. Are these three friends foolhardy or are they brave? Did they make a mistake or did they do what they needed to do to have the energy and focus to better their lives in the long term? I can’t say for sure because I’m not them and I don’t know exactly what each was going through and how I might have handled things differently. But I do know that for all of them, making the choice to leave was something they had each pondered for a long time (I know this b/c I was asked for advice repeatedly as they considered solutions to their dissatisfaction) and so in that light, I know that quitting was perhaps not the ideal but the best option for each of them and a well-considered decision.

Opportunity cost is something I also struggle with right now. In my job search boot camp, we have to report on the number of jobs we have applied for the past week and the number of contacts we have made at companies we are interested in. The target contact number per week is 20. I have seriously been lagging– applying to fewer roles than when I was previously employed earlier this year. Some of it is because I have gotten used to a slower pace of life– I am basically pacing with my retired mother and honestly, it ain’t a bad way to live. I sleep a restful 8 hours a night and spend my days reading and applying to jobs.

Also, I wonder: is it worth taking any job just to have something to do and something to put on my resume? Or should I wait for a job that clears my threshold for happiness b/c it is in that kind of environment that I can honestly expect to feel fulfilled and gratified? Interviews are great b/c it means somebody is giving you a chance to show why you are the best one for the job. But interviews for a company that you feel lukewarm about are particularly tough b/c it takes so much more energy to pitch yourself to a company that you feel no internal fire for. So in that light, I do think I have been more conservative about the roles I have been applying to. The opportunity cost of having this time and energy to find a good role is high– it seems better than taking something where there is the potential to languish and suffer.

I can relate to my newly unemployed friends as well– I was dying a slow painful death at my last work assignment: a contract role at a video game company that ended in late March. Because my contract was coming to an end, I basically wasn’t given any new projects. Sitting in what was a converted closet, I had nothing to do and would have preferred to be at home, applying to jobs and otherwise being engaged in more enjoyable activities. Yes, it was a paycheck and yes, it was a job which probably helps when looking for new roles. Those were my reasons for continuing to go in to the job. But I can agree with my friends that being able to just end something that is such an uncomfortable lifesuck and concentrate efforts on looking for something better has its benefits.

So that’s it from me. I am getting some reception from things I applied to last week so fingers crossed something good comes my way.



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