The Fed – Income in the Off-Season: Household Adaptation to Yearly Work Interruptions

October 2020

Income in the Off-Season: Household Adaptation to Yearly Work Interruptions

John Coglianese, Brendan M. Price

Abstract:

Joblessness is highly seasonal. To analyze how households adapt to seasonal joblessness, we introduce a measure of seasonal work interruptions premised on the idea that a seasonal worker will tend to exit employment around the same time each year. We show that an excess share of prime-age US workers experience recurrent separations spaced exactly 12 months apart. These separations coincide with aggregate seasonal downturns & are concentrated in seasonally volatile industries. Examining workers most prone to seasonal work interruptions, we find that these workers incur large earnings losses during the off-season. Lost earnings are (i) driven mainly by repeated separations from the same employer; (ii) not recouped at other firms; (iii) partly offset by unemployment benefits; & (iv) amplified by concurrent drops in partners’ earnings. On net, household income falls by about 80 cents for each $1 lost in own earnings.

Keywords: seasonality, seasonal employment, job loss, household income, household labor dynamics, unemployment, unemployment insurance

DOI: https://doi.org/10.17016/FEDS.2020.084

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