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Follow the Money back Home

Is it rational for unemployed and discouraged workers to return to or stay at the family home?

This boy's too young to be singing the blues

Lost generation, discouraged worker, hikikomori. We view them with pity if not derision, as if they, and the millenial/Gen Y/X-er we know still living with their parents just aren't trying hard enough. We'd love to help them but we have no time left from our busy professional lives except to throw them some tips, proof read their C.V.s, and feel a little smug that at least we're on the right side of the dole queue.

But money is money and unless explicitly disclosed, it is impossible to distinguish between corporate largesse and family indulgence. Who is to know whether your salary, work, or your uncle got you that smartphone? Lest we forget, patronage existed long before employment. Neither Da Vinci nor Michelangelo were subjected to psychometric evaluations by HR.

I should have stayed on the farm, I should have listened to my old man

The household can also provide direct resources in lieu of or beyond money, such as housing, transport, and utilities - something that companies have difficulty justifying to management and shareholders. The two sources also fund independent life events. Your employer may compensate your conference expenses, but a parental loan or guarantorship can make or break buying a house. Staying late at the office is seen as dedication, but sleeping there is mooching. As conventional employment becomes harder to obtain, and the disutility of employment increases, it becomes easier to weigh up a handout even with its associated emotional chains. The cost of our oft-unrequited love affair with post-industrial white-collar employment may outweigh the benefits to the extent that family resourcing could be viewed as a valid strategy rather than a last resort.

Where the dogs of society howl

Consider this extract from 2013's Australian National Accounts
I choose Australia because it is my home country and it bears many characteristics of the most developed economies, including high net wealth and a diverse financial sector.
Sector/Assets & Liabilities (AUD$ billion)Total financial assetsTotal financial liabilitiesNet financial positionLeverage
Private Non-financial Investment Fund$22.50$196.70-$174.20874.22%
Other Private Non-Financial Corporations$957.80$2,488.40-$1,530.60259.80%
National Public Non-Financial Corporations$8.50$23.50-$15.00276.47%
The Central Bank$130.90$130.80$0.1099.92%
Banks$2,785.70$2,996.80-$211.10107.58%
Other Depository Corporations$300.20$300.30-$0.10100.03%
Pension Funds$1,649.30$1,753.50-$104.20106.32%
Life Insurance Corporations$268.80$271.70-$2.90101.08%
Non-Life Insurance Corporations$179.20$192.00-$12.80107.14%
Money Market Financial Investment Funds$22.80$22.80$0.00100.00%
Non-Money Market Financial Investment Funds$272.70$438.30-$165.60160.73%
Central Borrowing Authorities$332.60$331.30$1.3099.61%
Securitisers$352.00$352.20-$0.20100.06%
Other Financial Corporations$109.70$93.80$15.9085.51%
National General Government$308.30$558.70-$250.40181.22%
State and Local General Government$187.30$311.80-$124.50166.47%
Households$3,759.00$1,839.60$1,919.4048.94%
Rest of the World$2,499.40$1,669.60$829.8066.80%

It seems counter-intuitive that households would have healthier balance sheets than ASX traded companies, but remember that companies operate on thin capital margins to compete on revenue and dividends. This may explain why it is easier to take petty cash from Mum and Dad than from your team leader. They love you just the same, it's just that things are tighter at the firm. Contemporary mores surrounding handouts aside, it makes sense to focus your efforts where there is most capacity to accomodate you. In a choice between a rich organisation and a poor one many people would follow the money.

That may not mean your parents. Not all households are equal. Just as there are many people competing for a few positions with a few stable employers, if household wealth is too concentrated then supporting non-worker relatives may be too much of a burden for all but the richest minority.

Beyond the Yellow Brick Road

Let us break down household wealth with the ABS' Australian Household Wealth survey 2011-2012.

Age of Reference Person15-2425-3435-4445-5455-6465-7475 and overAll households
Mean Household net worth$115,568$247,153$572,097$872,805$1,086,365$1,007,645$786,879$728,139
Median Household net worth$40,316$136,638$357,995$566,661$723,623$638,509$542,080$434,234

Established households - those old enough to have adult children - have the most cash to spare. Naturally, as they have enjoyed time in the market, low divorce rates, and steady employment. But even the lowest quintile households are net positive.

It is interesting to note that 24.5% of all households count welfare for over 50% of their income; this includes 6.8% of the top 20% - mean worth $2.2 million. The poshest parents may indeed help junior with government money rather than their own, so arguments that handouts enfeeble jobseekers ignore the middle and upper class welfare being enjoyed.
Net Worth QuintilesLowestSecondThirdFourthHighestAll households
Mean net worth$31,205.00$191,207.00$437,856.00$766,465.00$2,215,032.00$728,139.00
Median net worth$29,600.00$186,981.00$4,342,234.00$753,594.00$1,594,626.00$434,234.00
Mean income per week$1,121.00$1,713.00$1,606.00$1,904.00$2,894.00$1,847.00
Median income per week$920.00$1,557.00$1,305.00$1,663.00$2,183.00$1,442.00
Government pensions > 50% of income42.70%19.50%32.60%21.90%6.80%24.50%

Maybe you'll get a replacement, there's plenty like me to be found

Again, not all households are rich, but on average they are in a better position to grant favours than any other sector. If help from your kin is not forthcoming, then perhaps others will do. This may sound like mercenary ingratiation but there is no rule saying that establishing patronage excludes forming genuine relationships. It is no more forced than writing cover letters. Data that the hidden unemployed are not despairing suggests that it is not such a compromise after all.

So where do you go with this information? If you're stuck in your parents' basement feeling guilty about not corralling more rejection letters to remind you of your obsolete skillset, and you're reading this on their internet, the good news is you're already there.

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